Peter Kafka

Recent Posts by Peter Kafka

Waiting for iTunes.com? Don’t Hold Your Breath

Apple is shutting down its Web-based music service in a month. When will it open a new one?

No time soon, from what I can tell.

I’ve been on the phone all day with music industry sources. None of them know of any specific plans Apple has to replace Lala at the end of May, when it will shutter the streaming music company it bought last December.

Sources tell me that in the past few weeks, Apple has started signaling to the labels that it’s interested in a Web-based version of iTunes, its dominant music retail platform. But those conversations are preliminary at best.

So if you’re expecting to hear about an “iTunes.com” offering in the near future — like during Apple’s June 7 developer conference — you’re likely to be disappointed.

That said, moving music to the Web does seem to be on Apple’s agenda.

Sources say the company approached the labels earlier this year about a cloud-based “locker” service, where users could streams songs they owned to multiple devices.

But that went nowhere quickly — “a swing and a miss”, in the words of an industry insider — because the labels argued that streaming a single purchase to multiple devices constituted multiple uses, which meant they should receive more for the songs they  sell through iTunes.

It’s possible that Apple (AAPL) could argue that it doesn’t need the labels’ permission to launch a locker service, and that users have the right to do whatever they want with their content.

But even if that argument held up legally, it would enrage the labels, who already feel that Steve Jobs hoodwinked them when he set up the iTunes model in 2003. And even if Jobs didn’t mind antagonizing the labels, it would make his current efforts to romance other content providers, like TV networks, even more difficult.

Apple could also try a subscription/rental model for iTunes, like the one currently offered by the likes of Rhapsody, MOG and Spotify (at least in Europe). But no one has figured out how to rent music at a price that satisfies consumers, the labels and the music services. At least not on a large scale.

So no matter what strategy Apple pursues, it’s going to require a new set of negotiations with the labels, who might be prickly partners this time around. Hard to see this one getting off the ground and into the cloud in a hurry.


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