Apple Deals for Cloud Service Complete

June 02, 2011, 10:01 PM EDT By Adam Satariano and Andy Fixmer

June 2 (Bloomberg) -- Apple Inc. reached an agreement with Universal Music Group, the largest record label, setting the stage for its new service to let users access song libraries on multiple devices, two people with knowledge of the talks said.

The new music service, enabling customers to store their music on Apple’s servers, will be previewed on June 6 by Chief Executive Officer Steve Jobs at Apple’s annual developers conference in San Francisco, said the people, who declined to be identified because the deals aren’t public.

Apple’s deal with Vivendi SA’s Universal Music, whose artists include Lady Gaga and U2, follows agreements with Sony Corp.’s music unit, Warner Music Group Corp. and EMI Group Ltd. By moving the files into the so-called cloud, songs will be available on devices such as the iPhone and iPad without users having to plug in and synchronize the gadgets. Instead, tracks can be streamed from anywhere with a Web connection.

To start, the service will be available only for songs that have been purchased through iTunes, said the people. Later in the year, Apple plans to introduce a $25-per-year plan so music purchased outside iTunes can be stored on its servers and streamed through an Internet connection.

Under the agreements with the labels, revenue from the cloud service will be split between Apple and the music companies. Apple will collect 30 percent, while the record labels will get 58 percent and owners of publishing rights will get 12 percent, the people said.

Earlier this week, Cupertino, California-based Apple said it would discuss its new iCloud service at the developers conference. The company also will talk about upgrades to its software for Mac personal computers and mobile devices.

Cnet.com earlier reported Apple had reached an agreement with Universal Music Group.

--Editors: Jillian Ward, Nick Turner

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Andrew Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editors responsible for this story: Thomas Giles at tgiles5@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net

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