iTunes left high and dry as Radiohead cut 7digital deal

Monday September 17, 2007

EMI, which owns the band’s catalogue, has struck a deal with digital retailer 7digital covering repertoire including the albums The Bends and OK Computer, but the market-leading iTunes has missed out because of its insistence on allowing customers the opportunity to buy individual album tracks.

In contrast, Radiohead, who are currently out of contract after their last recording deal with EMI ran out with the release of 2003’s Hail To The Thief album, wish to make their albums available only as complete bundles, preventing fans from buying individual tracks.

The dispute comes in the light of James Blunt, whose Back To Bedlam was 2005’s biggest-selling album in the UK, telling Music Week that iTunes was not doing enough to promote album sales.

An Apple spokesman says the company has no “rules” about unbundling tracks. “With very few exceptions, all tracks on iTunes are available on a track-by-track basis,” he says. “There are no iTunes rules, but we believe that people want and should be able to buy songs [individually].”

However an EMI spokeswoman says, “iTunes insists that all its albums are sold unbundled, but 7digital doesn’t. Radiohead prefer to have their albums sold complete. The artist has a choice, and if they feel strongly then we respect that.”

The tête-à-tête comes at a delicate time for EMI, which in April pledged to offer its entire digital catalogue DRM-free in partnership with the launch of Apple’s iTunes Plus format, but continues to negotiate with one of its most strategically-important bands over their future relationship.

For Apple, Radiohead – alongside the likes of The Beatles and Led Zeppelin - remain one of the few significant acts yet to authorise their catalogues for its iTunes Music Store. John Lennon, Paul McCartney and Elton John were among the artists whose full catalogues arrived on the service this year.

7digital, which is now selling all of Radiohead’s albums and a number of early singles in bundled MP3 format, declines to comment on the appearance of the band’s material, whose arrival in DRM-free format has been accompanied by no PR or marketing activity.

However, its managing director Ben Drury says, “Since we started to do the combination of the pricing campaigns and the DRM-free format, album bundle sales have really started to take off for us. Our market share is still tiny, but we’re significantly outgrowing the market against a background of flat sales.

“It’s really started to happen since we’ve bundled things like videos and PDF artwork, which is the only way of differentiating between the paid-for service and the illegal downloads. The average basket spend has gone up by nearly 80% per customer – the customers are becoming more loyal.”

Drury adds, “We keep getting labels coming to us saying, ‘We offered this to iTunes, but they couldn’t do this.’ Obviously we’d rather they came to us first, but we have to reflect the reality of the market.”

Securing a UK Radiohead exclusive represents a notable coup for 7digital, which says it now expects to have all of the EMI catalogue which has been cleared for digital sale available in MP3 by the end of this week.

“We’re promoting the EMI stuff more because consumers want MP3s more than anything else,” adds Drury. “That’s our small message to the majors.”

The bundling dispute is not the first time Radiohead and iTunes have fallen out. Apple was ordered by the band to remove the group’s Kid A album from iTunes after briefly offering it in 2005.