For those about to rock ...

For all of the hype and hoopla surrounding the recent release of the iPhone, Apple's control over the digital music market has eroded significantly over the summer months. In early July, reports surfaced that Universal Music Group, the globe's largest music corporation, said it would not renew its contract to sell content through the computing giant's iTunes platform, with plans to instead market music to Apple on its own terms, determining its own pricing structure for new music and chart blockbusters. In an additional wrinkle, Universal artist Eminem, via his publisher Eight Mile Style and copyright management firm Martin Affiliated, later filed suit against Apple, claiming iTunes cannot sell his music because the label was not authorized to license the songs to Apple in the first place.

This week, Apple's market dominance suffered another blow when veteran Aussie rockers AC/DC bypassed traditional digital retail outlets entirely, instead signing an exclusive, multi-tiered deal with Verizon Wireless to release their entire 18-album back catalog via the operator's V Cast Music service. The announcement followed 24 hours after Apple's iPhone carrier partner AT&T became the last of the three biggest U.S. mobile operators to launch an over-the-air download service, teaming with indie-centric eMusic to debut a catalog spanning 2.7 million songs. Despite the AT&T and Apple partnership, the OTA service will not work on the iPhone--Apple CEO Steve Jobs remains famously allergic to over-the-air downloading, which no doubt explains why AT&T went with eMusic instead of iTunes.

Will Apple be forced to change its tune on digital music? Without Universal Music's content library, iTunes would be a shell of its current self--of course, iTunes sales amounted to about 15 percent of Universal's Q1 revenue, a figure in the ballpark of $200 million, so the label isn't going to do anything too drastic. If you're Apple, Verizon's deal with AC/DC is far more worrisome--here's a perennially popular band with U.S. album sales in excess of 63 million forgoing your digital platform to partner with a mobile operator. If the gambit works, and other artists follow suit, the fallout will be disastrous.

That's a big "if," however. The AC/DC deal seems destined for failure: For starters, each album is priced at $11.99, two dollars more than Apple's usual $9.99 per album rate. Moreover, the AC/DC content is only available in full-length LP format--Verizon Wireless will issue only the Back in Black classic "You Shook Me All Night Long" as a single download, at $1.99. (As someone who despises the iTunes mix-and-match, single-song download approach and believes albums should be enjoyed as cohesive listening experiences, I actually find this an admirable move, but I also realize I'm in a distinct minority.) The AC/DC exclusive expires in March 2008, so neither the band nor Verizon has too much invested if the deal bellyflops--and if it does, the big winner will be Apple, who can point to the flawed economics and consumer restrictions as irrefutable proof of iTunes' continued supremacy. Now more than ever, it's a long way to the top if you wanna rock 'n' roll. - Jason