If accurate, these reports describe a service that would have a weighty advantage over the recently released competitors from Amazon and Google. Both of those require users to upload their collections before making music available in the cloud, although Amazon makes new music purchased through its MP3 store available automatically on the web. Apple's method would save those with existing music libraries huge amounts of time.
But time isn't the advantage to Apple's service. According to BusinessWeek, the scanning process wouldn't differentiate between music acquired from legitimate and illegitimate sources — meaning even tracks downloaded illegally would be mirrored in the cloud, and even upgraded depending on the track's quality.
Why would the music industry agree to a service that basically rewards pirates? Because Apple's service won't be free, says BusinessWeek. It will likely incur a monthly cost, since the licensing fees Apple would have to pay for the arrangement described above would be enormous. But if labels are getting a chunk of revenue partially derived from pirated music, they're actually reclaiming some of the original loss on that theft.
But will users pay for cloud access to their entire music collection from PCs, iPhones, iPads and other Apple devices? We asked that exact question of users back in April, when we weren't sure of what the cloud service would provide. While a majority answered "no," it wasn't a landslide; 43.26 percent reported that they would be willing to pay. Amazon's service carries a fee structure dependent on how much storage space you use (5 GB of storage is free), and while Google's offering is free, it's still a beta product and has a hard 20,000 track cap. Even with a subscription model, if Apple's offering is unlimited and also offers full library mirroring and upgrading, it will be very strong competition.
Labels are reportedly banking on the fact that this deal will cause Amazon and Google to get on board with similar licensing deals, but Apple will benefit from being first out the door, and it could gain significant early lock-in advantage if it offers longer-term subscriptions, like the yearly one it uses for MobileMe.
Related content from GigaOM Pro (subscription req'd):
- Cloud in the Forecast For Apple
- Report: Monetizing Digital Content
- The Case for Increased M&A in 2011: Actions and Outlooks
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