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The record company, whose artists include arch iPod fans U2, simply decided that it no longer wished to guarantee that all its recordings would be available through the Apple music store. Instead, the month-by-month agreement that the companies are said to have reached, permits them to grant exclusive rights on a store-by-store basis.

Apple confirmed that Universal is staying put.

"We are still negotiating with Universal, the music is still on iTunes, and their not resigning is just not true," spokesman Tom Neumayr said.

The

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chances of Universal pulling out of iTunes were always slim. It remains the music industry's best hope of at least partially reversing declining CD sales, which may fall by more than 20% this year according to early returns. It certainly has more to lose than Apple, for whom iPods remain the cornerstone of its successful music business.

The record industry remains concerned about Apple's dominance of the digital market, though it is arguable that it has more to do with the efforts of potential competitors than it does with any supposed tying of the iPod to iTunes. After all, iTunes sales make up just 3% of all music on iPods, the rest come from CDs and, don't mention it but, p2p fileshares, neither of which are tied to iPods.

But if the supposed tie-in is Universal's chief concern, then the obvious solution would be for it to follow EMI's lead and begin selling DRM-free music through iTunes, receiving an the extra 20p per track into the bargain. However despite EMI having reported increased sales as a result of removing usage restrictions, none of the other three majors has yet indicated that it plans to follow suit.