The Music Industry Wants to Fight the Internet Again .. And Again Will Probably Lose


SXSW Run the Jewels
Free music at the Spotify SXSW house(Rich Fury/Invision/AP)
by John McDuling,  March 23 2015

AUSTIN, Texas–Should music ever be free? That was the inescapable topic of discussion among the hordes of recording-industry middlemen and hangers-on gathered for the music section of the South by Southwest (SXSW) conference last week.

It’s a schism that has emerged just when it looked like subscription streaming services, such as Spotify, were bringing an end to the music industry’s years of economic pain. The dispute concerns the “freemium” model, which allows consumers to listen to music for free in exchange for listening to ads, or pay to listen without ads.

 The backlash against free began last year, when arguably the biggest recording artist on the planet, Taylor Swift, pulled all of her music from Spotify. In the past couple of weeks, Swift’s stance has gained backing from the world’s two biggest record companies, Universal and Sony, who together account for more than half of the recorded music market, and seem determined to clamp down on free listening. Universal is using licensing negotiations (paywall) with Spotify to “push for changes to the company’s free service,” the Financial Times reported last week.
Some seasoned observers at SXSW said that this could be a colossal mistake. “Treating consumers like children and telling them that everything they’ve enjoyed about these streaming services is going to be taken away because the biggest record companies don’t like it, that’s another Napster moment,” Charles Caldas, the CEO of Merlin Network, the global licensing agency for independent music labels, tells Quartz. “The major labels screwed Napster and screwed the market by killing what was potentially the biggest opportunity the industry could imagine in getting into the digital space early. If they follow through with this, they are going to do it again”.

Streaming as music’s savior

In general, music ownership, in both physical and digital download forms, is in a death spiral. Although vinyl is making a surprise comeback, it’s a niche market.

.That makes subscription-based streaming the closest thing the music industry has to a savior. Figures released by the Recording Industry Association of America (RIAA) this week showed that revenue from streaming services in the US surpassed that from CDs in 2014, and grew 29% on the previous year. Credit Suisse has forecast that the global recorded music industry could return to growth again as soon as next year, thanks to the spread of streaming.



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