I've been trying to come up with a scenario that would warrant this 80%, but most would be too far-fetched for a non-fiction blog like Techdirt. The existence of these locker services would have to lead to governments deciding there is no reason to keep downloading illegal. Then either new 'pirate' platforms would have to start outcompeting already existing platforms or most legitimate platforms would have to decide there is no value in having good relations with the artists and labels their users adore. Then most users must stop spending money on music. Why is this not realistic? Despite the increasing convenience of unauthorized downloads, authorized platforms such as Netflix are beating piracy in terms of traffic. If the suggested 80% decline would be realistic, it would have already happened. It didn't.

He further stated that:

“We are at a turning point. Either the internet becomes an economically viable replacement to CDs or else there is an admission you can’t get fair value from the internet, which would lead to lasting damage to the music industry.”

No, just no. Either the internet becomes an economically viable replacement to CDs or else? The internet is a revolution in computer networking and communication - it was never intended to be a replacement to CDs. The internet is a disruptive technology which among many great things has helped thousands (if not millions) of artists and musicians reach global audiences they would otherwise not have reached. It has helped artists gain exposure and popularity to generate the licensing revenue which helps pay for the salary of collection societies' staff. For this reason the new generation doesn't blame the internet (although sometimes they forget where they came from). Just recently I interviewed Para One, a successful French electro producer, who said:

“I personally see the internet as a blessing. It would be unfair to hate it, since it pretty much kickstarted our careers through forums, then MySpace, etc, a while ago.”

Let's just label the part where he says that the internet should be a CD replacement "or else" as the FUD that it is and move on. Actual research into this suggests there's actually money to be made for the music industry. Of course that remains to be seen and depends on a few factors such as how good consumers are at predicting their own behaviour. It's also dependent on the moves of other competing platforms such as Spotify and Google Music.

However, these are intelligent platforms, built in a reality where they have to compete with free and in which they must convert 'free users' into paying users. This is why I cringe when I hear people from a less reality-based side of the business say "piracy" needs to be stopped in order for these startups to succeed. A piracy-free internet would have to be so restricted (three strikes is not enough) that it would devastate these startups and most other future innovation along with human rights.

Although the ‘DRM free’ MP3 now being provided from many of the the major music download companies can be played anywhere, each download is watermarked with header information specific to the exact purchase and purchaser.  This article from Techcrunch gives more details on ‘dirty’ MP3s.  Consequently, if you purchase a ‘DRM free’ MP3 file from iTunes and then share it, and the person(s) who received it saves it to their iCloud, then Apple will know both (i) who shared their copy and (ii) whose copy is illegal.  For files from other watermarked retailers, the same information would only require coordination with the other site.

Next consider music purchased from sites that sell legal but ’clean’ MP3s without watermarks.  These files will have unique MD5 or SHA-2 signatures that can distinguish them to a particular company.  They will certainly have different signatures than the watermarked versions (because the addition of the watermark) and they will be unique from versions of the same song encoded by others.  When Apple’s servers detect a number of copies far in excess of the ‘clean’ mp3 company’s reported sales, they will know where to suspect illegal copying.

Then there will be MP3s that individuals created themselves from, for example, ‘ripping’ their CD collections.  While these are not watermarked to the individual, they appear to be unique for each ‘rip’.  To confirm this, I ran a test with fresh installations of the exact same CD ripping software on two different computers.  I then had them rip the same track from the exact same CD using the unchanged system default settings on both computers.  The MD5 hashes did not match. Small differences between the two reads, the internal timestamps, the system metadata, etc. likely resulted in the mismatch.  It will almost certainly also be different from the file hashes from legal download sites, both those that watermark and those that do not.    In short, if you and thousands other people have MP3s of the same song with the same file hash value, you will not be able to credibly claim it occurred because all of you ripped it from your CD collections.

Apple would not have to.  They would simply have to comply with an information demand from the RIAA, who has had no problem with being seen as the bad guy in hardball enforcement against file sharing.  Moreover consider this:

1. Apple is the largest music retailer on the planet.
2. Apple believes, possibly justifiably, that it loses billions of dollars annually to illegal music file sharing.
3. The easiest way out of the legal jam over challenged content in your iCloud storage would be to convert the suspected iCloud music by buying it from Apple.  Apple becomes almost like a white knight in the process.

In the coming weeks, many customers and friends will ask us this question: why am I not able to automatically access Numero in my iCloud? The simple reason is that Apple and their major label "partners" have created a reward system that is both incomprehensible in scope and totally out of sync with iCloud's streaming peers' (Rdio, Spotify, et al) financial mechanics. As we have been entrusted with an incredible wealth of creative assets, and our primary responsibility is to our partners; the artists, producers, and songwriters that make up the Numero catalog, we feel that Apple’s pittance is an insult not only to them, but every other musician, living or dead, and, if the latter is the case, their heirs.

With that in mind, we have declined Apple’s invitation to iCloud.

IFPI’s chief executive, Frances Moore, told me via email that iTunes Match was “good news for music consumers and for the legitimate digital music business. It is the latest example of music companies embracing new technology, licensing new services that respect copyright and responding to the new ways consumers want to access and enjoy music.”

Brisbane-based intellectual property lawyer Ken Philp said iTunes Match provided a means for people to "launder" pirated music, as it would substitute a pirated track on a person's hard drive for a legitimate version accessed from the cloud.

Mr Philip, who is retained to defend the intellectual property rights of Jimi Hendrix's collections in Australia, said iTunes Match had the potential to legitimise pirated collections and encourage more piracy.

Peter Sunde, co-founder of file-sharing site The Pirate Bay says iTunes Match marks a big step towards consumers losing control of their media. The problem isn’t the $25, it’s that it doesn’t make sense to pay Apple, with its closed-source system, to gain access to music you’ve downloaded. More crucial than that, he says, is what that could mean for the future of sharing music.

Sunde cites Spotify as an example. The music-streaming service does let you share music links with your friends, but they must have a Spotify account to hear them. People who use Spotify have already stopped sharing and keeping their songs, he says. “In the end if people are dependent enough on the services, there will be no more copies [on local drives].”