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Apple Clinches Deals, Inches Closer to the Cloud

By Richard Adhikari MacNewsWorld ECT News Network
May 20, 2011 11:59 AM PT

Apple is reportedly one step away from clinching agreements with all the music industry's major players as it works on its rumored online streaming music service.

Apple Clinches Deals, Inches Closer to the Cloud

It signed up Sony Music on Thursday, Bloomberg reported.

Cupertino has already signed up EMI Music, according to Cnet, and Warner Music Group has reportedly been on board since last month.

Apparently the only holdout now is Universal Music Group, the largest recording company, though it's said to also be close to a deal.

Further cementing rumors about Apple's streaming music service is news that it has applied for a new patent, according to AppleInsider.

Apple, Sony Music, EMI Music and Warner Music Group did not respond to requests for comment by press time.

The Sound of (Apple's) Music

Apple already has the world's largest music store -- its iTunes online store. iTunes sells songs that are downloaded and stored on the customer's computer.

It's rumored to be working on a new version of iTunes which would see songs stored on servers in its new data center in North Carolina.

When iTunes subscribers log on to the new version of the service, Apple will reportedly scan the contents of their digital music libraries on their desktop computers, then provide them free access to those songs on its servers at any time and on any device they own.

Amazon launched a similar service recently, and Google has rolled out a beta version of its own online streaming music service.

However, both Amazon and Google are still wrestling with the music industry and have launched their services without completely coming to terms on rights with major labels, so it appears Apple has beaten them to the punch.

Another reported benefit of Apple's online streaming music service is that it won't require subscribers to upload their digital music libraries online first, as Amazon does.

On Apple and Patents

The U.S. Patent and Trademark Office has reportedly published a new patent application from Apple entitled "Local Storage of a Portion of Streamed Media Items."

This describes an iPhone-like device that gets snippets of songs synced to it via iTunes.

Such a capability could reduce the amount of storage required by a music library on a mobile device. For example, the device could store parts of a song locally, and the iOS software would fetch the rest of the track from the cloud.

This could also speed up music streaming. Currently, a device must download and cache a large enough amount of data from a file before it can be streamed.

The system described in the patent would use authentication methods, such as an iTunes account username and password, to prevent piracy.

Apple first filed for the proposed invention in November of 2009.

Timing Rules OK

Given that the patent approval process takes a considerable amount of time, the U.S. PTO's publication of the Apple patent at the same time that Apple is moving rapidly to tie up deals with the music industry is "interesting," remarked Michael McGuire, a vice president of research at Gartner.

"Especially given the IP around storage and cloud over the past 10 years, you'd have thought someone else would have filed a patent along these lines," McGuire told MacNewsWorld.

"This is probably some combination of people in the company over the years, starting at about the time they came out with the iPod and started looking at the iTunes software and foreseeing the cloud, moving ahead with the idea for streaming music," McGuire speculated.

"Apple's timing, at least, is excellent," said Aapo Markkanen, a senior analyst at ABI Research.

The Music Industry: Deal or No Deal?

It's likely that the rumors about Apple having signed up three of the four major music industry players are true, ABI's Markkanen told MacNewsWorld.

"Especially now that Google and Amazon are playing hardball with the labels, it would be in their interest to get involved in a competing service and help it win," Markkanen explained.

Sony Music's having signed on with Apple is especially interesting, as the Japanese company recently launched its Qriocity streaming music service, which has been seen as a competitor to iTunes.

However, "I don't think Qriocity is a factor here," Markkanen said.

Given that Sony is still reeling from repeated hacks of its PlayStation Network, perhaps he is right.

Piracy and Other Issues

Reports that Apple will include movies and TV shows with music in an online streaming service that might come under the umbrella of MobileMe may be correct.

"It would make sense to have one hub for all cloud storage needs," ABI's Markkanen suggested.

"I believe it's unlikely that Apple will just offer streaming online music," Gartner's McGuire remarked. "For Apple it would have to be something that's game-changing and unique; they tend not to follow Google's and Amazon's lead."

Existing iTunes users are already paying for the songs they bought, and letting them also access other content and have the ability to stream anything from Apple's online catalog would be "pretty cool," McGuire stated.

Then there's the question of piracy.

"Will labels and publishers try to act on how the users got content in their digital music libraries that they didn't buy from Apple but obtained through P2P, perhaps?" McGuire asked. "Are they going to try to fight that battle with Apple or Google or Amazon?"

It's not yet clear what Apple will charge for an online streaming music service or how it will structure its pricing.

"The licensing structure is different for music and for movies," Gartner's McGuire pointed out. "When you can watch a movie or TV show as many times as you like, it'll be expensive in terms of licensing fees."

Chances are, Apple might impose a monthly flat fee, Markkanen speculated.

"Apple likes to keep things simple," he explained.

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