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Apple Renews Flat-Rate iTunes Pricing Contracts

Apple Computer has renewed contracts with the world's four largest music companies to sell songs through its iTunes Music Store, after blocking their attempts to end iTunes' flat-rate pricing scheme, Apple said on Tuesday.

Apple (AAPL) Chief Executive Steve Jobs argued that offering songs for a single price — 99 cents in the United States, 79 pence in Britain — was essential in weaning consumers off the illicit downloads that have ravaged the music industry.

"If they want to raise the prices, it means they are getting greedy," Jobs said in a press conference last year. "If the price goes up, they [consumers] will go back to piracy and everybody loses."

Of the world's biggest music companies — Universal Music Group, Sony BMG Music Entertainment, EMI Group and Warner Music Group (WMG) — all but Universal had pushed for variable pricing to maximize revenue from hot artists.

But in the end Apple had more negotiating power because of the dominance of its intertwined iPod player and iTunes service.

The iTunes Music Store has a market share of about 80 percent in the United States and also leads most European markets.

Globally, digital music sales more than doubled to $1.1 billion in 2005, making up about 5 percent of industry revenues.

A London-based Apple spokeswoman said the renewed contracts applied across all of the iTunes markets.

Universal Music, Sony BMG and EMI declined to comment; Warner Music was not immediately available.

[Universal Music Group is a subsidiary of Vivendi Universal (V); Sony BMG Music Entertainment is a joint venture of Sony (SNE) and Bertelsmann AG, which is privately owned; EMI Group is traded in London.]