Apple scales back plans for iTunes streaming from the cloud

Tue, Aug 3, 2010


Ever since Apple acquired the music streaming site LaLa last December, there have been no shortage of rumors detailing a supposed Apple initiative that would allow users to stream purchased iTunes content from the cloud. Coupled with Apple’s expansive 500,000 square ft. data center in North Carolina, the only thing missing, assuming Apple was interested, was obtaining pertinent music licenses from record labels.

Unfortunately for Apple, LaLa’s licenses for streaming music weren’t transferable to Apple in the wake of the acquisition, and the music licenses Apple currently pays for don’t allow Apple to stream music over the air. That being the case, Apple needs to negotiate those licensing rights with record labels and those efforts are reportedly proving unsuccessful. 

And now comes news that whatever grandiose plans Apple may have had for a streaming iTunes service are going to be scaled back. CNET reports:

But eight months after the acquisition, Apple is telling executives at the four top labels that if Apple offers any cloud-music features within the next few months, they will likely be “modest in scope” and not include the kind of functionality that Apple outlined in meetings with the labels, such as storing users’ music on its servers, sources told CNET. They added that Apple still hasn’t negotiated the kind of licensing deals it would need to distribute music from the cloud.

Moreover, the report notes that LaLa employees who transferred over to Apple aren’t even working on music related initiatives. Instead, they’re busy working on an “undisclosed video feature”. And while Apple reportedly told LaLa executives that they’d receive “key positions helping shape music strategy for the iTunes Store”, it appears that that isn’t going to happen – at least for the time being. After all, if Apple is still struggling to acquire streaming rights from record labels, there’s only so much the folks from LaLa can do.

And so, the dream of “limitless” storage remains just that.


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3 Comments For This Post

  1. Fjord Prefect Says:

    As I recall, Apple only got the record companies on board with iTunes in the first place because the major labels didn’t see the software growing into the #1 music distribution service in the world, which resulted in much power and influence in the music industry being ceded to Apple. The iPod, at the time, was unproven and only worked with Macs anyway. “What damage could Apple possibly do?” the executives at the big four thought. And so they said “Sure, here’s a license to sell our music, maybe we’ll make an extra buck or two.” Little did they (or anyone else) know what iTunes would turn into. Perhaps that’s how they’re going about this streaming business, perhaps Apple is trying to cultivate the same sort of innocent, low-risk, no-one’s-going-to-pay-attention-to-it-anyway environment in which to negotiate with the now more cautious music big-wigs. “Come on, let us have a piddly license for our little streaming music project, it’s nothing big, just a hobby, it won’t even be a blip on the radar.” Fast forward to 6 months later when Apple soars to the top, as usual, while the rest of the tech world is struggling to pull their pants up.

  2. Peter Says:

    Fjord, I don’t think the industry will get fooled again by Apple (they didn’t get fooled, but that’s how they see it).

    Part of the problem is that companies like LaLa, Napster, Rhapsody, et al have done this but they’re the little companies. The record companies are smart enough now to recognize that if Apple puts it’s stamp of approval on it, people will use it. The record companies are still smarting over Apple’s 99 cent price and feel they got ripped off. They’re not going to let Apple do that again–if Apple is going to take streaming music mainstream (no pun intended), the record companies are going to make sure they get a big piece of that pie.

  3. Fjord Prefect Says:

    Well said, Peter. I wonder also if the record companies’ reluctance has something to do with the Google Music Store (or whatever it will be called) looming on the horizon. Perhaps they think they might get a better deal partnering with Google this time rather than Apple. That could be bad news for our favorite little fruit company and for us media consumers.

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