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Does 'iTunes Match' Offer 'Parley' to Music Pirates?

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In the year 2000, when MP3.com launched a service that allowed people to stream their own music from "the cloud" by authenticating it with a CD, the labels sued. Apparently, ownership of a CD didn't prove ownership of the songs thereon.

And so for the following decade, music lockers like Amazon Cloud Drive, MP3Tunes, Music Beta by Google, and mSpot asked users to upload their actual music files to their lockers, creating their own "DIY (do it yourself) cloud" music services, so to speak.

The problem with this for the music industry, the way we see it, is that the DIY cloud reinforces old behaviors: pirating music files rather than streaming them from legal services like YouTube or Spotify or, once in a blue moon, actually buying songs piecemeal from iTunes or another download store -- usually when a well-intentioned relative gives you an iTunes gift certificate (thus iTunes' annual sales spike in January, but that's another story).

Now, for an advance of $100 million or so, Apple has paid for the right to do what MP3.com was trying to do, but without requiring people to prove that they bought a CD or any music at all, for that matter. For about $2 per month, you'll be able to launch your own DIY cloud service that works with iPhones, iPads, iPod Touch, and any Mac or PC running iTunes. And if your music is pirated, so be it -- Apple has offered you "parley" anyway (to borrow a phrase from the Pirates of the Caribbean movie franchise).

Granted, for some reason, Apple doesn't let you stream these files the way all other cloud music services we've seen do. Instead, you have to download them to devices before playing them.  (Apple claims iCloud music will play "anytime," but fails to mention that you might have to wait for the songs to download before they play.)

Regardless of this streaming/downloading distinction, what Apple has done here is fascinating -- not because it offers something new, but because it locks us into the same model of administering our own music collections. And by extension, it reinforces the practice of downloading music without paying for it. Apple's iTunes Match encourages piracy far more than MP3.com's my.mp3.com CD-mirroring service ever did, and that service was sued out of existence for infringing copyright.

Berklee College of Music vice president and author David Kusek sees this development as a good thing, because it helps music be more "like water" -- and legitimizes/monetizes piracy, which is how we behave anyway in the digital age.

As I outlined in Forbes, with hundreds of millions of people connected to digital networks, the potential annual revenue stream for this is enormous. At $25 per person, if 200 million people opted in for iTunes Match, the service would gross $5 billion a year just for the ability to provide access to any song on any device, and let you pirate all the music you want to at will. Add to that the money from new songs you purchase, premium access, increased storage, exclusive concerts and the recording industry may see a bottom to its revenue decline, and could begin to rebuild from there. Seem counter intuitive? The record business will never be the same again, but maybe (just maybe) it will not go extinct.

Industry critic Bob Lefsetz sees it another way.

How can you get everybody to buy a mobile subscription? We can debate that all day long, but it's become almost irrelevant. Because today, Apple killed subscription [we wouldn't go that far, but Bob often does].

Yes, iCloud scan and match is subscription-based. But the concept of renting your music, like you rent cable TV, is kaput. And what did it cost? $150 million. For approximately $40 million to the bottom line of each recording company, you know they're not going to share the revenue with artists, the labels sold out their future.

It's like Nintendo being paid a bunch of money to never develop the Wii. It's like Electronic Arts being paid to never develop mobile games. It's a denial of the future. Who in the hell is going to buy a music subscription for even $3 a month when for $25 a year you can have everything you own, even stole, at your fingertips via iCloud[?]

DIY music services are like a pressure valve that gets activated when unlimited music subscriptions are too expensive to attract sufficient customers. Like Amazon and Google, a DIY cloud music provider can decide to stop negotiating and simply choose not to offer an unlimited subscription, or even a "scan and match" feature, and just roll out a hard-drive-in-the-cloud-style music service for free, without paying artists, publishers, or labels.

Apple's iCloud music service goes halfway there, by paying at least some of the labels (if not artists) for the right to offer a scan-and-match feature, saving music fans lots of time. But it leaves unfulfilled the possibility of convincing people to pay a monthly fee for all the music in the world, whether they've bothered to pirate it yet or not.

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