Is the iCloud really an iBlackCloud?

Yesterday, iTunes made their new cloud service public and in great detail.  While there are heaps of features and at a 10,000FT view it looks pretty awesome, my concern is mainly with the impact on music sales, the musician etc. Apple’s initial press release re: iCloud covered the bases but here is the section on iTunes:

“iTunes® in the Cloud lets you download your previously purchased iTunes music to all your iOS devices at no additional cost, and new music purchases can be downloaded automatically to all your devices. In addition, music not purchased from iTunes can gain the same benefits by using iTunes Match, a service that replaces your music with a 256 kbps AAC DRM-free version if we can match it to the over 18 million songs in the iTunes Store®, it makes the matched music available in minutes (instead of weeks to upload your entire music library), and uploads only the small percentage of unmatched music. iTunes Match will be available this fall for a $24.99 annual fee. Apple today is releasing a free beta version of iTunes in the Cloud, without iTunes Match, for iPhone, iPad and iPod touch users running iOS 4.3. iTunes in the Cloud will support all iPhones that iOS 5 supports this fall.”

If you haven’t figured it out, iCloud will allow music listeners to sync all of the music they’ve purchased through iTunes to all of their devices (up to 10). This applies to previous purchases as well as future purchases. This saves the headache of syncing multiple devices.  The “match” service is an additional service that allows users to take all non-iTunes purchased music and store it in the cloud as well for $24.99 a year. iCloud will scan your iTunes library, find the match on the iTunes servers and give you access to the 256 kbps AAC DRM-free version. As long as you pay for the service, you will have access to the songs.

This is a nice feature for people that have been arduously ripping their entire music catalogues for years. This is also a nice way for music piracy to be made semi-legitimate.

Think about it; billions of songs that have never been paid for are now generating a fraction of a dollar (and smaller depending on the size of the artist). All of that money going directly to the label and, potentially, no further. (slight sarcasm)

Essentially Steve is offering people access to 18 million songs (and growing) for $24.99 a year. Apple won’t call it a subscription service but in essence that’s what it is. Regardless if you steal or purchase your music outside of iTunes, you can have a legitimate version of the song on all of your iOS devices for one low annual price.

Seriously, how do labels and musicians make any money from this?

**Disclaimer: Excessive speculation ahead**

I would imagine that the songs being uploaded and thus being transformed from a bastard state to legitimate will be calculated and pro-rated out to the rights owner. The owner will get a royalty calculated from a small percentage of the annual fee that users are paying to iTunes and this will fluctuate based on service usage, number of songs available, etc.

** End Speculation **

All of this provokes a lot of questions in my mind. Like… How will this affect the independent musician? Tunecore? What about the future model for music consumption? Bob Lefsetz seems to think that we (consumers) are fine with the subscription model. We rent movies, television and cell phones. Why not music?

What does this do to the record labels and the ever-changing model for revenue generation? Newspapers, magazines, records stores and so-on are all going the way of the dodo. People still consume media but not the way they used to. A Gannett employee in the digital department likened the shift in media consumption to that of Coca-Cola.  Coke was never in the business of making bottles. They were in the business of making the stuff that went in the bottles. When the world shifted from glass to plastic Coke didn’t have an identity crisis. They simply adjusted.

I think the same should go for the record business. Record labels aren’t in the business of making plastic, wax, glass or ones and zeros. They are in the business of creating and distributing content.

Could the industry shake the black cloud if they assumed the following?

• Record labels are developers of content
• The primary channel for content is mobile
• The cloud makes it easier to distribute and manage mobile content
• Reaching the new generation must be done through social

Is the iCloud an iBlackCloud? I don’t think so.

Weigh in with your thoughts down in the comments!