Music labels want iTunes with subscription model

Those discussions will begin in earnest next week when Universal Music, the largest record company, sits down at the bargaining table with Apple. Universal's competitors, Sony-BMG, Warner Music and EMI, have either commenced talks with Apple already or are poised to do so, according to people close to the matter.

This year's talks are vital for the record industry because they come amid a continued deterioration in compact disc sales. As a result, one media consultancy, Enders Analysis, predicted this week that global music sales would fall to $23bn in 2009, down 16 per cent from last year.

Executives at Universal and other labels believe a subscription service could prove more lucrative for them than iTunes' prevailing model of charging consumers 99 cents per track because it would increase consumption of music. It would also entitle the labels to a share of monthly payments, in addition to small licensing fees each time their songs are played.

Record companies may also renew their request for variable pricing on iTunes as they try to ramp up their digital profits.