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That Digital Music Service You Love Is a Terrible Business (fortune.com)
An anonymous Slashdot reader quotes an article from Fortune:
Rdio goes bankrupt, Pandora hangs out a 'For Sale' sign and then gets rid of its CEO, artists and labels ramp up their criticism of YouTube. Now we have Tidal in acquisition talks with Apple, while Spotify complains about Apple treating it unfairly... the digital music business is becoming an industry in which only a truly massive company with huge scale and deep pockets can hope to compete... Rdio went bankrupt last year in large part because it couldn't afford to make the licensing payments the record industry requires of streaming services. Deezer, a European service, postponed a planned initial public offering partly because its business is financially shaky for the same reason... [Rhapsody] is still racking up massive losses... Spotify has found it almost impossible to make money, primarily because of onerous licensing payments...
[A]ll the available evidence seems to show that the digital-music business, at least the way it is currently structured, simply isn't economic. The only way for anyone to even come close to making it work is to make it part of a much larger company, like Apple or Amazon or Google. That way they can absorb the losses, they have the heft to negotiate with the record industry, and they can find synergies with their other businesses. In other words, music as a standalone business appears to be dead, or at least on life support.
The article links to an essay by a former eMusic CEO arguing high royalty rates make it impossible to have a profitable business, and the music industry "buried more than 150 startups -- now they are left to dance with the giants."
[A]ll the available evidence seems to show that the digital-music business, at least the way it is currently structured, simply isn't economic. The only way for anyone to even come close to making it work is to make it part of a much larger company, like Apple or Amazon or Google. That way they can absorb the losses, they have the heft to negotiate with the record industry, and they can find synergies with their other businesses. In other words, music as a standalone business appears to be dead, or at least on life support.
The article links to an essay by a former eMusic CEO arguing high royalty rates make it impossible to have a profitable business, and the music industry "buried more than 150 startups -- now they are left to dance with the giants."
So it seems like there's 2 problems here :
1. These "services" all offer an awful lot of service for free, but have to pay per song played. This is a guaranteed trip to the poorhouse.
2. Those payments per song? They don't go down with scale or time. Google and other internet companies, their cost of delivering service goes down with technology advances and sheer size. It costs google a lot less to deliver gmail service or web searches than when they started.
The only way this can work is if the record labels - who own everything and do not have to pay themselves - offer a service. Kind of how all of the free porn sites who also own most of the porn producers are owned by the same company.
Easy to pirate, easy to store. No excuse for people to not already have a large personal music collection.
Because you want more to be created.
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
Mozart had to take on private students to pay his bills, so can Justin Bieber, if he can find any paying students.
Musicians getting rich was a historical aberration caused by the technology of the day. They can all get day jobs and cover their beer with tips when playing at night for all I care.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Well, they'll try. But 'doing your thing' around the constraints of a day job and 'doing your thing' as a professional artist will yield two very different results.
No, IMO, the problem is that there are too many middlemen. The Internet service takes its cut, followed the the performing rights organization (e.g. ASCAP, BMI, or SESAC), the publisher takes at least half of what is left (and probably more), and the tiny crumbs that remain get divided between all the composers and lyricists. The artist probably gets nothing unless he/she is a singer-songwriter or there's some other specific arrangement with the publisher. Either way, the more middlemen you have leeching off your music, the less you'll make from it.
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There are many reasons to have zero sympathy for the music industry. You don't have to be a kid to appreciate that the labels are ultimately reaping what they've sown.
They really are the real thieves here.
A Pirate and a Puritan look the same on a balance sheet.
...and a lot of that music was distributed for free.
Free distribution of media has pretty much existed since the beginning of time for the sake of this discussion. Commercial supported content began about a week after the first radio station went on the air.
There are bands that I have enjoyed for years without pirating or paying one red cent. That's because "free music" is in fact nothing new. The only reason that Pandora is having a hard time is that the music industry decided to be leeches this time rather than paying to promote artists.
This whole getting paid versus paying makes a big difference.
A Pirate and a Puritan look the same on a balance sheet.
I don't understand why they want all streaming companies to die, but they are purposely killing them
There are a number of reasons why this is the case. To touch on but a few briefly...
There are many other reasons, of course, but these are the ones that come readily off the top of my head. Usually it's a mixture of greed, stupid, and fear - and the first two of those creates a situation wherein they have a lot to be afraid of.