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Music is Biggest Battlefield for Cloud Technology Companies

Chris Morris|Special to CNBC.com
Thursday, 2 Jun 2011 | 10:59 AM ET

The skies are getting cloudy in the virtual world.

iTunes
iTunes

As cloud storage options grow, the technology is edging closer and closer to the mainstream—and that's creating some confusion. The abundance of options, combined with the general lack of mainstream education about the advantages and disadvantages of the technology, has a lot of people scratching their head.

Is this something they should care about? And, if so, which service should they sign up for?

While cloud storage might be one of the hotter buzzwords around these days, it doesn't represent an imminent, permanent change in your day-to-day activities, say experts. It's simply another way to store digital files and make them more convenient to access.

"These new models are not going to wipe away everything that proceeded them," says Ben Pring, an analyst with Gartner. "People will be running physical hardware and saving things to hard drives until long after we are gone."

Cloud Computing - A CNBC Special Report
Cloud Computing - A CNBC Special Report

Pring added, "There's a tendency to over exaggerate how fast these changes happen. The reality is the dominant suppliers in these industries are so large, with such vested interest and such momentum, that they have much more control over the pace of these tech changes than people might assume."

For many people, the cloud is already a daily part of their life, whether they store their photos on Flickr or another photo-sharing site or watch streaming films from Netflix.

In fact, the place most people will feel the impact of cloud storage is in their entertainment options. Netflix currently leads in film streaming, though plenty of companies are looking to unseat it. These days, though, music is the hottest battlefield.

Amazon and Google have both already announced cloud-based platforms that are designed to let people store their music collections online, allowing them to access songs (theoretically) wherever they go. And Apple is expected to jump into the fray soon.

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Google Music, launched May 10, will allow users to store up to 20,000 songs. Once uploaded, that music can be accessed from any PC or Android tablet or smartphone—but not, at present, from any Apple devices.

The service, right now, is free, though Google has hinted that it might charge users after Google Music emerges from its beta period.

Amazon's Cloud Drive, meanwhile, is very much focused on music, as well, but doesn't limit itself to that. The service offers 5 GB of free storage to all users, which is capable of holding up to 1,000 songs, 2,000 digital pictures or 20 minutes of HD video.

Source: bluemilecloud.com

For people with larger collections, the company is offering a range of tiered storage plans costing anywhere from $20 to $1,000 per year. (Amazon also offers a free one-year upgrade to a 20GB package to customers who buy an MP3 album.)

To encourage adoption, the company has added a "Save to Amazon Cloud Drive" for all digital music purchases to encourage use of the service and offers an option to let users upload songs from their computer's hard drive.

In both cases, though, the companies are facing opposition from recording labels. Music companies maintain that Amazon does not have the licensing rights to stream music, only to sell it digitally. The retailer says it is simply offering an online storage facility, similar to Dropbox or Box.net.

Google, hoping to avoid that backlash, has vowed it will delete users' MP3s if the copyright holder has a "legitimate claim" against their music being on the server. (The company uses spectral analysis or watermarks that some labels insert into legitimately distributed MP3 files to determine its authenticity.) So far, though, the labels seem less than thrilled, fearing both sites are safe havens for people to store their pirated music.

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Record labels are rumored to already be on board with Apple's expected entry into the cloud storage space. Analysts say the company should launch the service this year and that it will stream songs directly to your iOS and other devices, eliminating the need for people to upload songs to multiple devices.

Adoption rates for cloud technology will vary—largely by demographic. As Pring points out, people in their 20s have grown up accustomed to the Internet being the source of their entertainment and aren't hesitating to embrace the cloud. Older consumers will take a little more convincing.

"These services are aimed at that younger demographic," he says. "Whereas for the Heartland and middle aged Americans, there are lot of security concerns and emotional comfort concerns about not being able to hold something in their hands. … [Cloud providers] are going to have to continue to assure their client base that these things are secure and that customers aren't going to be exposed as a result of them."

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