Apple and Music Publishers Close to Agreement on Cloud Licensing, But Delays Still Possible

itunes 10 icon 150Late last week, we reported that despite having three of the four major labels on board with its plan for a cloud-based streaming service and the final label apparently close to signing a deal, Apple still needs to reach agreements with the music publishers before it can launch its service. At the time, we noted that the two sides were essentially on the same page, with only monetary compensation to be negotiated.

CNET now provides an update claiming that the two sides are actually quite close on the monetary issue, leaving only a small amount of negotiation. The report does caution, however, that unexpected delays can still pop up and that even seemingly simple negotiations can take significant amounts of time in the complex landscape of music sales.

Negotiations between Apple and music publishers have begun in earnest only recently but the amount of money that separates the two sides from reaching a deal is relatively small, according to two sources with knowledge of the talks. That said, these are cloud-licensing contracts, which are new and complex and there's still several ways Apple's service could be delayed, insiders say.

The report lays out how Apple and music publishers are having to forge into entirely new territory with their negotiations over cloud-based streaming services. Publishers are currently paid at a fixed rate of 9.1 cents per track sold either digitally or on physical media, a rate set by the U.S. Congress. Separate cloud streaming rights are not part of that package and thus Apple and the publishers have had to hash out new standards for the industry.

Reports indicate that labels and publishers are keen to have Apple launch its service quickly, looking to the service as another revenue-generating opportunity to help reverse declines in the industry and as a means to get Google and Amazon to reach similar agreements after those companies launched basic cloud services without the agreement of labels and publishers. That said, there is reportedly some tension between labels and publishers, with publishers apparently upset that labels have already claimed the vast majority of money Apple is prepared to pay for cloud streaming rights, leaving little for the publishers. The disagreements may primarily be posturing by the different parties, however, and thus it is likely that they can be overcome.

CNET does still expect Apple's cloud-based streaming service to debut at the company's Worldwide Developers Conference in San Francisco, an event that begins in just two weeks.

Tag: CNET

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Top Rated Comments

Popeye206 Avatar
172 months ago
Can't wait for the WDC and see what's new!
Score: 5 Votes (Like | Disagree)
talkingfuture Avatar
172 months ago
Looking forward to seeing what they have come up with for this and Mobile Me as a whole. Hopefully we won't have to wait long and it will be ready for WWDC.
Score: 3 Votes (Like | Disagree)
Porchland Avatar
172 months ago
I doubt this whole thing can be a winner if it ends up isolating the benefits solely to iTunes-purchased media... except for those who have always & only purchased their media via iTunes.
That's why I think there is a good chance that this will be a two-option deal:

1. You can stream all of the tracks you have ever purchased from iTunes, add and delete tracks from you devices without syncing back to your iTunes computer, OTA sync changes from one device to your other devices, and re-download tracks that you have deleted accidentally,

and, if you're so inclined,

2. You can sign up for a subscription plan for $9.99-$14.99 a month (or included as part of an iCloud service with other features) that will allow you to stream any track in the iTunes database, create and edit playlists, and (maybe) burn CDs with limitations on the number of tracks and number of CDs you can burn each month.

That brings streaming to every iTunes user, allows Apple to brand the subscription plan as one of its iCloud services, and gives users a new option without taking anything away.

Apple could extend iCloud later with a catalog TV/movie tier that would be priced competitively with Netflix and with a tier for new shows that would compete with cable carriers. Those are technologically possible now, so it's purely a function of getting license rights from enough of a critical mass of Viacom, Disney, NBCU, etc., to market the tier as comprehensive.
Score: 2 Votes (Like | Disagree)
gnasher729 Avatar
172 months ago
I just want to park 30,000 songs somewhere so I can retire a bunch of iTunes music libraries, mostly CD rips, could that be a scenario with this service?

I'd read the small print what happens if they lose your data. Most likely you get your money back, which isn't very helpful if the service is free.

A cheap 1 TB terabyte drive, plus another drive for backup, will be cheaper and more reliable.
Score: 2 Votes (Like | Disagree)
OllyW Avatar
172 months ago
I have no need whatsoever to put any of my music up on a server that is own, operated, controlled, and prowled by a corporation who's only objective is to find new and exciting ways to separate my money from my pocket. My home computer will do fine thank you very much.

I don't think it will be compulsory. :)
Score: 2 Votes (Like | Disagree)
bbeagle Avatar
172 months ago

Knowing Apple it will cost a lot of money for something you can get else where for free, but as soon as Steve says its MAGICAL fanboys will run out and buy it. Apple uses MAGICAL clouds and it will completely change the way you look at life and the sky!!!!

Only if something really is BETTER will Apple fans go out and use it.

Are Apple fanboys using Ping in great numbers? No. Because it doesn't offer more than facebook/twitter/etc. yet. Are they using .ME in great numbers? No. Because it isn't better than Google mail, etc.

Just because you don't see what makes an iPad magical and 1000x better than an Android tablet, doesn't make you right and everyone else in the world wrong.
Score: 2 Votes (Like | Disagree)