The new ‘space’ race: Apple, Google compete for cloud-stored music

by admin on April 26, 2011

Apple and Google are vying to determine the future of music distribution through rival “cloud”-based storage services.

The tech giants are racing to reach deals with the major music labels so that they can roll out services that allow users to store music on remote computer servers and access it via the Internet on an array of devices.

Who will cross the finish line first is an open question.

Apple’s iTunes boss, Eddy Cue, has already inked a deal with Warner Music Group and is said to be close to agreements with Sony Music and EMI. However, Apple doesn’t appear to be near an accord with market leader Universal Music Group.

Meanwhile, Google has renewed talks with Spotify, the popular European streaming music company, to jumpstart its music ambitions.

Google and Spotify, which is trying to gain a foothold in the US, have talked before last October but have yet to reach a deal. Google’s music negotiations are being led by the head of its Android mobile operating system, Andy Rubin.

The search giant is also trying to ink new licensing agreements with the labels but has hit some roadblocks in its negotiations with Warner Music, including how payments are made, sources told The Post.

“Warner wants a license deal that would offer an advance against future earnings,” one source said.

The payment model for both Google and Apple is based on fees per subscriber rather than how many songs consumers want to store in the cloud, sources said.

Google as a newcomer to the music business is at somewhat of a disadvantage to Apple because it doesn’t have existing music licenses with the labels.

While Apple and Google race each other, Amazon has managed to beat both of the them to the punch by rolling out a cloud-based music service without first securing deals with the record labels.

Amazon’s service also allows consumers to store their music on its servers and access it anywhere on any device.

Amazon said publicly it didn’t need agreements with the labels to launch the service, but behind the scenes it is talking to the music industry about gaining their approval.

The streaming music industry is set to explode with a number of players, including Rhapsody, MOG and Rdio, trying to offer consumers more flexibility in accessing their content. They are all betting that buying and storing music downloads on one computer will go the way of the CD.

Record labels are hoping for as many viable partners as possible so that they aren’t beholden to one dominant service the way they are to Apple’s iTunes for digital sales, industry sources said.

Google and Apple declined comment.

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