September 3, 2002 is an important date for the music industry. That was the day that Napster was effectively shut down by the courts after punishing lawsuits by the major labels. It’s also the day that the same labels started to seal their own fate by killing off a service that could have helped to save it as Napster was desperately trying to make deals with the majors while these lawsuits were going on.
Not content with that, they’re now in the process of killing off not only Pandora service, which has been a great way to hear and learn about music, even for hardcore music nuts like yours truly, but will also probably mean the end of other Net music services who can’t afford the licensing fees. Because of punishing royalty rates that they can’t afford and pushed on them by SoundExchange and the Copyright Royalty Board, it looks like Pandora will be out of business soon, as detailed in a Washington Post article.
SoundExchange insists that its demands are fair but like many online radio stations who won’t be able to afford the new rates they’ve set, Pandora can’t afford to meet their demands. The end result is no music and no service then. So the labels can be happy that they’ve driven another music service out of business, not to mention one that was playing by their rules. Ultimately when services like this disappear, music fans will be driven to more of the unauthorized P2P services that the RIAA is trying to shut down. But obviously this strategy isn’t going to work if the legit services can’t survive themselves. Also, the labels won’t be too thrilled when they ultimately realize that once Pandora and other streaming music services are driven out of business, they won’t be able to collect ANY revenue from them anymore.
The end result is another example of the industry and labels stupidly killing themselves off. But don’t worry, they’ll be sure to scapegoat everyone except themselves. And ultimately it won’t matter because they’ll be shrinking and bleeding more each day. Good sound business policy it ain’t.
FOLLOW-UP NOTE: One thing I forgot to include in the post above was another blog entry that I did two years about Pandora. I was really impressed with how well the service worked with finding music similar to what I liked and even more impressed that it came up with a bunch of surprises when doing so. That alone makes me hope that the service will find a way to stick around for a while.
// Notes from the Road
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