iCloud: uma gigantesca nuvem musical (Economist)

USA internet: Apple ascendant
FROM THE ECONOMIST INTELLIGENCE UNIT
June 13th 2011

With the major record labels on its side, Apple's dominance of the digital music industry looks set to last.

Apple is not in the business of disappointing its fans, but more than a few have felt somewhat let down by the company's latest offering. Before last week's launch of iCloud, hopes were that Apple would unveil a subscription-based deal akin to Spotify's existing European service, which provides unlimited streaming of all labels' catalogues for a fixed monthly fee. Instead, fans got a service geared towards ensuring Apple's devices can access a user's music library from the cloud via downloads, not streaming. It appears a lot less ambitious.

But while iCloud may appear less innovative than earlier Apple offerings, the Cupertino-based company has undoubtedly shifted the ground in the music industry and created a platform that has the blessing of the record labels—something neither Google nor Amazon were able to do. Unlike its rivals' offerings, iCloud does not require customers to upload their music to the cloud. Instead, the service can automatically scan a user's music collection and match it to the iTunes store, which contains more than 18m tracks (users can upload tracks not available in the store). Known as iCloud Match, this feature will be available for an annual subscription fee of US$25 from this autumn (minus iCloud Match the service is free but limited to tracks bought from iTunes). Without the approval of the record labels, iCloud Match would not have been possible.

Yet the decision to allow all existing tracks to be included in Apple's new service has raised concerns about music piracy. Many observers have suggested the service could provide an amnesty for those who have previously engaged in illegal file-sharing activity. Conversely, some customers may worry that by handing over details of their listening habits and music collections they are being lured into a trap by Apple and the music industry. Clearly, this is the kind of information the Recording Industry Association of America (RIAA) would love to get its hands on if it was compelled to pursue further legal action. Apple, however, has insisted it will not provide specific details of users' libraries to the record labels—only aggregate information about total download volumes. More importantly, the fact the major labels have agreed the terms of the deal with Apple suggests they are ready to forget about the past and focus on the future.

Money for nothing?
That future looks promising. In his keynote speech at Apple's recent Worldwide Developer Conference, chief executive Steve Jobs noted that the era of the personal computer is coming to an end. The future, he reckons, will be all about mobile devices. That means the iPhone and iPad if Mr Jobs continues to get his way. With iCloud intended to run over these devices, the record labels are undoubtedly happy to ride on the back of Apple's current success and expected growth in this market. The four major labels have already secured an advance of around US$150m from Apple and will take a 58% share of subscription revenues from iCloud (music publishers will take 12% and Apple will keep the remaining 30%), giving them a substantial boost.

Clearly, if Apple remains dominant in the mobile devices market, then the record labels look set to benefit, and with little exertion on their own part. A survey conducted last year by market-research company NPD indicated that around 25% of iTunes users were interested in a cloud-based service, and that around half of those would be willing to pay US$10 a month for an unlimited streaming service supporting multiple devices.

With the record labels on board, Apple might soon be able to deliver the more ambitious music service that many were hoping to see launched last week. And if today's iCloud can deliver the user experience for which Apple is renowned, then a lot more people will be accustomed to paying for such a subscription service when Apple and the record labels feel ready to provide it. No doubt, Google and Amazon will be trying to get back into the game somehow, but for now iCloud looks by far the biggest and whitest musical cloud in the sky.