Analysis: How Apple, the RIAA and iCloud Could Shake Up the Hosting Landscape

What happens when you take two very litigious institutions, put them at either end of a new technology, and put hundreds of millions of dollars at stake?

We may find out when Apple launches its full-blown iCloud service later this year and as it begins to host entire music libraries for potentially millions of consumers. The stakes are high and could impact the broader cloud-computing market whether those litigious institutions -- Apple and the Recording Industry Association of America (RIAA) -- continue their peaceful co-existence or not.

Answers to these questions could have a deep impact on cloud hosting services:

• How will Apple respond to customers who want to store pirated music on iCloud? Will it, ultimately, take a ’see-no-evil’ approach, or simply report offenders to the RIAA either voluntarily or, say, under court order?

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• Will the RIAA leave Apple alone, content that even if customers host volumes of stolen music in iCloud that the technology, in the long haul, will be too great of a benefit to recording artists to risk getting in its way?

• If Apple and the RIAA reach an understanding or formal agreement, will it be transparent and provide a framework for other hosted, cloud-computing services in the future?

The way iTunes over iCloud will work is straightforward, and includes Apple maintaining a library of 18 million songs on its own servers; when you sync your iTunes library with iCloud, Apple using its forthcoming iTunes Match service, will simply make its cloud-hosted MP3 available to your account rather than requiring you to fully upload that file. It will store any of your other files it does not have on its servers.

An early look at this service, which Apple has made available by downloading iTunes and iOS updates, shows that it provides long-needed relief to anybody who has maintained a Mac or PC and iPod, iPhone and/or iPad. Device continuity of an iTunes library makes both the library and the devices immediately less of a headache and more valuable. We were able to take a fairly large song collection – with varying song availability on a Mac, iPad and iPhone on the same account – and with minimal effort synchronized all iTunes-purchased songs across all devices, so each song played on each device. It worked not just for songs, either: the service also synchronized – over the air - audio memos and files that we created.

Where it gets hazy is what Apple will do when you upload pirated songs or files from your iTunes library with iCloud.

NEXT: Apple And The RIAA Walk A Tightrope

According to the site Ars Technica: ’A lot of readers asked if Apple shares any information about users' scanned libraries with third parties. Apple tells Ars ’no,’ so the RIAA won't suddenly have a list of every song you ever downloaded or ripped.’

The RIAA, for its part, has appeared cautiously optimistic. Its CEO, Mitch Bainwol, issued this statement about iCloud:

’This groundbreaking new model exemplifies the unique cultural benefit that springs from the partnership between music and technology. When a service comes along that respects creators’ rights and ignites fans’ appetites for their music collections, it’s a win for everybody.’

Bainwol’s statement is a fancy way of saying nothing.

Asked further if the RIAA was having conversations with Apple, or if there was any agreement between the two over treatment of stolen music on iCloud, an RIAA spokeswoman declined to comment apart from saying: ’We don't negotiate licensing terms with services,’ and indicating it’s handled on a label-by-label basis with services.

While the RIAA might not negotiate with services, they do sue. Right now, they’re suggesting LimeWire is liable for $75 Trillion (yes, trillion with a ’T’) for supporting copyright infringement.

A spokeswoman for Apple did not respond to a request for comment.

Entire, new areas of contract law could wind up debated in federal and state governments by the end of the year – all impacting the rights of cloud customers and responsibilities and liabilities of cloud hosts. And while there are existing laws and court rulings on these very issues, it’s worth noting that both Apple and the RIAA have armies of lawyers they have never shied away from using.

There is a tightrope for Apple. If it pushes too hard to against customers who have DRM-free files they want to upload to iCloud, they risk alienating them at a time they need iCloud to get off to a fast start. But if they don’t, they risk years of distracting and expensive legal wrangling with the RIAA or individual record labels.

For those contemplating a wide-scale move of critical data to the cloud, it’s definitely worth keeping eyes on iCloud.