Apple strikes deal with Sony for streaming iTunes music service - report
Apple has reportedly inked a licensing deal with Sony Corp.'s music division to begin offering the label's catalog in the cloud, leaving Universal Music Group as the last holdout among the major record labels.
Context & Ripple Effects
The report lands four weeks after Apple's cloud licensing deal with Warner Music, making Sony's music division — per Bloomberg's same-day reporting on label accords for the iTunes cloud service — the second major reportedly signed. That leaves Universal Music Group as the confirmed last holdout among the majors, and turns the remaining negotiation into the story.
The stakes echo an older fight: back in 2007 Apple publicly denied that a major label might quit iTunes rather than concede terms, so label leverage against Apple's storefront is a recurring theme. What is new in 2011 is that the bargaining chip is no longer downloads but cloud streaming rights, where each major's signature gates how much catalog a launch service can offer.
First-order effects
- If the Sony deal holds, Apple enters its cloud launch with Warner and reportedly Sony's catalogs cleared, while Universal's absence would leave visible gaps in any consumer-facing locker or streaming tier.
- Universal becomes the pricing bottleneck: with three of four majors reportedly signed, its holdout position weakens, since Apple can launch without it and negotiate from a live service.
Second-order effects
- Rivals building cloud music offerings — Google and Amazon had already launched lockers without full licenses earlier in 2011 — face renewed pressure to match Apple's licensed-catalog approach or defend their unlicensed stance.
- Sony's signing sets a precedent other labels' negotiations will be benchmarked against, shifting leverage in publisher-versus-label royalty splits over cloud reproduction rights.
Third-order effects
- Label-by-label licensing is emerging as the chokepoint for cloud services generally, meaning whoever clears the majors fastest defines the terms — per-track cloud royalties, locker mechanics — that the rest of the industry inherits.
- The pattern points toward recorded music economics migrating from unit sales to licensed access, with Apple's storefront power now applied to subscription-style consumption rather than just downloads.
The trend: Music licensing is moving from per-download deals to cloud-access agreements negotiated major by major, with each label's signature determining which platform can launch a complete catalog first.