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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."
Instead of working closely with the smaller companies to create a diverse and competitive market, their predatory (legal) and greedy (bad business) tactics caused the shutdown of many music startups, angering music lovers, and ultimately, they are shooting themselves in the foot because when only have Apple and Amazon to deal with, they will:
1. Negotiate terms that leave the music industry with lower profits
2. Eventually launch their own music labels, mimicking what Netflix did with Movies & TV series, to create further leverage
All those moments will be lost in time, like tears in rain... time... to... die...
The better way this can work is reset copyright back to its original length of time - 14 years, and also set maximum royalties that they can charge for the privilege of their copyright. The industry might suffer a bit (boo hoo), but the artists will come out ahead since self publishing is much easier now. Their royalties would climb dramatically without the industry skimming so much.
Of course the best way is to abolish copyright altogether, and artists get paid for performing their work like the rest of us. Getting paid when a machine plays a recording is ludicrous!
What's so terrible about Bandcamp (which is the digital music service I love)?
They seem to be doing pretty good, they're growing as well as being profitable.
Best part (IMO) is that they also have lots of artists saying they appreciate Bandcamp. Here are some comments from that blog post:
Bandcamp is the greatest platform for independent artists. I am glad to be a part of it, without it getting new fans would be difficult.
We release small independent music compilations since three years here on BC. We worked together with more than 200 artists in these years. The most of them publish their music on BC too. I can confirm: More people buy the music on BC. That is what the musicians say in talks. And even our pay what you want releases have a really good perfomance.
I've bought a lot of really great music on Bandcamp, the artists like it. So yeah, what's so terrible again?