• A customer can pay $25 a year to Apple, download huge amounts of music from filesharing sites / P2P services (or just being receiving via sneakernet) – syncing them all to their iTunes Account for much higher bitrate, guaranteed quality versions. Whilst they can then download all of the files and keep forever, the amount labels will receive in this scenario – for what effectively are new purchases – will be negligible compared to that of a purchase performed by the customer.
• For labels, by not signing up and granting Apple the right to do use your catalogue with this service you are potentially missing out on an extra source of revenue if your catalogue is being shared or made available online. In the current economic climate, most labels would consider it mad to not grant Apple the additional rights for this service. However, when a label grants Apple appropriate rights under licence to add its files to the iTunes Match service, it is effectively handing over another piece (from what precious little is left) of the value of their catalogue.

As Andy Ihnatko (journalist and Apple pundit) said yesterday after the keynote (I paraphrase), ‘everybody who has launched cloud services and lockers has done it in the present. Apple’s come up with a solution that’s 20 minutes into the future.’

It remains to be seen whether iTunes Match will have real sticking power, given that this will be the first time a subscription-based, unlimited music service – which it effectively will be for some customers who game the system – will have been launched to what will, I’m sure, be a worldwide audience. By reach, Apple has the largest customer base of any music or multimedia company in the world in terms of captive userbase or potential new customers, all engaged already to varying degrees in the Apple ecosystem. Although we will most likely never be told these figures, it will be interesting to analyse any attrition rates (or ‘churn’) 12, 24 months down the line. Will the service finally be the ‘killer app’ for Apple’s iTunes? Labels will have to wait for their first royalty statements incorporating iTunes Match payments to see whether the income difference is significant. For smaller labels, it could mean a large extra amount each month or it could mean very little indeed.

One thing is for certain – Apple is once again the cause of both consternation and, in some quarters, a little quiet optimism. If the end result is that customers become used to paying for music, this is good. The clearest worry is this further devalues and commoditises music as something customers ‘acquire’ in ‘units’ or simply ‘store’ as opposed to collect and value accordingly, with a single gateway payment in order to access it. As a music lover and ardent collector, I find this quite distasteful.

Yet, this could encourage more providers to offer similar or dramatically different cloud-based services to music fans – a competitive market is good for innovation and helps stimulate growth in an industry which largely reached the point of stagnation halfway through the last decade. Apple will already be hard at work on the next iteration of their service, and Amazon now has more information on which to react and refine their own cloud service with. After five pointless years of attempted litigation, the long-running feud between EMI and the (excellent) MP3Tunes.com locker service (which we have recommended in the past) may just fizzle out without any kind of judgement. The obvious observation is that any label which doesn’t embrace locker and cloud services might as well fight against the dying of the light, but we are by no means at the final stage of evolution for cloud-based music. I personally cannot wait to see who steps into the ring to challenge Apple first.

Images via SiliconAngle and TUAW.

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