updated 10:50 am EDT, Tue May 24, 2011
Universal still among final obstacles
Apple and major music publishers are very close to cementing a deal for the former's cloud music services, two sources claim. Described as having "knowledge of the talks," the sources say that only a relatively small amount of money is still separating the two sides. The informers add, however, that because cloud licenses are new and complex, there remain several ways in which Apple's service could be delayed.
Agreements are already believed to have been made with EMI, Warner and Sony. The one major holdout has been the largest record label, Universal, but even that company is thought to be in a position to sign as soon as this week. The real obstacles may be things like publishing rights, as distinct from recording rights, and the fact that there is no precedent for cloud-based mechanical licensing fees. CD and download rates are set at a statutory rate of 9.1 cents per track, which is only poised to be reviewed by the Copyright Royalty Board in 2012.
Sources in the music industry note that there is currently tension between publishers and labels, as the publishers allege that labels are taking most of the money Apple is ready to pay for cloud licensing. Labels which have licensed with Apple have reportedly negotiated only what their songs are worth, meaning that if Apple doesn't agree to the publishers' price, a deal could fall through. A source suggests however that the situation is only a negotiating tactic, and that Apple is trying to turn labels and publishers against each other to its own advantage.
The most severe barrier to a deal may therefore be time. Apple is generally expected to announce cloud services at WWDC, which opens on June 6th. The event should also mark the introduction of iOS 5, in which cloud streaming may be an integral function.