Record Labels’ Obsession with Music Streaming

Somehow you just get the feeling that record industry executives who haven't been able to shoot straight for the last ten years are getting ready to reload and fire.


They are set to go beyond the obvious cockamamie ideas, like Interscope/Geffen/A&M Chairman Jimmy Iovine’s brainstorm to come up with a $2,300 laptop computer basically for playing music.

Now that’s what’s going to save the music industry, don’t you think?

Iovine formed a partnership between HP and Beats Electronic, the audio technology company founded by Dr. Dre.

The laptop is definitely upscale and will allow users to hear music the way it was actually produced. Then again, I am asking the question, how many audiophiles out there really drive the music market?

Iovine dreams on by predicting that this hardware solution includes a plan to start an online distribution platform which is being called “Timberland” to work along side the soon-to-be-launched video website Vevo.

Iovine is quoted as saying this is “a giant step forward” for the music industry.

Say what?

From hardware to soft ideas.

Google is now rumored to be trying to enter the streaming music market by using its dominant search platform.

Insiders say Google is getting ready to announce deals with the four major record labels in an attempt to erode some of iTune’s 70 percent market share. The labels are slobbering all over themselves to get at Apple which has really stolen the key to their brick and mortar record stores and opened up online under their own terms.

Apple’s terms mean – Apple sells the hardware and makes a small percentage of the 99 cent per tune charge, but the labels also get a relatively small percentage of the 99 cents (compared to traditional delivery methods) and the labels don’t get to sell the hardware.

There is long-festering animosity between the labels and Apple CEO Steve Jobs who seems to have their number. Clue: he understands their unbridled egos because he’s got a large one of his own.

Starting soon, then, Google will make it possible for search clients to type in a song and buy it within the Google infrastructure.




But is it necessary?

Google is involved with LaLa and iLike (part of MySpace).

Again, as my readers know, the labels are focused on themselves.

In this case getting back at Steve Jobs. Jobs may not be Mother Teresa but he wins by focusing on what the consumer wants. If he can pull one off on the labels while he is at it, well, that’s up to him.

The labels have it in for Jobs because he took the iTunes idea to them – you may remember – as an antidote to piracy that surrounded Napster’s arrival. The labels were in a panic. They called their army of lawyers together and never looked back.

The labels should have bought Napster to take it out of play and maybe even operate it. Instead, they let Jobs sell them his solution to piracy that was iPod/iTunes. The hapless label heads never thought to stop Jobs because he knew what button to push – piracy.

Of course, iTunes is no solution for piracy.

It’s a solution for Apple – a damn good one – for loading up iPods and iPhones with convenient content. Remember Jobs was an early proponent of eliminating DRM (digital rights management) even if he was against giving up iTunes own proprietary version of DRM.

Now, after bumbling through a decade of inaction, legal strategies, failed decisions and partnerships, the record labels are: a) getting into the hardware business; b) betting that music can be sold through search and c) hoping the Android smart phone kicks Apple’s ass when it comes out.

One would be shortsighted to see the future of the music industry like this.

Apple owns the “record store”, controls the pricing, wins when music is either sold or stolen and has such mobile and online dominance of the paid music market that to compete one would have to outsmart the genius who pursued and achieved this strategy.

Lots of luck.

Meanwhile don’t lose the lesson that consumers are the ones with all the power -- not record label CEOs.

Knowing the difference makes the difference.

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