iTunes Match and iCloud: Pirate reward or anti-theft measures?

Apple’s (s aapl) new iCloud service comes with the ability to download your iTunes music purchases to any Mac, PC or iOS device associated with your account, and iTunes Match will extend that courtesy to your entire music library, regardless of where it comes from, when it arrives in the fall. Some claim the iTunes Match service amounts to a reward for music pirates, since it provides users with access to high-quality 256 Kbps tracks regardless of the source or quality of their originals. Others think that far from rewarding pirates, iCloud access to iTunes music provides a compelling legal alternative that should act as a piracy deterrent. So what’s the deal?

Speaking at the World Copyright Summit in Brussels this week, Victoria Espinel, the coordinator of U.S. intellectual property enforcement, said cloud music offerings like that unveiled by Apple on Monday “may have the effort of reducing piracy by giving value to consumers — the ability to own forever and access almost anywhere — that cannot be obtained with legal copies.” Espinel suggested that “the flexibility of the cloud may help spur the development of compelling legal alternatives.”

But wait, isn’t iTunes Match just “complete pirate amnesty?” After all, Apple didn’t specify any limitations on the ability of iTunes Match to scan and match ripped tracks and mirror them with 256 Kbps AAC tracks from its own iTunes library. In theory, those ripped tracks could’ve easily been ripped by someone else and shared via torrent or other less-than-legal solution. Also, the replacement tracks that Apple provides will be DRM-free, unlike those it gives current legitimate iTunes music purchasers using iCloud’s purchase history feature.

If iTunes Match does indeed process pirated music without issue, there’s no question that legitimate iTunes shoppers are the ones that end up looking dumb. Let’s say you download 50 albums from illegitimate sources, like torrent sites. With the $25.95 iTunes Match annual fee, you can download high-quality legitimate copies for about $0.50 per album. Compare that to probably around $9.99 per album when purchased legally through the iTunes Store, plus the $25 iTunes Match fee if you want that service.

Framed like that, it’s very hard to mount a convincing argument that iTunes Match doesn’t reward piracy. But it doesn’t only reward piracy. It also monetizes it.

Imagine a scenario where Apple hadn’t introduced support for content from sources beyond the App Store in iTunes Match. Would such a restriction discourage pirates? Hardly. Music piracy has been on the rise basically ever since it became possible, and shows no signs of abating. iTunes Match wasn’t likely to inspire music pirates to turn over a new leaf, no matter what.

What it does do, however, is allow record companies to recoup some of the losses associated with piracy, by effectively charging for music that was already stolen. In the example above, we saw how 50 albums works out to just $0.50 per year with iTunes Match if the music is pirated, but that’s still a massive increase when compared to the big goose egg.

Of course, iTunes Match amnesty could also actively encourage piracy, because of the obvious value proposition referred to above, and lead to an even steeper rise in the rate at which digital music is being stolen. But just like Apple may ultimately have sacrificed the Mac in order to score a victory in the larger future of cloud computing, it also might be willing to hasten the demise of traditional digital music sales (which seems inevitable anyway) in order to move to a more future-proof, subscription-based model. To use an old maxim, Apple may have cut off the limb to save the body with iTunes Match.