By Guillermo Escofet

Earlier this month, a mobile industry player, handset retailer Carphone Warehouse, broke new ground in the cloud-music-services sector with the launch of Music Anywhere. The service is a “digital locker,” in the sense that it is designed to let users store their music collection in a central place on the internet, which can then be accessed by different devices.

But although digital-locker services usually wash their hands of any responsibility for the legality of the tracks being uploaded, saying they can’t be held accountable for pirated music owned by their subscribers (much to the chagrin of music labels and rights owners), Music Anywhere aims to pay royalties for all music stored and streamed over the service. And the platform provider behind the service, Catch Media, has already gone a long way toward achieving that, having secured licensing deals with all four major labels and several indie-music aggregators before launch – no mean feat, considering how ridiculously complex the music industry makes it for service providers to license content and how suspicious labels are of locker services.

Rather than have users physically upload tracks to Music Anywhere, the service scans users’ PC hard drives for music tracks and tries to match them with the tracks in its six million-strong catalog of licensed music. If a match is found, the corresponding track in the catalog is added to the user’s account. If a match is not found, the track on the hard disk is uploaded to a digital locker. In both cases, the user is free to stream the tracks to Web browsers, PCs and one predefined handset (initially just iPhone, Android and BlackBerry devices). Catch Media says it will keep a tally of unlicensed tracks and note how often each one is streamed, so that if licensing deals can be secured for them in future, rights holders will get their fair dues.

Users pay a flat fee of £29.99 a year for the service – when not bundled into the price of handsets sold by Carphone Warehouse – and a portion of subscription revenues is divided among the rights holders on a pro rata basis, depending on how much each track has been played.

Backup services so far

Until now, mobile players have mostly dabbled in the personal-information-management (PIM) and user-generated-content side of cloud services – an area commonly referred to as “data backup and storage.” In fact, Carphone Warehouse has launched Music Anywhere as an extension of its My Hub backup service, where handset users can store contacts, pictures and messages. Numerous operators have launched My Hub-type services, such as T-Mobile, which has put great focus on its My Phonebook Backup service, and O2, which failed to get much traction for its heavily marketed Bluebook service.

Offering services that back up subscribers’ contacts and other PIM data along with snapshots and videos taken on the user’s camera phone is a natural play for operators. It’s a useful service for subscribers, who don’t want to lose that data if they lose their phone and want an easy way of porting that data when changing phone. And it’s useful for operators, as a way of encouraging users to stick with their network. It also avoids legal complications, since none of the content being backed up is copyrighted.

Digital-locker services are considered by many in the music industry to encourage piracy because they make the ownership of ill-gotten tracks more attractive by providing anytime, anywhere accessibility through the “cloud.” MP3-music-service pioneer Michael Robertson, for example, is being sued in person by major music label EMI for running music-locker service MP3tunes.com.

Legitimizing locker services

Music Anywhere’s model tries to legitimize locker services in the eyes of the music industry. Although a lot of the music “uploaded” to Music Anywhere will no doubt be pirated, the service provides a rare opportunity to the music industry to claw back some revenue from pirated content – even though Music Anywhere’s small print says that subscribers whose music collections are mostly made up of pirated tracks might have their subscription terminated.

Informa understands that numerous operators are planning to follow Carphone Warehouse’s lead and extend their data-backup and storage services to digital lockers. There are reportedly a few 20-30-petabyte digital-locker deployments by major operators in the pipeline, costing US$100-200 million – and some of these might rival any such deployments by the online players.

The biggest deployments appear to be in North America, where operators have identified this kind of service as a key part of their value-added-services strategies. In Europe, deployments are reportedly less ambitious – more about testing the waters than a full-fledged commitment to such services. But now that Vodafone seems to have hit a dead end with its Vodafone 360 service, it is reportedly refocusing its attentions on cloud services.

In some ways, digital-locker services are not a natural play for mobile players, since the vast majority of digital-media content is downloaded to and stored in PCs. Most multimedia content on phones tends to be user-generated photos and video clips.

Role for operators

But many mobile operators belong to parent firms with fixed-line arms, making a service that converges mobile and the Internet more of a natural fit. And many mobile operators are becoming distributors of netbooks and other PC products as part of their mobile broadband offerings, making the dividing line between the mobile and PC worlds faint. And the “anywhere, anytime” idea is intrinsic to mobile.

In addition, the idea behind locker services is that users should store all of their digital content in a single place, rather than have numerous separate backup/locker services for specific types of content and devices.

There are powerful online players, such as Google, that are angling to take on the role of central repositories of people’s digital content. But operators have a powerful factor in their favor: user trust. It is arguable that if users are given a choice, they are more likely to trust operators than online players with their data. There are numerous examples of online services that have shut down with little notice, leaving users in the lurch. By contrast, operator services offer a greater sense of permanence and accountability.

By the same token, though, users might think twice about storing all of their content with their operator for fear that it might stop them from churning to another operator when convenient. Stickiness is precisely one of the factors prompting operators to deploy such services, but it’s not necessarily what users want.

More launches inevitable

There is little doubt that digital-media cloud services such as Music Anywhere will be deployed by mobile operators, either through the same platform provider, Catch Media, or others, such as NewBay Software. And if they don’t sign up to licensing deals with rights holders, they will at least try to show more accountability for the content uploaded by users than the likes of MP3tunes.com, through some kind of digital-rights management. For example, some of the platforms targeted at operators are designed to carry out copyright checks of all content uploaded and apply restrictions on downloading, streaming and sharing depending on the copyright owners’ rules and the operators’ business rules.

It will be interesting to see which firms users will trust most with their precious content.