As part of Apple’s iCloud announcement this week, Steve Jobs announced a “cloud sync” feature similar to those launched by Amazon and Google in recent weeks.  This service had been heavily rumored and even partially pre-announced for weeks.  The announcement answers most questions about how iCloud differs from the Amazon and Google offerings, and what Apple is able to offer now that it has licenses from the major recording companies while the others don’t… yet one tantalizing point remains unexplained.

iCloud automatically stores users’ iTunes music tracks online.  It automatically downloads newly purchased tracks  to all of a user’s connected iTunes devices, which include iOS devices (iPhones, iPod Touches, iPads) and Windows PCs (Vista or higher; XP isn’t supported) and Macs with iTunes software.  Users can choose which of their previously-purchased iTunes tracks are copied to all of their devices. It’s all free to iTunes users, but you have to use an Apple device or Apple iTunes software to use this feature of iCloud.

Apple doesn’t make any mention of streaming content from iCloud to Internet-connected devices, whether Apple or otherwise.  It all seems to be file copies and downloads.

This leads one to wonder: just why did Apple pay $80 Million for the streaming infrastructure of Lala.com in December 2009?

Apple is ambiguous (at best) on this point.

The iTunes Match feature adds to the mystery.  iTunes Match, which will launch this fall, lets users store their non-iTunes tracks in iCloud, regardless of their origin and as long as they are in a standard DRM-free format.

iTunes Match incorporates a feature that has come to be known as “scan and match”: it identifies music on the user’s device, using techniques such as examining ID3 metadata tags in MP3 files and acoustic fingerprinting.  If it finds a match and the track exists in the iTunes catalog, then it need not be uploaded to the Cloud; Apple will simply make a copy available for that user.  If iTunes doesn’t have the track, then it’s uploaded to online storage.

Apple charges users $24.95 per year for this feature, a chunk of which will go to record labels as royalties.  Given that most “non-iTunes” tracks are likely to be of dubious origin (downloaded from file-sharing sites, ripped from friends’ CDs, etc.), this amounts to a “piracy amnesty” fee.  It’s also worth noting that Apple didn’t originate this technique.  Apart from Michael Robertson’s MP3tunes.com, which had to drop that feature under legal pressure from the record labels, CatchMedia offers this feature today in the UK, in partnership with Carphone Warehouse.  It has record company licenses and charges consumers a fee that amounts to double Apple’s price.

The scan-and-match technique has two advantages over the Google and Amazon schemes, which require every track to be uploaded.  First, uploading takes time.  Depending on the number of tracks in a user’s collection and the Internet connection speed, uploading could take hours, days, or even weeks.  Scan-and-match takes seconds per track as long as it finds a match.  The other advantage is that for matched tracks, the user gets iTunes’s high-quality (256kbps AAC) version of the track regardless of the quality of the track on the user’s device.

The question is, how does the user get this track?  Is it downloaded to the user’s device(s) or streamed?  If it’s downloaded, does the user’s original file stay or disappear?  Again, Apple does not say.  The web page uses language that sounds intentionally ambiguous: “the music iTunes matches plays back at 256-Kbps … quality.”  The press release says “replaces your music,” which is a bit more suggestive of downloads; yet it also says “it makes the matched music available in minutes (instead of weeks to upload your entire music library)”, which implies that “replacing” does not involve downloads that could be as time-consuming as uploads.  Furthermore, Apple’s acquisition of Lala tips the balance back towards streaming.

Even knowledgeable commentators have mixed views; some (like CNet and the New York Times) say download, while others (like the Associated Press via Eric Garland of online media measurement firm BigChampagne) say stream.  Others such as Music Ally and Digital Music News are hedging their bets.

The difference is certainly important.  So why isn’t Apple forthright about this aspect of iTunes Match?  Leaving aside Apple’s penchant for secrecy before launch — which Apple otherwise didn’t exercise this time — there are a few possible explanations.  The options, as I see it, are these:

1. Apple intends to let users stream their tracks to any Internet-connected device, not just iOS or iTunes devices, using a web interface.  Google and Amazon offer this.
2. Apple intends to let users stream their tracks, but only to iOS devices or PCs/Macs running iTunes, using some type of proprietary secure streaming protocol that excludes non-Apple devices.
3. Apple will download copies of iTunes Match tracks to users’ iTunes devices.

The first of these strikes me as unlikely, given that everything else about iCloud and iTunes Match seems designed to recapture the platform lock-in that Apple enjoyed when it used DRM.  Now it’s lock-in through the convenience of seamless, automated cloud sync.  Yes, you can copy your tracks to non-Apple devices, because they are DRM-free, but it’s a hassle compared to the automated ease of iCloud.

Furthermore, because Amazon and Google offer streaming, wouldn’t Apple want to publicize it heavily instead of using ambiguous language?  Apple is not shy in using a competitive matrix to claim its superiority over the others.

The second is a distinct possibility.  It would also explain Apple’s ambiguous language: it’s the type of “feature” that critics would pounce on, given that it’s clearly less open than Amazon and Google, and includes what could be called DRM.  If this is what Apple intends to offer, it’s not surprising that Apple would be reticent or evasive about it now.

The last option is also a possibility.  It is consistent with platform lock-in; moreover, it increases the possibility that users will use iTunes and iOS devices as their only music players.  It could be a feature of the financial deal that Apple struck with the record companies.

But there are two problems with this option.  First, it would cost Apple much more money, as royalties on downloaded copies would be much higher than on streams.  Second, this option “elevates” non-iTunes tracks to the same status as tracks purchased from iTunes.  It sends a message that users need not purchase tracks from iTunes, yet those tracks can become full-fledged iTunes tracks anyway.  That’s the status quo for tracks stored locally, but it’s inconsistent with Apple’s opportunity to re-establish lock-in through the Cloud.

What do you think?  Here’s a poll:

In any case, what Apple is definitely not offering with iCloud is the ability to stream any of the music from its vast library on demand, as is the case with services like Spotify, Rhapsody, Napster, Rdio, and MOG.  Instead, Apple is sticking with the paid-download model.  It boggles my mind why journalists and analysts aren’t focusing on this distinction, which to me seems far more important than “cloud sync.”

I have said that cloud sync is now a “checklist item” for online music services.  I’ll go further and state that it may turn out not to be a particularly valuable feature.  For those who use streaming subscription services, it’s irrelevant.  And for those who hoard thousands of MP3s on their hard drives — a crowd that overlaps considerably with the crowd that actually uses more than one or two music devices actively — cloud sync could become a nuisance once their 8GB or 16GB portable devices fill up with tracks that the almighty Cloud puts there automatically (for that scenario, Apple needs to invent iCache).

Furthermore, if you have multiple music devices, the odds are that you listen to different types of music on each device anyway.  My PC is used mostly for background music in the office; my Android handset is for active listening while commuting; my iPad is for home with the kids.  I have a moderate-size digital music collection (a few thousand tracks) and use Rhapsody and Pandora as well as file-based music players.  Occasionally I want to copy music files from my PC to another device; a cable or Bluetooth works just fine.  Cloud sync doesn’t help me.