Why the Online Music Industry is a Mess

This will explain a lot.  From CNN Money:

If disruption means losing money, then online music services know how to spend like rock stars.

Adoption and revenue growth rates at a few top players like Spotify and Pandora are real — Pandora (P) reported earnings yesterday, breaking even — but what are the costs to play? It’s still unclear in many cases if audience growth will translate to profit.

Every few years a new service rises up, captures audiences but then has the same cost-centric problems as every one that has come before: negotiating terms with rights holders. Music labels, music publishers, and in some cases, emerging artists who circumvent traditional music property conventions by going it alone — think self-managed Taylor Swift — all want or need a stake in streams or downloads, and that can make or break a deal.

“With most other businesses, if a supplier makes unreasonable demands, a retailer can turn to other providers,” wrote Michael Robertson, CEO and founder of, about the problems with the industry. “Since copyright law gives record labels and publishers a government-granted monopoly, no such option is possible with music. Digital vendors have only two options: Accept the terms or not include those songs in their offering.”

Read the rest here.

Alan Cross

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker. In his 40+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.

Alan Cross has 38051 posts and counting. See all posts by Alan Cross

One thought on “Why the Online Music Industry is a Mess

  • Honestly, after reading this piece; many common elements I've heard time and time again popped up. All these articles speak about the "industry" as some glorious overlord which watches over and produces everything. On second read, I thought, why not have the "industry" eradicated?

    The music business does not come from the holy grail of conglomerates such as pepsi and wal-mart – it comes from the artist. Though pop music and the entire genre of formulated, consumerist market music is seen as an integral part of this so called "industry", I see no reason why we must propagate a formula that not only is out dated but also unwanted.

    The solution is not to find advertising allowances, or create packages with phone companies. Rather it truly is to allow money to be generated by the artists themselves. Allow for a freer market of artist created fandom and let's pull away from the old model of having some big wig own a production company to press the music onto a format. The internet has allowed anyone and everyone to produce their own music – the differentials being in equipment and time. If an artist wishes to seek money, they should not do it with a recording label, but with themselves looking at their band as a single business entity.

    We know the troubles that artists see when joining a label – however more and more artists are willing to go it themselves. Dearly Beloved is a great example – their band IS their business, and they have a publicist: that's all. If more bands adopted this idea, not only would there be a wider variety of music and interests, but more money would be created and even so, more jobs but bands looking not at some large company overseeing their needs, but viewing themselves as a large company producing a product that is intellectually patented by them.

    It's just a simple snipet of a greater issue that can be debated – but that sums up my view.


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