Please note that we’ve written a new article with much more information about iTunes Match and a couple brief how-to’s.  Just click here to read it.

Apple announced iTunes Match during the WWDC keynote causing quite a stir in the music world.  Some people say iTunes Match enables piracy; others think that Apple worked hard to satisfy the RIAA with the $25 subscription fee.  The more paranoid people in the audience think the new service will make it easier to track pirates.  Let us explain what iTunes Match does and the technology behind it; then you can decide what to do with your music collection.

Instead of syncing your non-iTunes music to your devices manually, Apple wants to match your current music collection and give you access to those songs anywhere through iTunes.  Once you’ve matched all of your music, it will have the same benefit as purchased music: download it as many times as you’d like to any of your authorized devices.  iTunes scans your music library and matches (via acoustic match technology) any tracks it can find in the iTunes Music Store.  After it’s done, you can download and replace your current music with 256Kbps AAC DRM Free tracks directly from iTunes.  If you have obscure music that’s not available on iTunes, Apple will let you upload it for safe keeping.  The service itself costs $24.99 per year, per iTunes account.  That covers the functionality; now let’s dig into it a little more.

Pirates rejoice!  No, not really… there are too many “unknowns” for anyone to think Apple granted “parley” with this $25 subscription fee.  We cannot be certain that Apple will only analyze your music library with LaLa’s acoustic match technology.  MD5 hashes, ID3 tags and other metadata could inform Apple of pirated music.  Considering the fact that they already know every song on our computers (iTunes Genius), I don’t think they’ll be turning any information over to the RIAA tomorrow… but can we be sure?  I’d love to assume that the subscription fee only exists to satisfy the RIAA, but without comment from Apple, we’ll never know.  I’ve heard that the fee breaks down into this:  30% to Apple, 12-18% to producers and 52-58% to the RIAA.  I assume that artists get a cut from the producers (which I guarantee is minimal).

In addition to those numbers, a popular indie publishing company — TuneCore — updated their FAQs to reflect the iTunes Match changes.  With the introduction of iTunes Match, Apple will pay the artist every time someone downloads or streams their music from iTunes.  Of course, TuneCore doesn’t mention how much… and it makes the payout numbers more confusing.  Will Apple pay the artists from the $25 subscription fee, some imaginary purchase or other revolutionary and magical calculations that only Apple knows?  TuneCore suggests iTunes Match is a great new way for artists to make money:

Therefore, as long as your song is available to buy in iTunes, you could, for example, decide to give that same song away free directly to your fans. In fact, it doesn’t matter how or from where your fans actually got your music. If your fans use iTunes Match to re-download or stream your song, you get paid.

Wow.  What if bands gave away free music?  Could they survive off the iTunes Match subscriptions?  It doesn’t look like it.  TuneCore updated their FAQs with more information about the payout:

Each time your music is accessed via iTunes Match, TuneCore will pay you a proportionate share of the total subscription revenue generated by the iTunes Match service. This means you are paid each time a subscriber re-downloads and streams your music. The pay-out rates can fluctuate each month, depending on how much subscription revenue was generated and how often your music was re-downloaded and/or streamed. As always, TuneCore will pay out 100% of the revenue it receives for your music.

That means the artists are only paid twice if someone buys their music, then uses iTunes Match to re-download or stream it from iTunes.  That’s more revenue in their pocket, but it doesn’t mean they’ll be giving away music.  With the revenue sharing model, the artists get next to nothing after Apple, the labels and the producers take their cut.

Ultimately, $25 per year matches up to 25,000 songs.  Any purchases from the iTunes Store do not count towards the 25,000.  It doesn’t matter where the song came from: ripped CD, shared from a friend, downloaded from a peer-to-peer service, etc.  There is absolutely no acknowledgement from Apple about piracy, so tread carefully.  If iTunes Match really does launder music, everyone would happily pay $25 a year to share, download and launder as much music as they’d like.

We feel sorry for anyone who decided to use the Amazon or Google offerings.  No matter how you look at this, iTunes Match is a better deal.  Apple worked with the labels and came up with a revolutionary music service.  Google and Amazon didn’t work with the labels… now they’re several steps behind.  Let’s face it; Apple is the only company with enough pull in the music industry to make this happen.  You probably didn’t know this, but Apple recently increased iTunes previews to 90 seconds from 30 seconds.  I expect the conversation with the music labels went like this:

Apple — We’re increasing the iTunes Store previews to 90 seconds.
Music Labels — No, you’re not.  We didn’t authorize that.
Apple — It’s better for our customers, and we’re not asking.
Music Labels — But we have to approve it!
Apple — You’re welcome to leave the iTunes Store if you’d like.
Music Labels — Crap.

It’s an interesting realization… music labels make more money from iTunes than any other revenue source.  They couldn’t survive without it.  I’m happy Apple worked with the labels to come up with iTunes Match.  It will be very interesting to watch the service develop over time.  If we find any more information about it, you’ll know right away.  Keep reading the blog and leave us a comment or two if you have questions.  We’ll do our best to answer them.


iCloud Venn diagram from Joy of Tech.