The Cloud

Why it matters: The term “cloud” has only been in general use for about two years, but anyone who has worked on a Google doc in concert with someone else has already dipped a toe into cloud waters. Experts theorize that, eventually, most of the work, both business and personal, that is now done on computers with hard drives and individual software licenses will migrate to cloud servers. The most recent application for Ccoud computing making some rain is music purchasing and storage.

Who’s doing it: Earlier this year, both Google and Amazon launched cloud-based music locker services. Consumers can upload their digital music collections and can then stream those collections to any digital device without having to synch that device to any other digital device. Both companies launched their services without first securing licenses from music distributors, using the rationale that consumers were uploading their own music to the server, just as they might load their own music onto an MP3 player. Both companies are now said to be in talks with the music labels.

Apple has made news recently as it prepares to launch iCloud, a new service that will enable the 200 million consumers who have iTunes accounts store their music in a cloud and stream it back to themselves on tablets, computers and smartphones. The New York Times reports that the company has signed contracts with Sony Music, EMI and the Warner Music Group and is in the final stages of negotiations with the Universal Music Group. The advantage to having secured licensing agreements with the music labels is that Apple will be able to scan a user’s music library, match their songs to a master collection on the company’s server and assign the user the right to stream all the music that is verified in that way. Users will not need to upload their music libraries, a process that is time-consuming and tedious.

Assessment: The widespread adoption of cloud technology seems virtually inevitable. For business, it reduces hardware and software costs, along with the need for IT staff. It can increase efficiency and reduce duplicated efforts. Security remains a concern, particularly for businesses. But at least for now, consumers will be most interested in its ability to streamline music cataloguing and portability. Although both Google and Amazon have beat Apple out of the gate with cloud-based music storage, they have done so with services that are imperfect, incomplete and inconvenient. But that hasn’t stopped Amazon from coming out swinging. Earlier this week, Amazon offered consumers 20 gigabytes of free cloud drive storage with the purchase of Lady Gaga’s newest album at the promotional price of 99 cents. It was selling for $11.99 on iTunes. Unfortunately for Amazon, that gambit may have backfired. The offer drew such an enormous response that it stalled the very servers Amazon was trying to promote and many consumers were unable to listen to the music they had just purchased.

By comparison, Apple looms large over the whole category of online music sales. The company pioneered the one-click music purchase and its iTunes store has become the model of a convenient and easy-to-use digital retail outlet. Some industry watchers speculate that the company will announce the new service at its annual developer conference in June and others believe that it will wait until the fall. But it almost certain that whenever the company launches iCloud, it will immediately become the horse to beat.