Apple’s iCloud: Deals with Three Major Record Labels, Possible Preview in June

While Google and Amazon struggle to reach negotiations with record labels for their respective digital music lockers in the cloud, Apple is one step ahead with three of the four key music labels in its back pocket, and may preview its new service as early as June.

In March, Amazon released its cloud-based storage service called Cloud Drive, which offered 5 GB of online storage for free and saves album or MP3 purchases automatically to the cloud. But record labels said Cloud Drive was illegal because Amazon did not obtain new licensing rights for the service. Amazon decided to meet with record labels last month, but they still haven’t reached an agreement. 

Google launched a cloud-based storage service as well, called Google Music. This service, which was launched in early May, allows users to upload 20,000 music files and access them from any computer and Android device. But like Amazon, Google hasn’t struck any deals with record labels, meaning that both services are limited in what they can offer consumers.

Now, Apple may be fashionably late to the cloud party, but unlike the others, it brought friends. Apple recently signed licensing deals with Warner Music Group, EMI Music, and Sony Music Entertainment. The tech giant is close to striking a deal with Universal Music as well, which would put the four largest music labels on its side. 

Apple’s cloud-based storage music service, which is reportedly called iCloud, aims to offer music fans the ultimate cloud experience. ICloud will scan a user’s digital music library in iTunes and transfer everything to the cloud, where users can then access their music on PC’s or Apple devices. The service has a few perks as well, such as recognizing if the quality of the song is good or not, and replacing it with a better version. ICloud will even allow some previously pirated songs to be stored.

The cost of the service has not been announced yet, but there have been rumors regarding a possible bundling of the iCloud with Apple’s MobileMe service, which synchronizes e-mail, contacts and other web data across various devices for $99 a year. 

While it seems odd that record labels are siding with Apple after years of complaining about Apple’s grip on digital music, this new partnership could be beneficial for the labels. With Google and Amazon releasing unlicensed services that don’t provide record labels with a slice of the pie, the labels hope to show those two what they’re missing with an ultra-competitive joint venture with Apple, who is more than willing to share a slice of its Apple pie. Labels hope it’ll encourage Google and Amazon to sign deals as well.

But where Google and Amazon may prevail is in the Android market. Apple is known for offering its services exclusively on devices that run its software, which would put Android devices out of the loop. 

Nevertheless, Apple seems to have a monster of a service on the verge of release, and some reports have estimated an early June demonstration. 

“We will come to a point in the not-so-distant future when we’ll look back on the 99 cent download as anachronistic as cassette tapes or 8-tracks,” said Ross Crupnick, a music analyst at NPD Group.

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