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Yet now that the attacks have subsided, it’s time to see them for what they are: Nothing more than a blunt instrument that accomplishes nothing constructive.

As of today, only one of the Web sites attacked by the hacker troupe Anonymous is still apparently affected, and that belongs to the Universal Music Group recording label. It currently displays only a message saying “The Site is under maintenance. Please expect it to be back shortly.” Others that had been attacked yesterday, including the sites of the U.S. Department of Justice, the Recording Industry Association of America and the Motion Picture Association of America all seemed to be operating normally.

Thursday’s attacks, which have been described as the biggest action yet organized by Anonymous, were launched in apparent revenge for the FBI’s arrest of several people associated with the file-sharing site Megaupload.com over suspicions of online piracy. Taking place against the backdrop of a wider, more civil protest against anti-piracy legislation currently before the U.S. Congress, the atmosphere around the attacks has been politically charged.

As Molly Wood of CNET put it, the #OpMegaUpload attacks — coming as they did on the heels of Wednesday’s peaceful anti-SOPA protest — seem like an “unsettling wave of car-burning hooligans that sweep in and incite the riot portion of the play,” spurring equally unsettling reactions from the powers that be.

Many outlets have portrayed the attacks as “hacks,” implying that someone had picked a lock in order to commit some kind of sabotage. But the tactic used — a distributed denial-of-service (DDoS) attack — is more aptly compared to a blunt instrument, requiring neither skill nor knowledge, only large numbers of willing participants who team up to swarm a site with more requests than it can accommodate and thus overwhelm its ability to function normally.

The adjective “willing” is debatable, and perhaps inaccurate. Anonymous was able to generate such impressive numbers with the operation — it claimed more than 5,000 participants — by spamming a link in chat rooms and via Twitter that, when clicked, triggered a tool used to launch the attack. People tricked into following the link are given no context or information, and so may or may not have any idea that they’re participating in the execution of a crime.

For the record, it is illegal in the U.S., the U.K., Sweden and other countries to launch and participate in a DDoS attack like the one Anonymous organized. As anyone who has observed the evolution of Anonymous (and its various affiliates using the names LulzSec and AntiSec) should know, the FBI arrested 16 people last July, many of them charged with participating in a DDoS attack against PayPal in protest of its shutting down an account used by WikiLeaks.

In 2009, a New Jersey man was sentenced to a year and a day in prison for launching a DDoS attack against the Church of Scientology. And in 2010, a 23-year-old Ohio man was sentenced to 30 months in prison for launching DDoS attacks against several prominent U.S. conservatives, including the author Ann Coulter, former New York City mayor Rudolph Giuliani and Fox News commentator Bill O’Reilly.

Records like that suggest to me that DDoS attacks never accomplish anything that the people who organize and carry them out attempt to do. At most, they inconvenience the people who visit and operate the targeted sites for a few hours, until the attention spans of the attackers shift elsewhere. They also generate headlines that are forgotten by nearly everyone except the targets, and sometimes law enforcement.

And so it will be this time. Mark your calendars, because the Megaupload revenge attacks will spur a series of arrests later this year. Some of those arrested will be people who didn’t know they were committing a crime. And that certainly won’t help Anonymous’ image. Nor will it further a single bit of what passes for the Anonymous agenda.

But this one has a twist or two. The media company is Grooveshark, an increasingly popular music service that’s also being sued by all of the major music labels.

And Grooveshark doesn’t want information about alleged lawbreakers. Instead, it wants details about an anonymous user who posted comments on Digital Music News, an industry news site.

Paul Resnikoff, the site’s owner, publisher and primary writer, writes about the subpoenas (and posts them in their entirety) here. And Ben Sisario of the New York Times has a good summary of the story. So I’ll try to do my version very quickly:

• Universal Music Group, the world’s biggest label, is suing Grooveshark over copyright violations, and has cited an Oct. 2011 story that Resnikoff published, along with comments made by one more readers, in its case.
• The story concerned claims by musician Robert Fripp and his team, who argued that though they didn’t want Fripp’s music on Grooveshark, the company wouldn’t take his songs off its site.
• The comments in question came from someone who said they were a Grooveshark employee, and that they had specific instructions to upload music from the big labels to the site, without permission from the labels or artists. “And,” the commenter adds, “to confirm the fears of [Fripp], there is no way in hell you can get your stuff down.”
• Grooveshark is demanding that Resnikoff hand over “any and all correspondence or other communications” between himself and Universal Music over the story. They also want “any and all documents concerning the identity of the First Anonymous Commenter, including, without limitation, that person’s name, address, telephone number and e-mail address, and the IP Address and ISP associated with that person.”

Resnikoff says he won’t comply with the subpoenas. He tells me that even if he wanted to hand over information about his anonymous commenters, he couldn’t. He says that as a matter of policy his site routinely “flushes” any information about anonymous commenters within two days of their posts.

And Resnikoff says that even though the comments in this case contained explosive allegations about Grooveshark, he never tried to verify the commenter’s identity: “What the world sees is what we have.”

In his post, Resnikoff suggests he’ll be protected by whistleblower laws when he fights Grooveshark’s demands. But he tells me that his legal team isn’t sure what laws they’ll cite yet. “We’re just incredibly committed to protecting any informants or sources of information,” he says.

This fight has plenty of interesting gray areas. For instance: What kind of legal responsibility does a news site have for claims that its commenters make? But I’ll let media law experts weigh in on that. For me, the notion that a Web publisher that isn’t directly involved in a legal suit can be forced to cough up names and addresses of contributors makes me shiver.

That scenario also strikes me as similar to some of the worst-case scenarios that SOPA/PIPA opponents have been making in recent weeks — this is a Web site faced with big legal problems over the actions of a single user, right? So I’ll be interested to see if they jump on Grooveshark over this one.

But Grooveshark doesn’t seem to think anyone will get riled up about this. This afternoon, I received an unsolicited email from Edelman, its PR firm. The email contained a copy of the subpoena, and a statement Edelman wants attributed to Grooveshark: “Grooveshark reaffirms its confidence that it will prevail in this litigation and that this filing represents the next step in reaching that end.”

(Image courtesy of Shutterstock/photobank.ch)

The music companies, Sony Corp.’s Sony Music Entertainment and Access Industries Inc.’s Warner Music Group, joined in an amended complaint to a suit filed last month by Vivendi SA’s Universal Music Group in U.S. District Court in Manhattan.

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In this case, it’s Madonna’s new pact with Universal Music Group. The New York Post says she’ll get around $1 million an album for a three-album deal, and music industry folks say the paper has its numbers right.

This is a very reasonable contract. Madonna is long past her music-selling peak, and the music industry is a decade past its peak, too.

Still! Reasonable contracts — especially for superstars — are still very new things for the music business. Not too many years ago, Sony handed Bruce Springsteen a reported $100 million, and that was well into the post-Napster slide. So let’s just walk through what each side gets here:

• Madonna gets the kind of money, upfront, that she would have laughed at in the past. A million bucks is what you used to give a hot “baby band” no one but a few hipsters had heard of. But the world’s biggest music company will buy her billboards, etc., and that’s still worth something. Plus, on the off chance that one of these albums does take off, the low advance means she could actually earn royalties on the sales.
• Universal gets bragging rights and one of the music industry’s few living worldwide icons, for what amounts to walking-around money. And, again, who knows? She might still sell some records, perhaps on the back of her upcoming Super Bowl appearance.
• Universal doesn’t get Madonna’s lucrative back catalog — Warner Music Group still has those songs, which it continues to sell, repackage, and sell some more. And Universal doesn’t get a piece of her lucrative touring business — concert giant Live Nation has that. (Remember when Live Nation was also going to be a big deal in the record business? What happened to that?)

But wait a minute. Why does Madonna need a record deal at all? Couldn’t she just sell her music on her own, like Prince and Radiohead and the Eagles and lots of folks?

Sure. But not everyone wants to be Louis C.K., who has just declared his direct-to-fan experiment a huge success. (To play devil’s advocate: Even though everyone who bought one of his concerts blogged about it (more than once, in some cases), he has still only reached 130,000 people — far less than would have seen him had he done an HBO deal or a Netflix deal. And those guys would almost certainly have paid him more, too. Though if you want to be a contra-contrarian, you can note that he could still do that. (Which I have!)

Some people, it turns out, are still happy to take money up front from Big Media companies and hope they can deliver the Big Reach, which the do-it-yourself Web can’t guarantee.

My favorite story related to our case is the story of a kid who appears in front of the judge for sentencing for the crime of having murdered both his parents saying judge have mercy on me cuz I am an orphan.

– Grooveshark chairman Sina Simantob, from a series of internal emails from 2009 that were made public as part of Universal Music Group’s copyright lawsuit in federal court against Escape Media Group, Grooveshark’s parent company

But not so fast. Before we can get there, we need to review some history, then engage in some speculation.

First, the past: Way, way back in 2000, EMI was supposed to merge with Warner Music Group. But the deal, which would have created a company that controlled 25 percent of the world’s music market, didn’t fly with European regulators.

And since Universal is the world’s biggest music label, and the new combination will create a company with about 40 percent of the world’s music market, you’d think antitrust types would have a problem with this one, too. (Maybe even in the U.S., which has usually let most industries consolidate, but recently perked up when it came to AT&T’s proposed T-Mobile deal.)

Bear in mind that back in 2000, there were five major music labels. Since then Sony swallowed up BMG, so we’re down to four. And Universal wants to shrink it down to three.

Universal’s answer, of course, will be that today’s music business looks nothing like it did 11 years ago when Britney Spears was selling millions of CDs, Napster was a novelty, and Apple’s iTunes store didn’t exist. Most important: Back then, music sales were a $37 billion business. By the end of last year, that number was down to $16 billion.

But simply arguing that the pie is smaller won’t convince regulators. If Universal is really going to get this deal done, it’s almost certainly going to sell off some pieces, particularly in markets like Germany and France, where a combined EMI/UMG could end up with something like 80 percent of the music market.

I think it will also work very hard to convince people that even the world’s biggest music label doesn’t have any power when it comes to Apple, which controls the world’s digital music market.

That part won’t be that hard, because it’s at least partly true. But it will still be interesting to see Universal, which has longstanding ties to Apple, go out of its way to publicly complain about the relationship, without actually straining it for real.

And in any case we’re going to have quite some time to watch this one develop. EMI CEO Roger Faxon told his staff yesterday that approvals, etc., for the split-up could go “well past” March 31, 2012, when EMI’s fiscal year ends. Music industry folks assume that a realistic timetable would be closer to 12 months from now.

[Image via Jason Mrachina]

Barring a last-minute hitch, EMI’s recorded-music unit will be sold to Vivendi SA’s Universal Music Group for $1.9 billion, while a group spearheaded by Sony Corp.’s music division will buy the publishing operation for $2.2 billion, according to a person familiar with the matter. The deal, valued at $4.1 billion in total, could be announced later Friday, but the bank may wait until the weekend, the person said.

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Said strings: You have to visit a certain brand’s Facebook page, “Like” their page or jump through a similar hoop, and then pick your songs from a limited assortment of freebies.

But if you find one you like, you can download it in MP3 format. And it’s yours forever, and you can play it anywhere, anytime you want, on any device. Even a Zune!

Zero cents for a song is a pretty good deal for music fans. The question is whether Free All Music, which is making this possible, can turn it into a business.

The two-year-old start-up has been moving slowly as it tries to figure that out. In a cheap-money go-go era for start-up funding, it has raised a mere $1.7 million. New CEO Habib Khoury, who replaces founder Richard Nailling, says his company is “en route” to a proper Series A.

On paper, at least, the business model is a simple mashup of two gambits we’ve seen before: Marketers who buy music and give it away for promotions, and marketers who reward Facebook users for “Liking” them.

In this case, Free All Music buys songs from labels like EMI Music and Universal Music Group at the same wholesale price that retailers like Apple and Amazon get — around 70 cents a song. Then it works with brands like Budweiser and American Express to give the songs away via their Facebook pages. Free All Music charges the brand a CPM of $5 to $8, and says that spread should allow it to make money.

Free All Music is still missing distribution deals with two of the big four labels — Sony and Warner Music Group — and even if it gets them, it won’t ever be a free music service that’s going to battle the Facebook giveaways currently underway via the likes of Spotify, MOG and Rdio. Those services give you unlimited music on demand, but only via streaming. Free All Music’s giveaways are one-offs, just like a bank giving away a toaster.

But much cooler than a toaster. Here’s the Jack White/Loretta Lynn song I downloaded gratis yesterday, in exchange for giving Budweiser a virtual thumbs-up.

Viacom and Google, who have been tangling over copyright violations at YouTube since 2007, will be at it again today at a federal courthouse in New York. The two sides will start oral arguments for Viacom’s appeal of the case, which Google won decisively in a 2010 ruling.

In the past, both sides have tried digging up evidence to discredit each others’ arguments, and while both came up with plenty of embarrassing stuff, they couldn’t find a smoking gun.

So now we’re back to the basic question of the case: How much protection does the Digital Millennium Copyright Act offer YouTube, or any other site that lets users upload and distribute content they don’t own?

That question has come up to the courts in at least three different suits in recent years: Viacom versus Google, Universal Music Group versus Veoh, and EMI versus MP3Tunes. And in all three cases, federal judges have offered up the same response: The DMCA gives Web sites enormous latitude. As long as the site serves a legitimate function, it can’t be held responsible if users upload stuff they don’t own. If copyright owners find something that shouldn’t be there, and they ask the site to take the offending piece down, the site has to comply. But that’s about it.

So far, that’s very encouraging news for all manner of digerati. And in theory, it’s quite threatening to media companies and other people who create, finance and distribute intellectual property for a living.

But things might not be quite so dire for the media guys. While you can read the recent court rulings as an invitation for a free-for-all, it looks a little different in the real world.

YouTube, for instance, has spent a lot of time and money creating systems to filter content on its site, which hoovers up more than 24 hours of stuff every minute. And it works hand in hand with most big media companies to help them keep stuff they don’t want off the site — and to help them distribute other stuff they do want there.

Included in that list of companies playing very nicely with YouTube — Viacom’s sister company, CBS. And once this suit finally gets settled — which could still take years — my hunch is Viacom will want to work closely with the world’s biggest video site, too.

[Image credit: Sweetheart/Shutterstock]

Last year, the classical-music charts were dominated by two distribution companies: the world’s largest record label and a five-year-old, Stockholm-based digital company with 43 employees, no performers under contract and virtually no profile in the broader music business.

The contrast between the giant Universal Music Group and the tiny X5 Music Group AB offers insight into the future of music distribution.

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What does that mean for the rest of us? In a nutshell: It’s yet another victory for Web sites and services that let users upload and access music, movies and other files under the protection of the Digital Millennium Copyright Act.

And it gives Google and Amazon additional cover for the cloud locker services they launched earlier this year, without approval from the big music labels.

In practical terms, though, I’m not sure that the decision does anything beyond maintaining the status quo. Had it gone the other way, it’s possible that it would have threatened lots of popular Web sites and services. But since it doesn’t: Carry on!

The most important news is that a third federal court has ruled on behalf of Web services whose users might use it to upload and/or access files that violate copyright rules.

In this case, it’s MP3Tunes fending off EMI Music. But it’s the same basic story as the Veoh/Universal Music and YouTube/Viacom cases: A judge has ruled that the DMCA doesn’t require Web services to figure out which files that users upload have the right to be there.

Assuming all of those rulings stand up (Viacom is appealing the YouTube decision, and this one will likely go back into the court system, too), this will give Web sites enormous flexibility. The rulings don’t give users unlimited access to stuff they don’t own, though, and they do require sites to pull down files if copyright owners complain.

In this case, Judge William Pauley ruled that MP3Tunes, which operates a “locker” music service similar to the ones Google and Amazon launched earlier this year, was liable for some copyright infringement, because it didn’t remove specific songs EMI had flagged. And he said MP3Tunes founder Michael Robertson was also liable, because he knowingly uploaded songs he didn’t own.

That means Robertson and his company could still end up paying significant penalties, even though they won most of their case.

Pauley’s ruling also briefly blessed the construction of the locker service itself. In short, he said that users have a right to upload their own songs to the cloud and play them back, even if the service they used to do it doesn’t have an arrangement with the music labels.

That’s good news for Google and Amazon, because they don’t have deals with labels for their services. But it didn’t seems like they were going to need them, anyway.

Though music executives huffed and puffed after the lockers launched, they haven’t taken legal action against the companies. They also haven’t pursued mSpot, a small start-up that offers something similar.

I’ve seen some reports that suggest that Pauley’s ruling gives Google and Amazon the ability to do a “scan and match” service, where users don’t have to laboriously upload their songs to a locker — instead, the service would simply look at what’s on their hard drive, and give them access to a copy stored on the site.

That’s what Apple’s new iTunes Match service does (among other things). And Apple hammered out a deal with the labels to make that happen.

But as far as I can tell, the only additional leeway that Pauley gives to Google and Amazon is the ability to save storage space on their own servers, by using “deduplication” technology — a “standard data compression algorithm that eliminates redundant digital data.”

That’s not nothing — it’s always nice to save storage space — but it won’t fundamentally change what they’re offering to consumers, who will still have to spend a long time moving their stuff into the cloud.

Big picture: If the idea of storing all of your music on a remote server — so that you can listen to it whenever you want, wherever you want — is appealing, this ruling is good news. It’s also good news if you like watching videos on YouTube, listening to songs on Tumblr, or using lots and lots of other Web sites that depend on stuff users upload. But since you can do all of that already, you’re not going to notice a change.

The service still doesn’t have a pact signed with Warner Music Group, but people familiar with discussions say the two sides are closer than they have been, and are optimistic a deal will get done.

It’s possible that Spotify could open in the U.S. without Warner, but that would leave holes in the company’s catalog. And that’s a crummy way to introduce a service that CEO Daniel Ek has been promising to bring to the U.S. for two years.

Even if Warner signs next week, though, it will likely take Spotify some time to ramp up a marketing campaign and other elements it would need for a U.S. launch. I wouldn’t count on seeing anything in the States till July at the earliest.

Multiple sources tell me the Universal deal was finished this week. Spotify declined to comment; a spokesman for Universal hasn’t responded to requests for comment. Spotify signed on Sony and EMI Music Group earlier this year.

In Europe, Spotify offers a “freemium” service, where registered users can listen to a certain amount of music each month for free, and paying subscribers get unlimited music, which they can stream to their computers or phones. People familiar with the company’s plans indicate that it wants to do the same thing in the U.S., and would likely charge around $10 a month for the premium service.

Unlike Europe, however, the U.S. has several existing subscription services that also stream unlimited tunes for $10 a month, and those have yet to take off, even though the services are now compatible with popular handsets like Google’s Android and Apple’s iPhone.

During the time that Spotify has spent trying to get to the States, meanwhile, three different cloud/locker services have launched in the U.S. as well: Amazon and Google allow users to move their own music to an Internet-based server, where they can stream it to PCs and some phones.

Apple has announced its own take on the concept, which will allow users to download copies of music they own to different devices (it’s possible that version will also allow streaming at some point).

The price point for those services all range from free to a few dollars per month — much cheaper than the $10 per month Spotify will likely ask for. But they’re a different offering: Google, Amazon and Apple are all promising to give you mobile access to music you already own, while subscription services like Spotify give access to millions of tracks you don’t have.

Amazon thanked users for their patience on its website and on Twitter, saying consumers who ordered “Born This Way” on Monday would get the full album for the promotional price. Lady Gaga, a Grammy-winning multiplatinum pop star, is known for her unusual sense of style as well as hits including “Just Dance” and “Poker Face.”

Amazon is buying “Born This Way” at the full wholesale price, around $9, from Lady Gaga’s recorded-music distributor, Vivendi SA’s Universal Music Group, according to people familiar with the matter.

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But when Apple gets its Universal deal done, it still won’t be ready to launch.

That’s because Apple has yet to nail down terms with the big music publishers, who own a separate set of rights. And Steve Jobs will need their sign-off, too.

While Apple came to terms with Warner Music and EMI Music weeks ago, and has now struck a deal with Sony Music, industry sources tell me the company doesn’t have agreements with the labels’ associated publishing companies–Warner/Chappell, EMI Music Publishing and Sony/ATV. The deal Apple is about to sign with Universal also won’t include publishing, I’m told.

The distinction between music labels–who own the rights to music recordings–and music publishers–who own the rights to songs’ underlying compositions–seems small and technical. But it’s an important one.

The two groups each get paid when their work is used, at different rates. And while all the big music companies have both a recorded music arm and a publishing arm, the two operate in different silos, and don’t always share the rights to the same music. The Beatles’ recordings, for instance, belong to EMI Music, while the bands’ publishing rights are controlled by Sony/ATV.

The fact that ownership of a single song can be shared by lots of people is one of the reasons it’s so hard to get anything done in digital music (recall that Google and Amazon both bailed on getting any rights at all for their cloud services). But the complexity isn’t a deal killer, either.

In Apple’s case, I’m told that the company doesn’t have any theological hurdles to clear with the publishers. It simply started talking to the music labels first, and has only recently started negotiating with the publishers.

The only issue to hammer out is just how much Apple will pay for its service, which will let users move their music to Apple’s “cloud” servers and then let them stream their songs back to different devices. But the two sides are at least “engaged” over the issue, says an industry source.

In many ways, this seems like a rerun of Apple’s move to extend the length of the song samples it offers at its iTunes store. Apple planned to increase the duration of its samples from 30 seconds to 90 seconds last September. But it didn’t get clearance from the publishers, and negotiations kept it from super-sizing the samples until December.

Music industry sources I talk to think Apple wants to launch–or at least announce–the cloud service at its developers’ conference in early June. And if the hang-up is truly just about money, then that still gives dealmakers time to hammer things out. But remember that this is the music business, and simple things always take longer than they should.

And why did talks between Google and the music labels really break down, resulting in the locker service that debuted instead?

I don’t know!

Here’s what I do know: Music Beta isn’t the service Google has been trying to build for the last year. And it’s not the service that Google thinks it’s going to eventually have.

Google has been clear that while it launched yesterday without approval from the big labels and publishers, it intends to re-engage with them sooner rather than later.

Which makes sense. Because while the storage-plus-playback system Google introduced yesterday isn’t a bad thing–particularly for Android users, who haven’t had great options when it comes to music players for their gadgets–it’s not a big leap forward. Just like the similar system that Amazon introduced in March.

Both those services were launched without new licenses–or in Google’s case, any license at all–from the big music labels. Apple, meanwhile, is working on its own cloud service, with the labels’ approval.

Okay. So what does label approval mean for a cloud service?

In Google’s case, label sign-on would give the company the ability to sell music, which it doesn’t do right now.  And it could let Google use a “scan and match” system, which would mean users wouldn’t have to upload every one of their songs to the cloud–instead, Google could use a single file to serve multiple users.

That would be helpful, because uploading every one of your songs to the cloud can take a very long time, unless you have industrial-strength broadband.*

But those are all smallish tweaks, too. Nice to have, but not have-to-haves. So what was Google really trying to get done?

I don’t know, and one of the frequent complaints I heard from music executives over the past nine months or so was that Google didn’t seem to know, either–they said the search giant’s goals kept shifting.

Still, we can get a decent sense of what Google wanted based on a proposal that leaked out last fall. Among other features, Google wanted a system that would let users sample any song they wanted, at least once. And the ability to share songs they owned with their friends.

Combine that with the ability to access your own music, whenever you want, wherever you are, and you could end up with something very compelling.

And industry sources claim Google may be looking to add even more features: One music executive, for instance, tells me Google has been talking about an “interactive radio” service–which would mean something with more features than Pandora offers, but less than a full-blown all-you-can eat subscription service like Rdio, Mog or Spotify.

Even more interesting, right? So why isn’t it here?

Google has made a point of telling reporters it blames two labels in particular for the collapse of negotiations last month, but wouldn’t identify them. Billboard, though, believes that Sony and Universal Music Group are the roadblocks Google is complaining about; reps at both labels declined to comment on the trade pub’s report.

Google also won’t be specific about what caused it to walk away from the table. So it’s possible the dispute was about something other than money. Perhaps the labels were insistent that Google crack down on piracy in a way the search engine can’t or won’t do.

But my hunch is that it’s about money.

Whatever the cause, Google and the labels are now in a very interesting spot. The music industry has been pining for real competition to Apple’s iTunes for a very long time, and many hoped that Google would be the one to do it.

Now it looks as if Apple will be the one introducing a full-featured cloud service, perhaps as early as next month. If it does, it means that Apple’s influence on the digital music industry will increase, and that the service Google rolled out yesterday will look even less impressive.

Which would give both Google and the labels plenty of incentive to get something done, quickly. Let’s see if they respond.

*A few months ago, I discovered that Columbia University has just such a connection. Free, too. Just sayin.

Which may sound a lot like what Amazon rolled out last month.

From the music industry’s perspective, however, there’s a big difference: Amazon started its service without getting approval from the big music labels. But Apple is actively seeking licenses for its service, and will pay the labels for the privilege.

And sources tell me that Apple has already procured deals from at least two of the big four labels (Universal Music Group, Warner Music Group, Sony and EMI) within the last two months. One source tells me Apple content boss Eddy Cue will be in New York tomorrow to try to finalize remaining deals.

“They’ve been very aggressive and thoughtful about it,” says an industry executive. “It feels like they want to go pretty soon.”

Reuters reported earlier today that Apple has “completed work on an online music storage service,” but said the company had not obtained licenses from any labels so far. I’ve asked all four labels for comment; an Apple rep declined to comment.

The industry executives I’ve talked to haven’t seen Apple’s service themselves, but say they’re aware of the broad strokes. The idea is that Apple will let users store songs they’ve purchased from its iTunes store, as well as others songs stored on their hard drives, and listen to them on multiple devices.

Amazon’s service does the same thing, but label executives have argued that a license would allow Apple (or Google, if it moves forward on similar, but stalled, plans) to create a more “robust service” with better user interfaces, sound quality, and other features.

I’ve never understood how a license would affect things like product design, but there’s at least one practical benefit from Apple’s perspective: The deals it is signing will allow it to store a single master copy of a song on its servers, and share that with multiple users.

Amazon’s service, by comparison, works much more like an external hard drive, where users are required to upload a copy of every song they’ll want to get via remote access.

Amazon offers its user a limited amount of storage for free. I don’t know if Apple intends to charge its users for the service, or will absorb the storage and licensing costs on its own.

An industry executive cautioned that a Myspace-Vevo deal would be hampered by their complex ownership structures, which involve multiple parties. Vevo is jointly owned by Sony Music Entertainment, Universal Music Group and Abu Dhabi Media Co. Myspace operates Myspace Music, a joint venture with some record labels that are also part-owners of Vevo.

A spokeswoman for Vevo declined to comment.

News Corp. has courted several suitors in attempts to offload the social media and entertainment site, according to people familiar with the matter.

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The company has brought on Steve Savoca, who ran digital at U.K. indie label Domino Records, to run its U.S. content business. He’ll join, among others, Ken Parks, a former attorney for EMI Music who has been running Spotify’s New York outpost for a couple years; and at least two veterans from Limewire, the now-defunct file sharing service.

And Spotify CEO Daniel Ek would like you to know that the company is still looking for “rockstar engineers and product people” in the U.S., too. (You’re welcome, Daniel.)

Spotify still doesn’t have a U.S. launch date, though, because it still doesn’t have all the music label deals it needs. Sony and EMI have signed on, but the company still hasn’t inked a pact with Universal Music Group, the world’s biggest music company. It’d be nice if Warner Music Group were on board, too.

It’s increasingly likely that by the time Spotify does open up shop in the U.S., it will face competition from not just other streaming music services like Rdio, Rhapsody and MOG, but a new offering from Google.

Google wants to operate a “locker” music service which gives users access to all of their personal music files from a cloud-based server, and has begun testing the service internally. But just like Spotify, Google can’t launch without label deals–or, at least, it doesn’t want to launch without label deals–and so far it doesn’t have anything locked down.

The digital entrepreneur is considering putting his money into a consortium bidding on Warner Music Group, which put itself on the block earlier this year. Sources tell me that Parker isn’t part of the formal bid, but is aligned with a group led by investors Ron Burkle and Doug Teitelbaum.

Given that Warner’s owners are expecting to fetch $2.5 billion or more for the company, Parker’s own capital wouldn’t be material to the Burkle-Teitelbaum bid. (Burkle, a billionaire who made his first fortune in the supermarket business, invests via his Yucaipa holding company; Teitelbaum helps run hedge fund Bay Harbour Management.)

But Parker’s interest in the music company, expressed in a letter Burkle’s deal team submitted to Warner’s bankers at the beginning of the bidding process, is still very interesting. Here’s a wonderkid who made his money and reputation via bits and bytes, putting his cash — and, presumably, some of his insight — in a media business that still makes most of its money selling analog goods.

Parker famously helped found Napster in 1999, moved onto address book startup Plaxo and helped guide Facebook in its early days. That move gave him an equity stake in the company, and enough money to do whatever he wants (Forbes pegs his net worth at $1.6 billion, and that estimate may be low). Most recently he’s been working, as an adviser and investor, with Spotify, the streaming music service.

Spotify is a big deal in Europe, where it has a million paying subscribers and 7 million active users. But it has yet to land in the U.S., because it hasn’t come to term with two of the big music labels — Universal Music Group and Warner.

I’ve heard a couple people suggest that Parker is trying to buy the label in order to get that deal done. But that theory doesn’t make much sense, because there are much cheaper ways to get Warner to license its music.

Easier conclusion: Parker believes that intellectual property — in this case, Warner’s catalog — is undervalued, in part because of the digital revolution he helped usher in more than a decade ago.

In any case, Parker’s interest may end up being academic. Burkle and Teitlebaum are one of at least five bidders trying to buy all or part of Warner. The music label, which is controlled by a consortium of private equity investors, expects to make a decision on its sale in the next few weeks.

[Image via Wikipedia]

That fight got a bit simpler last week: Lime Wire agreed to a settlement with a group of music publishers on Friday, according to document filed in federal court yesterday.

But the agreement doesn’t get Lime Wire off the hook. The company is still fighting another lawsuit, brought by many of the same people it settled with last week.

If that sounds confusing, welcome to the music business!

Super-quick primer: Music publishers own the underlying composition of songs; recorded music companies own the recordings themselves. And while all of the big music companies own both a recorded music division and a music publishing group, the two units own different assets, and usually function in separate but parallel universes. (The Beatles’ recordings, for instance, are owned by a unit of EMI, while the group’s publishing is controlled by a Sony joint venture).

Back to Lime Wire: The terms of last week’s settlement haven’t been disclosed. The court filing only notes that all claims by the publishers, who include Sony and Warner Music Group, have been dismissed, and that both sides will pay their own legal fees.

Meanwhile both sides in the recorded music case, which is being overseen by the same federal judge, are arguing back and forth about how to assess damages, and are headed for a trial. Stay tuned…

The streaming music service is going to raise something like $100 million, at a valuation of $1 billion or more, very shortly, according to TechCrunch, the Financial Times, the New York Times and Sky News (?).

People who tell me they’re familiar with Spotify’s plans also tell me all of those publications are wrong. But they won’t be specific about why they’re wrong. So my hunch is that some combination of the total amount raised, the valuation and the investors may still be in flux. Or not.

Whatever. Sooner, or later, Spotify is set to cash a very big check. What’s it going to do with that money?

The easy assumption is that the company will turn around and redistribute its new investors’ funds to the big music labels, as part of the distribution deals it is cutting to get into the U.S.

Spotify already has deals with Sony and EMI, and is supposedly closing in on one with Vivendi’s Universal Music Group, the world’s biggest label.

And as I wrote last fall, Spotify is willing to pay the labels real money over the life of these deals to get them done. But I don’t think the bulk of this cash goes immediately from DST, or Kleiner Perkins, or whomever, to UMG, Sony, et al.

For starters, I don’t think Spotify’s backers would be happy to serve as a direct funding source for the flailing labels. And remember that Spotify is a money-losing startup, so it would likely need cash to fund operations even if it was staying put.

But I think that Spotify is going to have to spend real money to break into America, which already has plenty of streaming music services, and doesn’t seem very interested in them.

A rough guesstimate is that Rhapsody, Napster, MOG, Rdio and Thumbplay have a total of about a million subscribers–about the same that Spotify has on its own. So in order to really make the case for music you rent by the month, Spotify is going to have to lay out serious marketing cash to get people to pay attention.

It will need to staff up, too: The company, based in Sweden and London, has a handful of people working in a small corner of Google’s New York City office, but that won’t be nearly enough to tackle the States.

The other big variable, which wasn’t on Spotify’s radar when it started looking for cash last year but certainly is now, is the impact of Apple’s new subscription plan. As described in Apple’s press release, that plan will lop 30 percent off of every subscription Spotify sells through Apple’s iTunes store.

Spotify, like every other music service, can’t live with that. So if Apple doesn’t back down, and U.S. or European regulators don’t force it to back down, Spotify will have two choices:

• It can market the heck out of the service on everywhere but Apple’s platform, and hope that the overwhelming majority of its signups happen via some other outlet, where they won’t have to pay Apple’s tariff.
• And/or it can spend a lot of time fighting Apple in court.

Either way, some extra cash might be handy. Good thing the company has some lined up.

Both EMI and Spotify declined to comment.

Coupled with last month’s Sony deal, Spotify now has the approval from two of the four major music labels for an American launch. But that still doesn’t guarantee you’ll see the streaming music subscription service in America anytime soon.

In order to make a credible offer to U.S. users, Spotify will need to at least get Universal Music Group, the world’s biggest label, on board, and it’s not there yet.

It would also be nice if Spotify could land Warner Music Group, which now seems more doable than in the past, given Warner CEO Edgar Bronfman’s increasingly positive comments about the company.

If and/or when Spotify does come to the U.S., it will also have to contend with new rules from Apple, which will require a 30 percent cut of any subscriptions the service sells through Apple’s iTunes platform. That tariff is going to be a significant problem for many of Spotify’s peers, who are working on slim margins to begin with; I don’t know how Spotify plans to address this one.