Just before Apple’s Worldwide Developers Conference, which starts Monday, the company has leaped a large hurdle by reaching an agreement with Universal Music Group over its iCloud music service, according to CNET.
iCloud will reportedly let users listen to music from their iTunes libraries from a Web browser or Internet-connected Apple device. Universal was the last of the big four music labels — along with Warner, EMI, and Sony — that Apple needed to convince before the service could be launched.
Apple will be launching the iCloud service at WWDC, as well as showing off iOS 5, and releasing more details about Lion, the next version of the Mac OS X operating system. If reports about iCloud are correct, however, it will be the showstopper of WWDC and provide a significant new alternative for accessing and listening to music.
Another major detail that came to light concerning the iCloud service on Thursday was pricing. A report by the Los Angeles Times says Apple intends to charge users of the service $25 per year, with a free trial available to those who buy tracks on iTunes.
According to “sources familiar with the negotiations,” the revenue split between Apple and the music labels will be extremely favorable to the labels. The Times wrote:
The agreements, finalized this week, call for Apple to share 70% of any revenue from iCloud’s music service with record labels, as well as 12% with music publishers holding the songwriting rights. Apple is expected to keep the remaining 18%, said people knowledgeable with the terms.
With the music labels bleeding money from the rise of digital media, it’s no surprise the split is so much in the labels’ favor. They need a way to ensure they’ll make money, even as restrictions on how to access music evaporate. Plus, the iCloud service doesn’t have to be a major revenue generator for Apple because the company makes most of its money on hardware sales like the iPhone, iPad, and Mac computers.