Much has already been written about the fundamental legal/licensing questions surrounding Amazon's move -- namely, is Amazon required to secure music label licenses (at substantial cost) in order (1) to enable consumers who have purchased their music to store that purchased music in the Cloud, and (2) to enable them to stream that purchased music from the Cloud?. Here is a nice summary piece by MG Siegler of TechCrunch (click here) -- a second helpful overview by Greg Sandoval of CNET (click here) -- and a third thorough overview by 3. I won't repeat that background.
This record label licensing issue is particularly interesting to me, because I negotiated all major and indie label streaming licensing agreements during my time as President of Musicmatch. In fact, we at Musicmatch led the way in securing those industry-first licenses -- so, in effect, every single streaming negotiation was entirely new at the time. Those negotiations were frequently painful. Those negotiations also were much closer in time to the major label lawsuits against Michael Robertson's MP3.com -- the original music storage locker service that was crippled by litigation (MP3.com was hit by a $53 million judgment in the landmark digital media case UMG v. MP3.com, and eventually purchased by Vivendi (owner of UMG) which ultimately did nothing with that service).
But, MP3.com did something very different logistically -- MP3.com itself created a locker of music that it itself ripped from purchased CDs -- and then it gave consumers the ability to access those same bits from anywhere in the world if those consumers already owned that music (whether legitimately or not). Amazon's Cloud Drive/Player service does things differently -- Amazon does not create a locker of music bits on its own. Rather, it enables consumers who purchase their music via Amazon's music service to store that music (those bits) in Cloud Drive and to stream that purchased music. But, it also does enable consumers to upload and stream much of their music from their own music collections no matter how that consumer "has" that music (the service does not permit uploading all of the user's music collection -- some that is DRM protected cannot be uploaded).
And, that may be the central hook that that labels use if they choose to litigate against Amazon; and they are already rattling their sabres in that regard. The major labels already have a pending lawsuit against Michael Robertson again -- this time related to Robertson's second storage and streaming service MP3tunes.com, which enables consumers to upload their MP3 files to, and stream them from, the Cloud (again, no matter how those consumers "have" that music). Although Amazon's service is different from MP3tunes.com, it is not altogether different.
So, will the labels go after Amazon in a desperate attempt to cling on to the last remnants of their past business models and practices? Is it really worth the fight against Amazon -- a behemoth fully prepared to fight?
One thing is for certain -- both Apple and Google will be watching very closely, because they too will soon be launching their own Cloud-based storage and streaming services.