iCloud costing Apple up to $150m to charm labels?

Jun 3, 2011
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Apple's new iCloud service may cost users $25/year - after a whet-your-appetite free trial - according to the latest rumors, but the company itself has reportedly had to open its wallet a whole lot wider in order to keep the labels happy. As well as what's said to be between a 58- and 70-percent share of iCloud music revenue, Apple has apparently agreed to between $100m and $150m in advance payments to the big four labels.

That's based on paying each label between $25m and $50m apiece, with the final amount supposedly depending on how much music each user is storing in the cloud, the NYPost reports. Initially, iCloud functionality is expected to be free of charge to users - at least those who buy their media through iTunes - but Apple is reportedly planning a $25 yearly subscription at some point in the future.

The hefty sums involved are believed to be giving Google headaches in its own negotiations with labels, who are now expected to ask for greater amounts than before thanks to Apple in effect validating the model. Although Google already offers a cloud music service, that requires users upload their existing digital media collection to an "online locker" for streaming; in contrast, Apple's iCloud system is expected to perform a simple scan of local content and then mirror that online using a master collection of digital tracks.

Such a process will be quicker and more straightforward for users, and is likely to be a key element of Apple's value proposition at iCloud's launch. Amazon uses a similar system to Google, but is also able to sell tracks via its MP3 download store and automatically slot a copy of each song bought into the user's online account. Since Google is yet to finalize deals which would allow it to sell music directly, that's not an option: any time a Google Music user acquires a new track, they must upload it themselves before it can be accessed via the cloud interface.

Google's negotiations, while bumpy, are nonetheless expected to bear fruit by September, with the full launch of Google Music tipped to take place at that time. Steve Jobs will unveil iCloud on Monday at the WWDC 2011 keynote - which SlashGear will be liveblogging - though it's unclear whether the service itself will open for users at that point.


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