Apple has cut a licensing deal with Universal Music Group that will enable Apple's online music store to offer songs from the largest of the four top record companies, sources with knowledge of the talks told CNET.
The agreement means Apple now has the rights to offer recordings from all of the major labels. In addition, Apple has reached agreements with some of the large music publishers, the sources said.
Apple announced Tuesday that it would unveil a long-anticipated service called iCloud on June 6 at its Worldwide Developers Conference in San Francisco. Apple did not disclose whether iCloud would include any music features, but we do know that Apple managers have sought for more than a year to create a music feature for the service.
Details about the agreements are few, but here's how the revenue from iCloud's music service will be split, according to the sources: the labels will get 58 percent and publishers will receive 12 percent. Apple will take 30 percent.
Streaming will not be available on Monday but will be offered soon, the sources said. They added that an Apple digital locker will store only music purchased at iTunes. The company is said to have plans to store songs acquired from outside iTunes sometime in the future. A year ago, when Apple first discussed a cloud-music service with the labels, creating digital shelves for people to store all their songs was part of Apple's vision.
Obtaining rights from Universal Music, home of such acts as Lady Gaga, U2, and Kanye West, gave Apple the final piece of the puzzle as far as recording rights are concerned. When it comes to publishing and performance rights, Apple still has more deals to negotiate, and at this point it appears the talks will go to the wire. According to The New York Times, Apple has penned publishing deals with Universal Music Publishing and Sony/ATV, the publishing arms of Universal and Sony and the two largest record companies. The Times reports that EMI and Warner/Chappell have yet to reach an agreement.
Apple, the country's dominate music distributor, is setting up to be a major player in cloud computing, the name given when Internet users complete computing chores via a third-party's servers instead of their PC. Cloud music is supposed to be the format that succeeds the CD and digital download.
Consumers will have the final say, but so far much of the music industry as well as Apple, Amazon, and Google appear to be making big cloud bets. Amazon and Google have each debuted their own cloud services. What makes Apple's different is that it will be the first among the big three to offer licensed music. This is supposed to give Apple much more flexibility in terms of what it can offer consumers.
Apple's iCloud will be much more than a music service. On Tuesday, CNET reported that in recent weeks Apple has raced to license movies and TV shows from Hollywood film studios and TV networks. Apple, however, faces more obstacles in licensing video for iCloud. The hold-up is due in part to exclusive licensing arrangements that some of the studios have entered into with HBO.
Nonetheless, expect to see the iCloud come with more than just music features--if not on Monday--than sometime in the future.