What Exactly Is The Music Cloud? And Is It Headed Our Way?

September 1, 2010

Joel Rose

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Later today, Apple will be holding a press conference. As with all things Apple, there is little advance word on what it's about. But it appears to be music-related, judging from the big guitar on the press release. That's fueling speculation that a major overhaul of the iTunes music store is imminent -- one that could take advantage of advances in so-called cloud computing.

When Apple launched its first iPod, the selling point was how many songs it could hold. As the ubiquitous ad said, "1000 songs, in your pocket."

Now the Next Big Thing in digital music is getting those songs back out of your pocket. Why bother storing music on an MP3 player when you can listen instantly to millions of songs over any phone, computer, tablet, car, TV -- or any other device that's connected to the Internet.

"Rather than buying songs for 99 cents and downloading them and managing them and moving them between your devices, you just log in from anything and your music is right there," says Eliot Van Buskirk, a blogger for Wired.

Ever since Apple bought the music-streaming company Lala last year, Van Buskirk and others figured it was only a matter of time before Apple switched from selling individual downloads to offering access to a stream of music over the Internet -- a so-called cloud-based music service.

"The smart money is on this cloud-based iTunes," says Van Buskirk. "Whether it's what's being announced now or later, it seems to be in the pipeline for sure."

But for now at least, there is no cheap, cloud-based music service in the U.S. that gives you access to almost any song you want, from any device you want. Sure there's Rhapsody but it costs 10 bucks a month. Napster has a 5 dollar plan but it won't stream on your iPhone. Neither offers a free service. For that, you have to go to Europe, where there is Spotify. It allows you to listen to music for free from your Web browser.

Well, not entirely free. The service is supported by ads that occasionally interrupt the music. If you want to turn the ads off, or listen on your phone, you have to pay a monthly fee. Mark Mulligan of Forrester Research says Spotify's users love it.

"It's a huge success as a free, advertising-supported music service. So successful at getting people to get free music. Not so great at convincing them to pay 9.99 a month in order to upgrade to the premium offering," Mulligan says.

For months, Spotify has been trying to negotiate licensing deals with the major record labels to make the service available in the U.S. None of the labels would grant an on-the-record interview for this story. Neither would Spotify. Wired's Eliot Van Buskirk says the main sticking point in negotiations is exactly what you'd expect.

"Money, as usual," Van Buskirk laughs. "For the industry, they only have one shot to sort of get it right in the biggest market in the world for music."

Van Buskirk says record labels are focused on getting the highest revenue they can, for as long as they can. And they're wary of letting Spotify offer the free version of its product in the US. But without it, Van Buskirk says Spotify would have a hard time distinguishing itself from the other streaming services that have been on the market for years.

"Without the free unlimited version, Spotify is just Rhapsody's good-looking Swedish cousin. And we've had Rhapsody here in the states for years. Their membership's actually declining," says Van Buskirk.

CD sales are also falling. And paid MP3 downloads seem to be leveling off, too, according to Mark Mulligan at Forrester Research.

"So the record labels are beginning to realize it is absolutely time for a plan B. They don't know what plan B is yet."

But Mulligan has a guess. Eventually, he thinks record labels will have to cut their prices. And when the price of a cloud based-music service drops to a few dollars a month, it'll be a lot easier to fold that charge into one of the bills you're already getting from your phone or Internet provider.

"Music stops being something that you ever pay for. It becomes something you get free with your iPod, or free with your Verizon subscription. Or as in the case of Spotify, free in exchange for listening to a few adverts."

Mulligan says 'free' is a bitter pill for record labels to swallow. Which is why it may be a while before Spotify, Apple -- or anyone else -- unveils a cloud music service in the U.S. Copyright 2010 National Public Radio. To see more, visit http://www.npr.org/.