Apple signs music streaming deals with Sony, EMI and Warner

Apple has trumped Google and Amazon's unlicensed music locker offerings by landing a cloud-music licensing deal with Sony Corp., EMI Music and Warner Music.

Bloomberg, citing sources close to the deal, said Apple has reached agreements with Sony Corp., EMI Music and Warner Music. Universal Music Group is also close to signing a deal with Apple, it said.

CNET had earlier reported that Apple bagged a licensing deal with EMI Music and was in the process of formulating a deal with Universal Music Group and Sony Corp.

With these deals, Apple can launch its music locker service called iCloud at its Worldwide Developers Conference (WDC) on June 6. iCloud is rumored to be an upgrade of its MobileMe service.

Apple has been working towards putting its cloud infrastructure in place. In February, AppleInsider reported that Apple is due to open its $1 billion data center in North Carolina.

The new data center is five times the size of its existing data center in Newark. The North Carolina facility measures 500,000 square feet compared to Newark's 107,000 square feet.

Gigaom said Apple COO Tim Cook had confirmed that the North Carolina data center was intended to support its MobileMe and iTunes. This raised expectations that Apple could offer iTunes streaming subscription service. Currently, Apple offers streaming content service for its Apple TV.

However, the licensing deal with music labels seems to have been the missing puzzle in Apple's music locker ambitions.

The deal is a blow to Google and Amazon who launched their music locker services recently. Amazon launched its cloud-based music locker service called Cloud Drive in March. Also Google announced the launch of its music locker service called Music Beta last week at its developer's conference Google I/O.

Both Google and Amazon's music locker service require users to upload their music collection in the cloud which then can be streamed to any device via a browser. The decision to pursue a music-locker service sans a license had irked the music labels. Reuters reported that there could be a legal backlash against Amazon from music labels. Reuters report about Amazon's CloudDrive service quoted Sony Music's spokeswoman Liz Young as saying: We hope that they'll reach a new license deal, but we're keeping all of our legal options open.

Google was also involved in securing licenses from major record companies but it also launched its music locker service - Music Beta, sans a license. The legal premise on which Google and Amazon attempted the venture was that users are uploading their own music in the cloud, just as they would on any other device.

In the scheme of these legal hassles Apple has achieved something which Google and Amazon were aspiring for - a license with music labels.

A license in place allows Apple to offer a service which eliminates the need to upload music to the cloud which is usually a time consuming exercise. Apple can now offer a scan and match service. WSJ reported that under this service a music service first buys a catalog of music from a music label and then scans a user's hard drive to match the files with music stored. It then ascribes the user the right to stream the verified songs to multiple devices.

Such an arrangement also makes transfer and sharing of music more legally acceptable once proper rights are in place. However, the only caveat which kept the music labels from such an arrangement was that most of music stored on user's hard drives have been obtained from P2P sites or have been ripped from CDs, which is hard to verify as to whether the music was bought.

However, it seems while music labels were musing over this caveat the launch of unlicensed music lockers from Google and Amazon compelled them to side with Apple to offer a much more sophisticated service.

Apple and music labels have their own share of misgivings. Recording labels are haggling with Apple over the 99 cents pricing for single downloads. They have been insisting that Apple should revise the pricing. In 2009, Apple revised its pricing and offered songs on iTunes at three price points 69 cents, 99 cents and $1.29, with most albums still priced at $9.99.

Apple holds significant power over the music industry as its iTunes has become a key platform for digital music distribution. NYTimes reported that Forrester Research estimated that downloading music from Web stores like iTunes generated $1.5 billion in 2008. Thus, music labels are apprehensive about stepping on Apple's toes.

However, in an attempt to assault Google and Amazon's music locker service, music labels have gone back to their savior Apple.