The good news is the same old whine always was wrong, even in 1999. But this time people are not being taken in by Silicon Valley bullshit.
Remember David Pakman? He supported the notorious Internet Radio Fairness Act before Congress. Remember Pakman’s post bemoaning the demise of Grooveshark and blaming “high royalties” and major labels for why music startups fail? Nothing to do with high operating costs and executive salaries…at “startups” like Pandora for example (that are also ticking off Pandora stockholders):
Same old, same old, right? The royalties are too damn high. Nothing to see here, move along.
Not so fast. Jim McDermott at Trickness wrote and excellent reply to Pakman. Erik Sherman at Inc. Magazine now joins the chorus pushing back on Pakman’s quest for someone to buy him a pony…er…explain why music startups fail.
Why is the success rate so low? Packman says the problem is the royalty rates that companies must pay for the use of music. Startups cannot afford the royalty rates, leaving only giants like Apple and Google able to manage the financial burden. It’s a problem all of the music industry’s making, according to Packman….
Packman points at the greed of the industry — and it may be that the labels are socking away the cash and paying musicians next to nothing. They do have a history of questionable actions over decades and there have been disputes between musicians and labels over the right split on streaming royalties.
But to focus on the industry is to ignore the greed of the tech crowd.