Finding Music In a Virtual World

December 18, 2012 / by David J. Hurley / 0 Comment



A bill in Congress proposing to change the way that digital royalty rates are set provides another benchmark in the rapidly evolving economics of the music industry. The recent bill is the latest skirmish in a decade long battle to establish ‘internet-age’ playing rules that are fair to the many entities comprising the music industry.

The specifics of these issues are esoteric and a range of competing interests are in the fray. The ‘traditional’ music industry remains the most powerful and positions itself, dubiously, as representing the artists’ interests against those of upstart tech companies (as popular streaming services are considered). Of course, radio, satellite and cable media are all at the table with their particular interests.

Even the artist themselves have a say in this fight (which is a sign of some progress), but it is not always clear which approach is in their best interests. For example, a service like Pandora can dramatically increase exposure for a band – so lower royalties with higher volume may result in a net increase in pay to musicians.

The economics of the music industry has been in flux since Napster revolutionized the business. Streaming services now provide options not formerly available with various layers of consumer control distinguishing it from traditional radio models. Should streaming services pay the same commissions as radio? What about less tangible benefits offered to musicians by services like Pandora?

There is no question that the music industry has matured and musicians are more sophisticated in their use of the internet and social media. There is no shortage of successful musicians who were ‘discovered’ singing into a webcam on a crude, self-posted YouTube video.

The growth in streaming options allows listeners to enjoy tunes without buying them. Terms like ‘intelligent radio’, ‘social media integration’, and ‘music discovery service’ now are used to describe the defining features of Internet music sites. No doubt Spotify and Pandora, or some variation of these applications, are here to stay. However, notwithstanding their sharing functions and social media integration, the social aspect of on-line listening remains relatively unexplored.



Read my review of Turntable FM in the Review Section to discover an exception to the rule.