Tuesday, June 7, 2011

How iCloud will monetize pirated music

Steve Jobs took the stage today for the WWDC 2011. One of the main goodies that Jobs revealed is iTunes Match.

iTunes in the cloud will allow users to sync their music library with all their apple devices wirelessly, and continuously.
Source: http://www.apple.com/icloud/features/

Users will be able to download any song purchased in iTunes to all their devices, at no extra charge Jobs said.

The iTunes in the cloud will have an integrated feature: iTunes Match. This will allow you to put all your songs (including those you "forgot to pay for") and add them to your library. The services will compare your entire list and compare it to the songs already available in the store. Songs that are already in the store will not need to be uploaded. Your other personal songs (referring here to the pirated content), will be uploaded and downloaded to the rest of your devices.

There is no charge per song basis, however you will need to pay a fee of $24.99 of this service.

Rumours suggest that the publishers will earn 12% of the iTunes in the Cloud revenue, the labels 58%, and Apple will enjoy the remaining 30$

Source: http://tech.fortune.cnn.com/2011/06/03/what-is-apples-icloud-cut/ 

This model will allow the folks in the music business to generate some revenue from pirated music. The users who download these songs illegally will end up paying for these songs indirectly if they decide to go with iTunes Match, thus paying pack some share of revenue to the right holders.

Interestingly, Amazon Cloud Player and Google Music Beta did not cut official deals with any music labels, which left these folks without any revenue sharing. Apple's new model is a sort of a win-win-win situation (Apple-Music Folks-User). It does unfortunately help the owner of pirated music to utilize his stolen songs, but it still gets a fee from that user which it shares with the music label. In the alternative scenario, this user will generate in $0 revenue. The logic behind their model is: Any payment would be better then total piracy...

Looking ahead, I believe iTunes Match will be a great introduction for Music consumers to get used to pay for Music as a Service. Complete streaming model will probably rule the music industry in the future, but the consumer still needs time to adopt the idea that he doesn't need to physically own the song, on his own personal drive. As simple as this sounds, its this lack of user adoption standing in front of the music subscription model.

What is Apple's iCloud cut? - Apple 2.0 - Fortune Tech
ustream to watch WWDC 2011 :)

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