A customer checks out the Apple iTunesmusic store at an Apple store in Tokyo, on Aug. 25, 2006. Universal MusicGroup, the world's largest music company, has declined to sign a long-termdeal with Apple Inc.'s iTunes music store, leaving open the possibilityfor exclusive deals with other services.(Reuters, File Photo)

BEIJING, July 3 (Xinhuanet) -- Universal Music Group has refused to renew a two-year agreement with Apple Inc. to sell music downloads through its iTunes store, according to U.S. media reports Tuesday.

The decision means Universal, the world's largest recording, will not to sell the music and videos by artists such as U2 and 50 Cent via iTunes, and will instead sell content on the site on a month-by-month basis, leaving open the option to do exlusive deals with other services.

But the move does not mean that Universal's vast catalogue of arists — which also includes Eminem and Sting — will be removed from the iTunes store any time soon. However it suggests that the company is searching for greater flexibility in the way that it sells its content online, potentially weakening Apple's dominant position in the downloadable music market.

Universal previously had a two-year agreement to provide content to Apple's iTunes site, which was extended by 12 months last summer, but since it expired last month, the deal has not been renewed,source said.

"There's some feeling among some music labels and some executives that Apple, because it's so dominant with iTunes, has gained a disproportionate power in the equation," said Susan Kevorkian, an analyst with market researcher IDC.

"This looks like tactics to enable Universal to regain some control over the situation, at least as they perceive it," she said.

Apple holds a 70 percent share in the music download market in the United States, and is the third-largest retailer of music overall in the U.S., behind Wal-Mart and Best Buy.

Since the iTunes service was launched four years ago, Apple hasdisputed with the record labels over issues such as pricing -- Apple insists that all tracks sell for 99 cents (in the U.S.), and the inability of tracks downloaded via iTunes to be played on devices other than the iPod.

Record labels have wanted to introduce variable pricing for their music, and Universal in particular has shown itself willing to explore different models, agreeing to make its entire catalogue available for free on Spiralfrog, an advertising-supported service which is due to launch in December.

(Agencies)