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Amazon Cloud Player licensing dispute outcome will have huge ripples

by Phil Hornshaw

When Amazon (AMZN) rolled out its new Cloud Player service earlier this week -- one which allows users to upload their own music files to Amazon’s remote servers, then stream or download them on other devices -- the company didn’t get permission from record labels, and it isn’t paying them any money.

Instead, Amazon argues that its digital locker, the server space it gives users that is tied to each user’s Amazon account, and is filled with files that user owns, are just storage. Providing the ability to play one’s own music shouldn’t require any additional payment to record or music companies, Amazon argues -- it would be like selling a CD and then charging for the privilege of playing it in a CD player. Or at least, that’s the thinking.

Meanwhile, the record companies are shocked and probably a little terrified. Streaming music services like Amazon’s could potentially mean huge revenues in licensing fees, and digital lockers effectively lock the music companies out. Apple (AAPL) and Google (GOOG) are also rumored to be working on streaming, cloud-based music services, but they’re supposedly in talks with the record companies about it. How things progress for Amazon will be a huge game-changer -- it will either give music companies a whole lot more control over what you get when you buy it from them, and whether you actually own the music you paid for, or it will allow Apple, Google and Amazon to proceed unhindered.

Legally, this is a big, scary gray area for the record companies, which is why Amazon didn’t go the traditional route of getting license agreements. Copyright law hasn’t adapted to the changing demands of the Internet, and so “streaming” and “downloading” don’t appear in the law anywhere, according to an analysis story from Ars Technica. Because the letter of the law doesn’t actually cover these services, it’ll be up to courts to decide what’s covered and what’s not -- at least until lawmakers actually write copyright laws to cover such services.

One big question is whether the license agreements Amazon has already entered into as a music retailer are affected by the Cloud Player. One of the sticking points in these agreements, according to Ars, is that retailers don’t allow people to download a file multiple times, which is exactly what the digital locker Amazon has set up allows. That could be an avenue through which the Cloud Player gets shut down.

Going forward, it’s likely to be a long and arduous battle between record labels and Amazon. In the meantime, the Cloud Player is live and works on Android devices: so enjoy it while it lasts, and while it’s a perk of being an Android device owner and not shared by the rest of the mobile community.