Apple has inked its licensing pact with Universal Music Group and will reportedly charge $25 a year for an iCloud subscription. That revenue stream--once you factor in splits with the music industry--is essentially peanuts, but the value of iCloud will go well beyond the profit and loss statement.

First the news, CNET's Greg Sandoval reports that Apple has cut a licensing deal with Universal Music. That move gives Apple all the major labels and Universal brings U2 and Lady Gaga to the iCloud party. Meanwhile, the L.A. Times reports that Apple will "eventually" charge $25 a year for iCloud and sell advertising around the service.

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When you factor in the revenue split with the music industry--labels 58 percent, publishers 12 percent and Apple 30 percent--Steve Jobs & Co. will get $7.50 in revenue for each iCloud subscription.

As for the rudimentary math, Apple is projected to move 184 million iPhone units in calendar 2011 and 2012, according to Piper Jaffray analyst Gene Munster. We'll assume that half of those iPhone subscribers will ultimately pay for iCloud with Apple getting $7.50. That's $690 million in revenue a calendar year.

Apple is also expected to sell 75 million iPad units over calendar 2011 and 2012. Again we'll assume half of those iPad users buy the iCloud subscription. Those iPad units will deliver $281 million in revenue a year in calendar 2012.

As for the iPod, Apple is expected to move 81 million units over calendar 2011 and 2012. We'll assume one third of those iPod users will get iCloud--it's unclear whether the Nano will be able to tap into Apple's cloud service. One third of that iPod base still gets you $200 million in revenue a year.

The grand total for Apple from iCloud at $25 translates into about $1.2 billion in annual revenue for the company. That's not a huge deal for a company the size of Apple, but it's not chump change either. In Apple's most recent quarterly SEC filing sales of music-related products--iTunes sales--were $574 million for the first six months of Apple's fiscal year.

In a nutshell, iCloud will at least double Apple's music-related revenue if that $25 a year figure is accurate. The math obviously gets more interesting for Apple if it gets 75 percent of its iPhone, iPad, and iPod users on iCloud. And the figures would really look good if you assume that Apple goes with a working-class iPhone that gives it a much larger addressable market of 500 million units or so.

However, given that Apple is expected to report revenue of $103 billion in its fiscal year ending September 30, iCloud is a nice add-on, but not a financial boon.

So what's the big deal For Apple, iCloud and streaming music gives the company a nice moat against Google and Amazon, two companies that jumped first into the music locker business. In addition, Apple ensures that iTunes becomes more of a platform.

In the big picture, however, iCloud is more about the halo effect for Apple. The direct revenue attributed to iCloud doesn't matter as much as the value in the Apple chain. When we get real numbers to play with, the iCloud revenue impact will be more clear. For now, there's enough information to get a rough idea of how iCloud fits into Apple's revenue machine.

Sterne Agee analyst Shaw Wu summed up the iCloud impact, which goes beyond direct revenue.

iCloud could be a very big deal, making iTunes even more powerful and useful by allowing access to content from any device, anywhere. In addition, we notice that every time a major new feature is added to iTunes (like TV and movie rentals), its utility value increases, which in turn drives more hardware sales, i.e., iPhone, iPad, and Macs. Press reports indicate that Apple has reached cloud licensing agreements with the major music labels. What is less clear is if Apple has also reached deals with providers of TV shows, movies, and e-books. Regardless, we believe reaching cloud music deals would be a great start and further distance Apple from Google, Amazon, Microsoft, and others, which in the last 10 years or so have failed to put even a minor dent to iTunes.

This story originally appeared on ZDNet's Between the Lines as "Apple iCloud: Nice incremental revenue boost, but halo effect more notable."