p2p news / p2pnet: Big Four Organized Music elements such as the RIAA and IFPI say on the one hand, the corporate music business is "booming"(as per IFPI boss John Kennedy) and on the other, that it’s being "devastated" (many and various press releases) on the other.

And when they say the corporate sites they back and supply are going great guns, it’s not merely an extreme exaggeration, it’s an outright lie.

The corporate sites are recognizable because of their total ineffectiveness, but the music industry claims they’re a major factor in the world of online music.

They are a major factor. But only because the Big Four, Warner Music, Vivendi Universal, EMI and Sony BMG, are trying to sue their customers into buying lossy, grossly over-priced formulaic downloads from catalogues almost entirely bereft of content.

"It’s a long-haul business right now," The Street has Aram Sinnreich, managing partner of Radar Research, saying. "It will be at least three years before anyone can make a serious profit selling digital music, largely because of the hold that Apple has on the market."

Actually, Apple, whose contempt for the people who’ve made it a power becomes more evident every day, has almost no hold on the market because as yet, there is no market. Online music is at this point in time wholly dominated by the p2p networks, indie sites and download services such as Russia’s AllofMP3.com.

iTunes, meanwhile, is an over-hyped, loss-leading software pump for iPod disguised as a music service.

"While Apple says iTunes is operating in the black, financial analysts generally estimate that the store is marginally profitable at best," says The Street.

"And even that performance seems to be a rare exception. Napster, which operates a rival online music services, is losing considerable money each quarter. Another rival, RealNetworks has been consistently losing money on its actual operations, which exclude gains from investments or legal settlements, the company’s real money makers of late. And few analysts think Yahoo!’s music service, which is charging a bargain basement price of $5 a month for a subscription, is operating in the black either.

"The problem digital music vendors face is that they haven’t figured out a business model that works, analysts say. The industry is reminiscent of the early days of e-commerce, when everyone and his brother rushed in to set up a Web store but nobody had figured out how to turn a profit.

"Selling downloads a la carte isn’t a profitable business, because for every 99-cent song (like Apple sells), stores have to pay the music labels 65 cents or more, according to analysts’ estimates. Add in marketing and technology costs, and the margins start to become very slim."

Almost as slim as the Big Four’s credibility.

Also See:
The Street – Online Music Hitting False Notes, April 17, 2006

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