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Apple Signs Cloud Deal With Warner Music

Apple Signs Cloud Deal With Warner Music

Apple has an agreement with Warner Music Group to offer the record label’s tracks on iTunes’ upcoming cloud-music service, music industry sources said.

In the race to the cloud, Apple is apparently stepping on the gas. All Things Digital reported Thursday that Apple has signed two of the top four record companies and wrote that Apple content chief Eddy Cue was due to fly to New York on Friday to try and finalize agreements with the two still unsigned labels.

It is unclear whether Warner was one of the two that had previously licensed Apple or whether the New York-based label inked an agreement on Friday. A Warner Music spokesperson declined to comment. An Apple representative was not immediately available.

Warner Music is the third-largest of the top four labels and home to such acts as Linkin Park, Flo Rida and Green Day. The other record companies are Universal Music Group, Sony Music Entertainment and EMI Music. At the same time as Apple makes the rounds at the labels, Google has grown frustrated and has told the labels that they exploring the option of breaking into cloud music by striking partnerships with existing services, including Spotify, say sources with knowledge of the talks.

There’s a lot of news leaking/flooding out about the land grab going on for cloud music so maybe we try to remember what all the fuss is about. First, cloud music is supposed bring back riches to the record labels, stimulate music sales for iTunes and other online retailers and supply fans with added convenience.

The term “the cloud” describes third-party computing. Apple and Google have discussed with the labels creating cloud services that would enable users to store their existing music libraries on the companies’ servers. Consumers could then access their songs from anywhere they could connect to the Web. What we’re really talking about here is the possibility that the company’s could offer users life-time rights to their music. They wouldn’t have to worry about an inoperable CD or a malfunctioning hard drive. The music would live forever in the cloud.

Neither Apple nor Google have spoken publicly that they are building such services but numerous news sites, including CNET, have reported that in addition to speaking to the top music labels about the cloud, they have also discussed launching cloud features for digital video with some of the Hollywood film studios.

The contest between Apple and Google is now for second place. Amazon stunned the recording industry last month by launching a cloud service for music, video, e-books and other digital media. But Amazon’s service is restricted because the retailer decided to launch without acquiring licenses. That meant it couldn’t offer a wide range of features or else risk violating copyright laws.

For instance, Amazon might have made the service more efficient had it licensed the right to make single copies of the labels’ songs and then deliver those copies to users. They could have scanned a users’ hard drives to make sure they owned, say, “Boulevard of Broken Dreams” and then streamed the same copy of the song to all the owners. Without the licenses, Amazon must store possibly millions of copies of “Boulevard.”

The features that Google and Apple are working on are supposed to be much richer than Amazon’s. One surprise about the competition by these Internet titans is that Google is having a hard time licensing music. All the industry sources I have say that top labels were practically hyperventilating at the possibility that Google would make a foray into the space and the sector would finally have a deep-pocketed iTunes competitor, one with the formidable hardware and software, one-two punch.

Google’s Android mobile operating system has proven popular with the public and top handset manufacturers. Google Music could have a large audience the day it launches. But Google and the labels also have a history of haggling over money. Warner, the company that has signed with Apple, pulled its music videos from YouTube in 2009 following a contract dispute. The two sides eventually came to an agreement.

Here’s the big question now: Is Google serious about looking for an alternative way into cloud music or is this a negotiating tactic. I wrote this week that acquiring Pandora, which is a Web radio service, might help give Google some added weight in talks with the labels.

Here’s the one card that nobody in the music industry wants Google to play. The search company could just decide to pull out and stick with YouTube, which just happens to be one of the Web’s most popular music sites. Anyone can listen to music free by watching music videos there. This wouldn’t be the first time that Google has stuck a toe into launching a standalone music service and then pulling out.

Music industry sources said that Google has expressed interest in opening a music store multiple times in the past during discussions with record-label execs. In 2009, some of the big record companies were led to believe that a Google search featuring focusing on music was the start of something bigger.

For example, Google would direct people who had keyed in the name of a song into its search field to audio previews of the track. This was later scrapped and Google didn’t make another peep about music until last year, when it started talking about cloud. So, it’s not guaranteed that we get the head-to-head competition between Google and Apple some of us hoped to see. We can console ourselves with this: by all appearances, Apple’s music cloud is on the way.


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