Apple Floating Cloud-Based Music Service?


Now that Apple has confirmed the date of its next "big announcement" for Sept. 1 in San Francisco, the rumor mill has kicked into high gear.

The big question is whether Apple will unveil its long-anticipated cloud-based music service, since it's easy to assume that the event will feature a music-centric unveiling (thanks to an acoustic guitar featured prominently on the invite).

Based on conversations with multiple label sources, the answer is a solid...maybe.

Word from sources is that there is an ongoing dialog between Apple and music executives at the corporate level of the four major labels about a potential cloud-based streaming service, and we've heard that there are some "large hurdles" to get over in that effort. Actual licensing negotiations for such a service do not seem to be taking place at this time, and likely won't until both sides hammer out a mutually agreeable concept.

But that doesn't mean there won't be any cloud-based announcements coming out of Apple at the event. Apple has been building a server farm in North Carolina that could serve as a data hub for all sorts of content, including music and video.

Piper Jaffray analyst Gene Munster issued a research note yesterday predicting the near completion of that facility points to a cloud-based content announcement.

"The company has indicated that the data center is on track to be completed by the end of CY10 and it will begin using it then," he writes in his note. "We believe an announcement at the September event is likely, but the service may not begin until late in CY10. With Apple's growing family of connected devices (iPhone, iPad, iPod Touch, Apple TV and Macs) it only makes sense that Apple would deliver a cloud-based media service to leverage its competitive advantage in the space."

That may just be limited to an Apple TV announcement, as predicted by Bloomberg BusinessWeek, citing "advanced talks" with networks such as CBS, Disney and Fox to offer 99-cent video rentals. The goal would be to kick start one of Apple's rare struggling products -- Apple TV -- which for three years has failed to make much of an impact. Per sources, Apple could introduce a $99 version of that device, along with the new content renting scheme at the Sept. 1 event.

Gleacher & Co. analyst Brian Marshall told Reuters that the event would probably only feature an Apple TV announcement and a focus on new iPods. He doesn't expect any music streaming announcements until the first half on next year.

"It'll be about the iPod," he said. "Apple TV, that's still chugging along. They will likely introduce [an Apple TV] in a sleeker case with more storage, but that's not going to be a big deal."

But Apple could just as easily announce its streaming music plans at the event without announcing the actual availability of the service. Doing so could take some wind from the sails of recently launched streaming music services like MOG and Rdio, as well as put some pressure on labels to fall in line with its plans. But it seems unlikely that Apple would do this since it goes against the company's strategy of announcing new products and services only when they are immediately available.

Meanwhile, the most likely announcement to take place at the Sept. 1 event is the introduction of a new iPod Touch with a front-and-back video camera lens that will support Apple's new "Facetime" video-calling feature, first introduced with the iPhone 4.