Universal Music Group has refused to strike a long-term licensing arrangement with Apple's iTunes Music Store and will instead opt for "flexible," interim agreements, a source close to negotiations tells Billboard.com.

In recent days, the music major is understood to have declined to sign a two-year pact, according to the source, but will enter into month-to-month deals carrying the same terms.

"UMG wants greater flexibility," says the source. "If someone comes along with a new service or device and wants an exclusive at launch for three months for 10% of UMG's top line product, UMG couldn't do that if they signed [a two-year] Apple deal."

The market-leading music firm's decision to break ranks could potentially derail Apple's rule over the online music market. Apple's iTunes generates more than 70% of all online music sales worldwide.

"UMG doesn't have long-term agreements with other retailers. So why Apple?" says the source. A spokesperson for UMG declined to comment.

UMG's tough new stance comes as the record industry awaits the arrival of Amazon's download service, which is expected to emerge as a legitimate contender to iTunes' market dominance.

The development comes just days after Apple released to the public its new iPhone, which some industry observers anticipate will beef up the computer giant's presence in the mobile music market.

A spokesperson for Apple did not respond to requests for comment at deadline.