Edible Apple

The days before a major Apple event are always exciting as the rumor mill kicks into full gear and speculation about what Apple may announce and introduce runs rampant. This year’s WWDC event, however, will be markedly different than past conferences to the extent that there will be no new iPhone hardware on the docket. Instead, Steve Jobs’ keynote will focus on OS X Lion, iOS 5, and a new cloud initiative Apple has dubbed iCloud.

Looking at each rubric individually, we can thank OS X developers who didn’t take their NDA all that seriously for giving us a plethora of information about OS X Lion. On the flip side, we don’t know very much about what iOS 5 has in store for us, and we know even less about what iCloud will be about.

But the pieces of the iCloud puzzle are slowly but surely coming together. Over the past few weeks a number of reports have pointed to a service where iOS users will be able to stream purchased content from the cloud down to their devices.

According to the LA Times, iCloud will initially be available as a free service to customers who purchase music from iTunes only to subsequently become a $25 yearly subscription service. Interestingly, the report relays that Apple plans to sell “advertising around its iCloud service.”

As for the breakdown of where that money is going, people familiar with the licensing agreements struck by Apple say that 70% of all proceeds will go to the record labels while 12% and 18% will trickle down to music publishers and Apple respectively..

In its initial incarnation, iCloud will be exclusively music focused though sources tell the LA Tiems that Apple envisions the service ultimately expanding to encompass all types of digital content, from movies to TV shows and anything else available via iTunes.

Apple, whose iTunes music store is the dominant purveyor of music downloads with between 75% and 85% of the market, has been carefully monitoring moves by rival Amazon.com as well as newcomers to the digital music space, including Google and, in Europe, Spotify.

Amazon pounced first in March when it launched a music “locker” service, dubbed Amazon Cloud Player, that lets users upload their music to Amazon’s computers and listen to their songs from any browser. Google followed suit in May with its Music Beta service.

Notably, though, Amazon launched its locker service without first securing any licensing rights from record companies. That said, some speculate that the record companies will use Apple’s service as leverage to secure sought after licensing rights from both Amazon and Google.

What remains unclear is how broad the iCloud service will be right off the bat. Will the service encompass songs previously purchased from iTunes? What about songs ripped from legitimately purchased CDs? Hopefully the service will be as all-inclusive as possible because if it only applies to iTunes purchases going forward, it might as well be considered dead in the water. We trust both Apple and the record labels have the good sense to recognize this.