By Russel Cooke
Because the fact is, for years, all music streaming services had the same, common problem: they were locked in an eternal struggle with record labels. How they choose to interact with record labels in the future, major labels and tiny independent presses in backwater towns and forgotten corners of the world, will determine the future of the music industry. Pandora and YouTube, today two of the biggest players in online music streaming, both recently signed deals with labels. How’s the future look?
Both services have since had to deal extensively with record labels, which they ended up doing in very different ways. They both introduced advertisements and forms of copyright protection. Both have also recently signed major deals with record labels. Both happened to take opposite sides on the debate, Pandora positioning itself on the side of independents, YouTube siding with the major establishment labels.
Pandora: For The Little Guy
Pandora has decided to sign a deal with Merlin, a sort of consortium of independent labels of which some 20,000 have membership. In August, Pandora signed that deal with Merlin, solving the royalties dispute that has plagued the service since its inception. It allows labels to negotiate directly with Pandora about royalty payments. For its part, Pandora managed to win access to the sales data from all these labels, and hopes to further refine their recommendation engine with it.
YouTube: Going Corporate
YouTube has taken a decidedly different path. It seems to want to become an establishment player in the recording industry, and has sought inclusion in the big boys’ club. It’s signed deals with major labels to release a subscription based streaming service. The deal virtually locks out independent labels, giving them no power to negotiate with YouTube.
The lines have been drawn. Is Pandora the savior of independent music? Is YouTube the new RIAA? The battle between major labels and the forces of independent distribution raged through the 90s (remember Napster?). Now it’s clear that the war will continue. Who will come out on top?
Russel Cooke is a business consultant specializing in customer relationship management. In his free time, he contributes predominantly business related articles, something he enjoys doing tremendously.