updated 01:35 pm EDT, Sat June 4, 2011
iCloud gets all publishers at last minute
Insiders said late Friday that Apple had managed to secure all its publisher deals just ahead of its iCloud music launch. Having already secured labels, it got the distributors after agreeing to give both major and indie publishers a 12 percent cut, higher than their usual 10 percent. The deal seen by Reuters should clear Apple to show the song-matching music streaming service knowing all its key rights are in place.
The deal had been clinched only by making some key compromises, according to tips. Sony and Universal had supposedly been pushing for 60 percent for themselves and 10 percent for their publishers, but publishers themselves have been pressing for higher rates. Apple had originally been giving indie labels just a 53 percent cut to make more room for their publishers, but it eventually bent to give them the same ratio as the majors.
Apple's own 30 percent also might not have happened if labels had obtained their way, one insider said. They and publishers now want a shared 80 percent of the revenue from a sale instead of the usual 70 percent. The store, such as iTunes or Amazon MP3, would be the one to see its revenue shrink.
Extra tips backed word of Google still negotiating its deal for its Music service. It had been looking for the same terms as what Apple ultimately agreed to but was stymied by Sony and Universal once again trying to get 60 percent for the labels.
Apple's success in getting a deal where Google failed is still partly a mystery, though Apple's possible willingness to limit streams to tracks people bought on iTunes, may have been instrumental. Google has the money to match the reported $100 million to $150 million paid in advance by Apple but might have objected to tracks being limited to those sold through its store, leading it to a more universal but upload-dependent system. Google's main incentive with a music service is to encourage cloud use and not store or device sales, like Apple.
iCloud should be shown at Apple's WWDC keynote on June 6 but may not go live right away.