Apple nears music deal with labels By Ryan Nakashima, AP Business Writer Friday, May 20, 2011
LOS ANGELES, (AP) -- Apple Inc. is close to securing deals with all four major recording companies on a music service that will allow users to stream songs stored on remote computer servers, presumably to an array of portable Apple-made devices, a person familiar with the matter said Friday.
Such a service would give users a wide array of music on-the-go, without having to worry about limited storage space and the need to physically connect different devices to transfer songs.
Universal Music Group, a division of Vivendi SA, is about to sign a deal that will give Apple the right to stream songs to its customers, although how exactly the service will function is unclear, the person said.
The cloud music service is likely to be unveiled at Apple's annual developers' conference in San Francisco, which gets under way on June 6. Agreements with the units of the recording companies that collect songwriting royalties have not yet been completed but are expected to be finalized soon, the person said.
The person was not authorized to speak publicly on the deals and spoke on condition of anonymity.
Universal would be the largest and last recording company to sign a cloud music deal with Apple after the maker of iPads and iPhones cut deals with Sony Corp.'s music arm, EMI Group Ltd. and Warner Music Group Corp, the person said.
An Apple spokeswoman declined to comment.
Bloomberg News earlier reported that Apple had reached agreements with Sony, EMI and Warner and that Universal was close to a deal.
Over the last two months, Amazon.com Inc. and Google Inc. have both unveiled cloud music plans but neither had secured deals with the recording companies. The services appeared to have limited functionality and amounted to allowing people to access material they had uploaded themselves.
Apple's deals with music companies will allow for downloading, mobile use and streaming — and will enable it to offer a more complete service, the person said. However, it is also unclear how much Apple will charge for such capabilities, and whether people would pay per song or by subscribing to a regular plan.
Amazon offers free storage for up to 5 gigabytes of cloud storage but charges, starting at $20 per year, for 20 gigabytes and more. Google's service works by invitation only and is free to use during the current test phase.
Compared with buying e-books, building a digital music collection is a hassle.
E-books zip directly to reading devices like the Kindle and Nook and are backed up "in the cloud" - on the servers of Amazon.com and Barnes & Noble.
A digital song, on the other hand, is typically downloaded to a PC and must then be manually transferred to an iPod or mobile phone. If you lose your Kindle, you can always download an e-book again; if the PC crashes or the iPod falls into the bathtub, the song goes down with it.
Moving music to the cloud has been an elusive goal for big tech companies and their music industry counterparts, until now. In the past two months, Amazon and Google have introduced cloud music services, albeit to mixed reviews and indifference from consumers. These new services let users upload their music collections into so-called digital lockers on the Internet and stream the songs they own to a variety of devices.
Both are limited, because neither Google nor Amazon could reach an accommodation with music labels. Label executives say they are negotiating aggressively to make sure they profit from the shift to the cloud. It may be the last opportunity to stem rampant piracy and years of plummeting sales.
Apple, the reigning heavyweight of the music business, may have solved this cloud conundrum.
It has reached agreements with three of the four major music labels and is close to reaching terms with the fourth, Universal Music, according to people with knowledge of these deals but who can't speak on the record because the talks are private. The company could preview its cloud plans as early as June at Apple's annual Worldwide Developers Conference in San Francisco.
The music industry will be watching to see whether Steve Jobs & Co. have discovered a way to quell the deep anxieties of the music biz while creating a flexible, easy-to-use service that isn't too expensive.
"With a big enough checkbook, anyone can get a deal with the record labels," says Michael Robertson, founder of an unlicensed cloud music locker called Mp3tunes, which is embroiled in a lawsuit with EMI. "The question is whether Apple's cloud music service will be consumer-friendly." Apple declined to comment.
Future may be iCloud
Apple's music service, which Engadget and other tech blogs are already calling iCloud, might well represent the future of recorded music.
Armed with licenses from the music labels and publishers, Apple will be able to scan customers' digital music libraries in iTunes and quickly mirror their collections on its own servers, say three people briefed on the talks. If the sound quality of a particular song on a user's hard drive isn't good enough, Apple will be able to replace it with a higher-quality version. Users of the service will then be able to stream, whenever they want, their songs and albums directly to PCs, iPhones, iPads, and perhaps one day even cars. And the music industry gets a chance at the next best thing after selling shrink-wrapped CDs: monthly subscription fees, a la Netflix and the cable companies.
"We will come to a point in the not-so-distant future when we'll look back on the 99¢ download as anachronistic as cassette tapes or 8-tracks," says Ross Crupnick, a music analyst at NPD Group.
While it may be a huge shift, it won't be free. Apple no doubt has paid dearly for any cloud music licenses, and it's unclear how much of those costs it will eat or pass on to consumers. One possibility would be to bundle an iCloud digital locker into Apple's MobileMe online service, which currently costs $99 a year and synchronizes contacts, e-mail, Web bookmarks, and other user data across multiple devices. Users will be able to store their entire music collections in the cloud - even if they obtained some songs illegally. That would finally give the labels a way to claw out some money on pirated music.
The service will probably vault Apple ahead of its major rivals in the race to the cloud. In March, Amazon introduced Cloud Drive, which requires users to upload their entire collections onto the company's servers. That's a time-consuming process for customers and forces Amazon to store multiple copies of the same songs.
Amazon announced the effort without engaging in licensing discussions with the labels and giving them only an 11th-hour preview, according to three people familiar with the matter. Labels objected to some elements, such as Amazon selling songs from its MP3 store and automatically storing backup copies of those files on its own servers without paying the labels any extra fees, according to executives at the labels.
Amazon spokeswoman Sally Fouts would not comment on the company's dealings with labels and says only that music sales have risen since the service launched. (Last week, the company's servers overloaded when it offered Lady Gaga's new album, "Born This Way," for 99 cents.)
No license for Google
Google negotiated with the music labels for more than a year to create a cloud music service, then began an unlicensed service similar to Amazon's when talks foundered. According to two music executives familiar with the discussions, Google was prepared to pay more than $100 million up front to the four major music labels for licenses, but talks broke down over the music industry's concern that search results in Google and YouTube often point to pirated music.
Google's unlicensed service, Music Beta, allows users to upload 20,000 songs they already own for free and features an "Instant Mix" feature that can generate a playlist of similar songs based on a single track. But Google, unlike Amazon and Apple, still hasn't arrived at a basic deal with the labels to sell digital music.
"We've been in active negotiations with the labels with mixed results," says Zahava Levine, director of content partnerships for Android, Google's mobile platform. "We want to help them sell their artists' music and have a lot to offer given the broad reach of Android and Google generally."
There's irony in the possibility of Apple trumping its rivals yet again in music.
Labels come around
For years the labels have complained about Apple's hammerlock on digital music and sought to nurture a strong competitor. Now they "are about to give Apple even more power to dictate how music is consumed," says Daren Tsui, chief executive officer of mobile entertainment company mSpot.
Yet Tsui and others believe that ultimately the cloud may deliver a more even playing field. Apple is unlikely to make its music service available for devices that run competing software, like Google's Android. And the labels figure that once Apple gets out the door, Google, Amazon, and others will follow with similar licensed services. Then the elegance of crash-proof, bathwater-resistant, play-it-everywhere music will finally be within reach.
I know this has been a goal for quite some time, but I see some problems with the approach.
- Data caps. It's all well and good to have access to my full collection in the cloud, but if I'm hitting it on an iPhone over my cell service, how long until I hit the ceiling on data for the month and start paying overage fees?
Quote:
"We will come to a point in the not-so-distant future when we'll look back on the 99¢ download as anachronistic as cassette tapes or 8-tracks," says Ross Crupnick, a music analyst at NPD Group.
- So along with the alleged impending death of CDs, we're going to face the death of downloads as well? How long until the labels push to have everything stored on the servers? That would be their dream - or close to it - of making us pay every time we wanted to listen to the song. I can see them pushing for a subscription fee just to hit the cloud, plus a per-song fee. Subscription stopped? No more access to any of the stuff.
Quote:
Users will be able to store their entire music collections in the cloud - even if they obtained some songs illegally. That would finally give the labels a way to claw out some money on pirated music.
- And how will they determine that I've gotten this music illegally? Because I didn't buy it from iTunes? What if I've bought music from Amazon and put it in my iTunes library (I have)? What if I've gotten free music from Amazon and put it in my library (I have)? What if I've ripped my own CDs (I have - a lot, about 98% of my stuff)? If I go to the cloud, are they going to try to charge me extra for that stuff?
This is all sounding like a big PASS for me, pending details.
Alan
_________________ Alan
"This is a true story, except for the parts that didn't happen." - Steven Wright
I'm sure I'll make some kind of use of this paradigm down the line (definitely not via Apple, though). Connecting to a central repository for portable playing sounds useful. But serious listening (for me, anyway) will require so much storage space and bandwidth for hi-rez, it will take years to become feasible.
I know this has been a goal for quite some time, but I see some problems with the approach.
- Data caps. It's all well and good to have access to my full collection in the cloud, but if I'm hitting it on an iPhone over my cell service, how long until I hit the ceiling on data for the month and start paying overage fees?
I agree with most everything you said, other than this one; I stream several hours each day from my house (Audiogalaxy), Pandora, and Slacker radio to my phone in the car, and have never hit any caps. "Unlimited" data plans for phones are usually capped secretly at something like 2 GB, and streaming uses less than 1 GB even on a heavy month, like if I'm on a road trip.
But, for higher-res audio, and just in principle, I say data caps are an archaic desperate cash grab by the service providers and need to be eliminated if we really want to move forward with the possibilities of technology.
Just under aweek before its Worldwide Developer Conference Kicks off at Moscone Center, Apple took the unusual step Tuesday morning of announcing the keynote topic and who would deliver it. Apple co-founder Steve Jobs, who has been on medical leave, will take the stage at Moscone West to discuss iCloud, "Apple's upcoming cloud services offering."
The e-mail that went out marked the first time Apple had acknowledged an upcoming cloud service -- and one of the first times in recent memory that the company has announced a product in a press release, rather than on a stage where it can demonstrate it. Apple watchers have speculated that the company is trying to manage people's expectations, since this is expected to be the first June since the iPhone launched in 2007 that it won't have a next-generation phone to show off. (New hardware is expected around September.)
Apple offered no other details about iCloud, although it seems poised to replace the company's current offering, the $99-a-year MobileMe. The company recently completed a $1 billion, 500,000-square-foot data center in North Carolina, suggesting Apple is preparing for a massive surge in processing needs. (It's five times the size of the company's current data center.)
iCloud is also expected to have an iTunes component. In recent weeks, Amazon and Google have unveiled digital lockers that allow users to store MP3s and other files online. Apple is said to have been negotiating with record labels for a more robust offering that could allow users to stream any track they have in iTunes via iPhones and other devices, regardless of whether the file is stored on that device or not.
Discussion of iCloud will come as part of a larger look at Apple's next-generation operating systems: Lion, the eighth release of Mac OS X for the desktop; and iOS 5, which will power the iPhone, iPad and iPod.
The Jobs keynote starts at 10 a.m. Monday. We'll bring it to you live in this space.
This scares the crap out of me! Maybe I like the nice dynamic sound of that 25 year old CD or that real nice MFSL I bought a few years ago. You're gonna replace that with some squashed, loud remastered version that is deemed to be the "official" version of the song? I don't think so....
Tricky Kid wrote:
Armed with licenses from the music labels and publishers, Apple will be able to scan customers' digital music libraries in iTunes and quickly mirror their collections on its own servers, say three people briefed on the talks. If the sound quality of a particular song on a user's hard drive isn't good enough, Apple will be able to replace it with a higher-quality version. Users of the service will then be able to stream, whenever they want, their songs and albums directly to PCs, iPhones, iPads, and perhaps one day even cars. And the music industry gets a chance at the next best thing after selling shrink-wrapped CDs: monthly subscription fees, a la Netflix and the cable companies.
BTW, I'm still running iTunes 9.03 & have yet to see one reason why I should upgrade.
Apple has cut a licensing deal with Universal Music Group that will enable Apple's online music store to offer songs from the largest of the four top record companies, sources with knowledge of the talks told CNET.
The agreement means Apple now has the rights to offer recordings from all of the major labels. In addition, Apple has reached agreements with some of the large music publishers, the sources said.
Apple announced Tuesday that it would unveil a long-anticipated service called iCloud on June 6 at its Worldwide Developers Conference in San Francisco. Apple did not disclose whether iCloud would include any music features, but we do know that Apple managers have sought for more than a year to create a music feature for the service.
Details about the agreements are few, but here's how the revenue from iCloud's music service will be split, according to the sources: the labels will get 58 percent, and publishers will receive 12 percent. Apple will take 30 percent.
Streaming will not be available on Monday but will be offered soon, the sources said. They added that an Apple digital locker will store only music purchased at iTunes. The company is said to have plans to store songs acquired from outside iTunes sometime in the future. A year ago, when Apple first discussed a cloud-music service with the labels, creating digital shelves for people to store all their songs was part of Apple's vision.
Obtaining rights from Universal Music, home of such acts as Lady Gaga, U2, and Kanye West, gave Apple the final piece of the puzzle as far as recording rights are concerned. When it comes to publishing and performance rights, Apple still has more deals to negotiate, and at this point it appears the talks will go to the wire. According to the New York Times, Apple has penned publishing deals with Universal Music Publishing and Sony/ATV, the publishing arms of Universal and Sony, the two largest record companies. The Times reports that EMI and Warner/ Chappell have yet to reach an agreement.
Apple, the country's dominate music distributor, is setting up to be a major player in cloud computing, the name given when Internet users complete computing chores via a third-party's servers instead of their PC. Cloud music is supposed to be the format that succeeds the CD and digital download.
Consumers will have the final say but so far, much of the music industry as well as Apple, Amazon and Google appear to be making big cloud bets. Amazon and Google have each debuted their own cloud services. What makes Apple's different is that it will be the first among the big three to offer licensed music. This is supposed to give Apple much more flexibility on what it can offer consumers.
Apple's iCloud will be much more than a music service. On Tuesday, CNET reported that in recent weeks Apple has raced to license movies and TV shows from Hollywood film studios and TV networks. Apple, however, faces more obstacles in licensing video for iCloud. The hold up is due in part to exclusive licensing arrangements that some of the studios have entered into with HBO.
Nonetheless, expect to see the iCloud come with more than just music features--if not on Monday--than sometime in the future.
If I can't own it, physically (or even merely on my hard drive, from which I can delete when I FEEL LIKE IT), then I won't buy it. Period.
_________________ "One good thing about music: when it hits, you feel no pain." -- Bob Marley
"There's got to be a way to make something louder and pull people in without making it louder and pushing people away. Music's not about pushing people away." -- Jim Scott, in TapeOp #75
Biggest news to come out of the press conference is that, for $25 a year, all your MP3s, regardless of the source, pirated or no, will be matched up with 256K versions on Apple's servers and synced to any PC, Mac or Apple device. Assuming said track is available on iTunes (so no Kid Rock, Prince, AC/DC, etc).
Also assuming Apple can identify your tracks correctly and picks the correct version, since you obviously won't be able to correct them if they don't.
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