Apple Is Said to Secure Music Accords With Labels for ITunes Cloud Service
Apple Inc. (AAPL) has reached agreements with three major record labels to let users of its new music service access their song collections from handheld devices via the Internet, people with knowledge of the deals said.
Context & Ripple Effects
Apple's iTunes cloud push has been assembled deal by deal: a cloud licensing agreement with Warner Music landed in April, a Sony pact was reported the very same day as this story, and Bloomberg had flagged back in March that Apple was negotiating for unlimited usage rights over music downloads. What is new here is scope — three major labels reportedly signed at once, per people with knowledge of the deals, so nothing is officially confirmed.
First-order effects
- If the reported accords hold, iTunes users gain internet access to their purchased song collections from handheld devices without tethered syncing, and Apple secures licensed cover for its cloud locker before launch.
- Any major label still unsigned risks missing the default music experience on iPhones and iPads at launch, which weakens its position for its own next round of digital negotiations.
Second-order effects
- Signing converts library portability from something a user did with files they own into a negotiated license, opening a new fee stream the labels can charge Apple for access that downloads once bundled.
- Rivals building cloud music offerings now face labels armed with Apple's paid-license precedent as a pricing benchmark, raising the cost of every future cloud deal in the market.
Third-order effects
- If the pattern holds, recorded music's revenue structure tilts from per-track sales toward recurring cloud-access licenses held by the major labels, with platform owners like Apple competing on whose account unlocks the library rather than on file quality or price.
The trend: Recorded music is migrating from owned files synced across devices to license-backed cloud libraries, with Apple's label-by-label negotiation cadence setting the template competitors must now license against.