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Apple's Music-Cloud Negotiations Put Amazon, Google Way Down in the Hole

Apple (APPL) reportedly is wrapping up music negotiations to use EMI Music, Warner Music Group, Sony Music, and Universal Music Group tunes in its upcoming cloud service. It bodes well for iCloud, but it means a rough ride for the new Amazon (AMZN) and Google (GOOG) cloud music services. Why? They didn't bother to ask the music industry for permission. There will be some lawsuits coming.
Apple's iCloud plan
The negotiations confirm Apple's long-expected move into the cloud. The company acquired the cloud-based music service Lala in 2009, shut it down in 2010, and, at this point, is expected to announce a new, cloud-based iTunes.

According to CNET, cloud negotiations with EMI and Warner are done. Only two conglomerates remain:

The negotiations with Sony Music Group and Universal Music Group could be wrapped up as early as next week, the sources said. What this means is that signed contracts with all four of the top four record companies will be in Apple's hip pocket on June 6 when Apple kicks off the company's Worldwide Developers Conference. The sources who spoke with CNET did not know when Apple would announce the deals or roll out the cloud service.

If Apple is able to wrap up talks, it could give iTunes the long-expected cloud update and perhaps even allow memory-free devices. It would also, of course, sorely hurt Apple's competition.

Amazon's problem is no devices
Amazon was the first out of the gate with a cloud-based music service in March. The problem is that, unlike Apple's iTunes, Amazon music doesn't have anywhere to go.
Amazon Cloud Music gives you 5 GB of free music space and will transfer it via Wi-Fi or cell phone to your favorite device. And, since Amazon doesn't have any devices, your favorite device is likely to be made by Apple or Google. Last week Amazon all but confirmed that it has several mobile devices coming this year, but Apple has a huge userbase available now. Promises of future devices will not help music industry negotiations, especially since Amazon has already tried to launch the service without permission.

Google's problem is no trust
While Amazon may be able to negotiate its way into the music industry's favor, Google has less of a chance of making Google Music work. The problem is Google is still learning to play well with other media:

  • In 2004, Google Books began scanning books without permission of the authors or publishers. Authors recently sued Google and won.
  • In 2010, Google TV launched by broadcasting programming without permission. It failed.
  • This month, Google Music brought cloud-based access without the music industry's permission
The main leverage Google has is its rising number of cell phone and tablet users. Like Google TV, it may have to suspend Google Music until it gets the cooperation of the media providers.

The best bet for Google, as well as Amazon, is to begin negotiating immediately (and aggressively) with the music industry. Either company is apt to have more leverage now than after Apple announces its own cloud service on June 6.

Photo courtesy of striatic // CC 2.0

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