Digital Music vs. Record Companies: Battle of the Bands

EMI announces that they will distribute through Apple's (AAPL) iTunes music sans Digital Rights Management [DRM]. Apparently, the music sounds way better without the DRM. EMI shares are down approximately 2% in this morning's trading, so no one is viewing this as a commercial victory for the music business. Music sales are off, some will say approximately 20%, due to the level of piracy that is rampant on the internet. Music listening is still as strong as ever.

Napster (NAPS) issues guidance announcing that in their next quarterly release, large increases in revenues and subscribers are to be expected. No word on profits. The implication being, "we are the choice to be watched."

Recording companies are sitting on their hands, or rather their libraries, and watching. For all their cool, they are as mercenary as any business. They realize that they have a problem and they want to select the financially correct solution. The new media technologies confuses them. Old media radio stations are not what they used to be. Record companies are honestly lost in their confusion.

The tipping point will come when artists start making selections. Currently, musicians try to get a deal with a record label and then complain that labels sap their souls. When musicians become more business-focused and learn to exploit new media, the record companies will be left behind. The record companies understand control first and music second. The listener knows music first and cares not for control.

What you need is a few breakout releases that bypass the record companies and leverage the power of new media. Steve Jobs, stop preaching to the record companies and sign some exciting talent directly! The record companies will come around like dogs salivating for their next meal.

NAPS vs. AAPL 1-yr chart

Comments

[YenKenZen:]

George,

agree with everything you said... in fact you said it very well.. except your plea to Steve Jobs.. Do you really think Steve Jobs cares any less for control?

2007 Apr 09 04:06 PM