The recent revelation by "The LA Times" that Apple Computer is considering purchasing at least a piece of Universal Music is interesting news in light of Apple's plans to unleash an online music store, but here's a fact most of the articles about this event have conveniently overlooked. Apple isn't the first high-tech company to consider purchasing Universal Music, and it isn't the most serious about the potential purchase. Microsoft first looked into buying the company; it wasn't until that deal fell apart that Universal Music owner Vivendi approached Apple CEO Steve Jobs.
Here's what really happened. Plagued by debt, Vivendi has been trying to sell parts of its business, including Universal Music, for months. On a few separate occasions, the latest as recently as last fall, the company entered into discussions with Microsoft over an outright purchase of Universal Music, a partial purchase, or an investment in the company. However, those talks all ended without a deal. This weekend, as news of Apple's interest in Universal Music surfaced, speculation ran rampant on the Internet that Microsoft was once again looking at purchasing Universal Music. No legitimate news sources have corroborated these reports, however.
Discussions between Apple and Vivendi have been less than fruitful, if you'll pardon the pun. The two companies discussed Apple purchasing as much as a third of Universal Music, but sources close to the companies have described the talks as "exploratory" only, and they apparently never went very far. This month, however, Apple will release a new online music store that provides songs from all five major music companies, including Universal Music, for roughly 99 cents a song. The store will initially require Mac OS X and Apple iTunes, although Apple will eventually add Windows compatibility to serve the other 97 percent of the market.
Vivendi's desire to unload Universal Music at this time makes some sense when you consider that audio CD sales have plummeted 25 percent since 2000, thanks largely to online piracy. Apple's new store hopes to curtail that piracy by making legitimate music available inexpensively, according to sources. However, Apple's stock nose-dived 8 percent Friday when rumours about the talks with Vivendi surfaced, suggesting that investors aren't too keen about Apple picking up the struggling music giant.