Wayne Rosso, formerly president of file-sharing service Grokster wrote an angry post about how the music industry failed in pioneering it’s own most profound transformation on The Music Void (read it on paidcontent.org)
Rosso says, the hope of pioneering the music industry’s most profound transformation, that inspired entrepreneurs over 10 years ago came to a halt. Rosso assumes there will be no new players of significance to enter the music business. One the one hand there is a lack of visions and ideas, on the other hand investors don’t want to fund any start-up that deals with music, no matter how clever and innovative.
Rosso blames labels have put themselves in the position of having to depend on the bulk of their digital sales from companies that actually couldn’t care less about selling music: Apple, Amazon and now Google. These giants have huge revenues, 99.9% of which are not related to digital music sales.
Remember when the industry was screaming “never again” when they finally figured out that Apple was making a fortune from iPods? They would never let another hardware manufacturer get away without sharing their sales. Doug Morris (UMG) delivered on that promise and got $1 for every Zune (Microsoft) sold. Zune market share decreased to 2% (from about 10% in 2007) in the first half of 2009, according to the NPD Group, so I guess the revenue for UMG was not what saved their life.
A senior digital music executive told Rosso “they (major labels) are despicable scum. They fly out to Cupertino and let Steve Jobs smack them around and then fly home and try to take every dime they can get out of start-ups in order to make them feel better about themselves.”
The fact that Google is now interested in getting serious about a music play makes labels think that this is going to be a game changer. The record labels are counting on Google rescuing them from Apple’s grip. But Google is not pitching anything particularly innovative. Basically an iTunes clone with a paid locker service. It’s looking like nothing that hasn’t been done better by others. And really nobody’s going to pay Google $25 a year to store their music in a cloud.
Labels are counting on half of that revenue…