Published April 14, 2011
Amazon.com Inc is due to meet with music label executives on Thursday to hash out deals over the online retailer's controversial cloud-based media locker service that has sparked a music business uproar.
Amazon launched the free digital locker Cloud Drive in March as a way for its customers to store songs and play them on mobile phones and other devices. They can also store photos and documents.
Music labels are furious that Amazon has not paid for licensing rights to stream music to consumers. They argue that Amazon only has licensing rights to sell digital downloads.
Several of Amazon's music licensing executives were in New York from Seattle this week to discuss a deal with the labels, according to two people familiar with the matter who asked not to be named because the talks are confidential.
In a letter to music labels on Monday, Amazon's Music team said that early indications had shown that the Cloud Player part of the service had boosted sales of digital songs in its MP3 store.
The letter, obtained by Reuters, said Amazon does not need a license for Cloud Drive because it is a general online storage service for all digital files, not unlike Google Docs or Microsoft's SkyDrive. Amazon also compared its Cloud Player to Microsoft's Windows Media Player.
"We don't publicly discuss our meetings with partners, and we have not announced any changes to Amazon Cloud Drive or Amazon Cloud Player since the launch," said Amazon spokeswoman Cat Griffin.
While Amazon has publicly contended that Cloud Drive is legal, the company is likely to want to smooth things over with the music industry, with which it has closely worked on CD and MP3 sales.
The risk for the music industry is that other companies might follow Amazon's lead and launch a similar service if they believe it to be legal.
Apple Inc and Google Inc are planning to launch music locker services, sources have said.
Music labels do not want to miss out on new revenue sources, so they are concerned over any new services involving music that do not require licenses.
Most of the discussions between the music industry and online companies have involved major label owners including Vivendi's Universal Music Group, Sony Corp's Sony Music Entertainment, Warner Music Group and EMI Music.