Apple is the new "record label" on the block, except now we download our records. Universal is not going to be in the record business much longer unless they control a mega download operation (can you say unlikely?)That is what Universal has to be worried about. They must be in a position where their top names aren't due to sign a new contract in the near future, but they still have to address the issue of responding to their top names complaining.
Of course, Apple can also play the game by not giving Universal the prime promotional positions in the weekly iTunes email, or front page of their site.
It won't be long before Apple enters in to a deal with a major label or signs there own artists.
For all we know, this dispute was the end of a deal that wasn't made.