The Cloud Cometh

Big things shaking in the music industry today.

Apple just announced its entry into the cloud music game with the iCloud service to compete with Amazon's music cloud, Google's cloud, and Best Buy's cloud platform.

What's is a cloud? Short version: you move your digital files to a company's distributed servers (the cloud) so that you can access your entire library anywhere (instead of only the songs you can fit on your iPod). Neat.

With Apple being the dominant digital download service, Apple's movement to cloud-based music is essentialy an edict to the music industry that "clouds are the future".

But that's not even the most interesting development.

Apple is allowing both legal AND illegal downloads on the service, no questions asked.

And the major labels like it.

Huh?

Apple thinks they've found a way to monetize music piracy by adapting the old-school royalty methods used in traditional radio. 

From Reuters:
"The $25 annual fee is collected into a pool, from which Apple takes its 30 percent cut. From there, sources say, 58 percent is set aside for labels and 12 percent for publishers. How those portions are distributed within the labels and publishers is entirely based on consumption. Apple monitors which songs users are accessing through iTunes Match, and identifies which rights-holders are then owed what portion of the pool. That same data is provided to the label or publisher to determine what portion of the cut is then owed each individual artist."

While I find the idea of artists being able to get paid for illegal downloads groovy, it's likely that in execution this system will screw indie artists and labels. Apple has already earned itself a sour reputation for not paying independant artists royalties. Ken Shipley of the indie label Numero has already chosen to refuse signing up for the iCloud service:"

Arguing in the comments section of the Hypebot article, Ken elaborates:
1. The money is shit. Actually, less than shit: .0035 cents per "match" if you've got a library of 5000 songs, .0006 of which you need to break off to the publisher. For a publisher to make $1 a track would have to be matched 1667 times.


2. According to Robert Kondrk at iTunes, who spent 30 minutes trying to convince us to join, the majors actually received $0. We corrected this last week. Regardless, as a label that has been sampled by, and has licensed to all four major labels, we know that none of this money is coming back to the artists. We can't even get regular statements, what makes you think they're going to spend the time to break out 15% of .0006?


3. Apple isn't calling this streaming because they don't want to pay current streaming rates. But they're also not calling it downloading because they don't want to get sacked with a mechanical every time someone puts it on a new device. As this Cloud boom popped up a year and half away from the next meeting of the Royalty Advisory board, Apple, Amazon, and Google are all operating in the wild west, setting their own rules until a proper rate can be set. The bottom line is, if Apple can put this onto 10 devices, be it a mobile or a desktop, but is not paying to replicate it, then the service has more in common with streaming than anything else.


4. No one is even talking about how this is essentially legitimizing pirated music by replacing it with perfect replica on 10 machines.
We're fine with being alone in the crowd, always have been, always will be. Our artists are paid regularly and well. If the rest of the industry wants to further marginalize itself by taking less than it's worth, they can go right ahead.

Depending on how Google, Apple and Amazon deal with rights and royalties, The Clouds could be either a boon or a burden for the independant musician,. I suspect that this new technology will be primarily a structural relocation of where fans hear music, similar to the transition from radio to casettes or from CDs to MP3 players. As an artist, I'm not counting on any additional revenue from a cloud.

But with plans for adding recommendation engines and integrating internet radio in the near future, "The Clouds" might very well be the future of the digital music industry. We may stop interacting with only our devices and instead tap into a universal music interface to access and enjoy our music.

Pay attention.

This is big.