Apple iTunes Match and the law of unintended consequences

I can’t imagine I was the only one who furrowed both brows on Monday, when Steve Jobs announced “one other thing” in the form of the iTunes Match service as part of its iCloud announcements. The best explanation I’ve found of it is here, with all its uncertainties – but in a nutshell, for $25 per year, you can upload any music from your hard drive, whatever its provenance, and access it from any iTunes-enabled device.

This is not some fanciful idea invented without consultation. A couple of weeks ago, reported Kevin Parrish at Tom’s Guide, Warner and EMI had already been signed but Universal and Sony were still in negotiations. By Monday all four labels were on board, and the RIAA released a statement saying, “When a service comes along that respects creators’ rights and ignites fans’ appetites for their music collections, it’s a win for everybody.” There’s no statement yet from the UK BPI, but it would be surprising if they didn’t follow suit.

What does it mean in practice? According to Greg Sandoval at CNet News, “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.” Given iTunes’ 225 Million subscribers, that could be a lot of money flowing back into the hands of labels and publishers if people buy into the model.

Of course, those that want to spend on iTunes Match don’t have to be music pirates that have accessed the majority of their music on BitTorrent. Most, if not all will have ripped music from CDs – a model which is stil, theoretically, illegal in many countries. Still others will have accepted an album on a USB stick, or will have been burnt a copy on a CD. If anyone has obtained their digital music collection entirely through online purchase, speak now. No, I didn’t think so.

Effectively, then, Apple’s model legitimises the reality of how things are done at the moment, whatever may be seen as law-abiding according to the morass of legislation around copyright, IP, licensing and so on. It remains to be seen whether the T’s and C’s of the service offer an effective carte blanche – “By subscribing to this service you will be no longer be considered as a threat to the well-being of the recording industry,” or similar words.

Apple’s model is not unique in its – ahem – uniqueness when seen next to music streaming services such as Spotify and Last.fm, as well as newcomer Amazon. Each offers online services of various forms to multiple devices, for tens of dollars a year.

So, what could be the unintended consequences? Much attention is being paid to the legitimisation of piracy, but there’s little to indicate this will lead to more illegal sharing. It seems unlikely in the extreme that the labels have allowed Apple’s T’s and C’s to close the door to future litigation against the Pirate Bays and indeed, single mums who undertake illegal filesharing – particularly given that the iTunes Match model is yet to be proven.

Indeed, even if it did, would consummate pirates trust “the man” to honour the terms of the deal? As asks Music Week, “Will some form of fingerprinting technology be used to filter [pirated] tracks out?” Perhaps the question they should ask is, “Would such technology be used to identify recipients of illegally shared files, and incorporate mechanisms to scan the hard drive not just for music, but also for evidence of such activity?” As we all know, record labels have form in this area.

Frankly, I think any consummate pirate who took Steve Jobs’ offer on without being 100% sure they weren’t going to be hoodwinked would be completely insane. Like it’s going to happen anyway. “Yeah, sure, just hand over the weapon, I won’t shoot you.” Bang. “But I thought you said you wouldn’t shoot?” And as for it being a license to pirate – well, come on, really. “Great, I’ll now acquire thousands of new tracks and upload them, and you’ll watch me do it!”

Far more likely is that iTunes Match is a step on the way to more comprehensive media delivery services offered over the Web. In this regard iTunes Match looks like a poor cousin of Spotify – with which, for ten quid a month, you can listen to what you like, where you like, online or offline. OK, you could go for the cheaper option offered by Apple, and listen only to the stuff you happened to have on your hard drive at some point in the past. Want anything else and you’ll pay by the track.

In other words, if you’re already bought into the idea of a cloud-based music service, then what’s to stop you going large? No doubt Apple knows this – it’s unlikely that it will stop here. Trouble with streaming models, as with radio, is that they appear to offer a much lower return to the artists than record sales – appear, that is, because they are not subject to the same level of transparency as sales and performances.

Meanwhile, we are yet to see anti-brands of the form of Napster, Kazaa, Pirate Bay, MP3.com and so on appear, offering low-cost or no-cost streaming services from countries in which it is harder to enforce legislation. Even if any such services were ‘clean’ (i.e. they weren’t also dens of malware and identity theft), they would offer no support to artists whatsoever. For the avoidance of doubt, I would recommend giving any such services a wide berth.

The bottom line is that, while we are undoubtedly lovers of the tactile, Apple’s iTunes Match service is one more nail in the coffin of buying music as physical product. It may great for the music industry and telecommunications companies but I fear for artists tied into long-term contracts that majored on record sales; or worse (and I’m speculating here, but only a bit) that have been drawn up more recently to the advantage of labels, in the knowledge that revenue will comes from subscriptions to the channel, not payment for individual content. If it is indeed a transitional model, both legislation and contract terms need to catch up fast to ensure iTunes Match can be the “win for everybody” that the RIAA claims it is.

Apple iTunes Match and the law of unintended consequences

One thought on “Apple iTunes Match and the law of unintended consequences

  1. We all knew that the big boys were coming to feather their nests in this area sooner or later. It might have been a more interesting if Spotify had managed to land in the US first, as we have seen it go from strength to strength in the UK, albeit behind a shroud of non-disclosure agreements.

    I work for an organisation called the Featured Artists Coalition, based in London, UK. We’re doing our best to figure which business models are going to benefit the artists of the future. It certainly isn’t easy, and we’re not convinced of Spotify’s ability to guarantee remuneration, let alone getting to grips with the ramifications of Apple’s recent announcement. One wonders, if Apple paid the labels an advance to set up iCloud, how much is going to artists and how will it be reported?

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