Is the Music Industry Driving Itself Out of Business?

Ars Technica ran an article yesterday about Pandora, the popular Internet radio service.  The article discussed how royalties being charged by Sound Exchange had risen steeply and were set to double again by 2010.  As a result, Pandora can’t make money and may pull its own plug.  Sound Exchange offered a potential loophole to Internet radio stations by requiring DRM in exchange for lower fees.   They argue that Internet radio can pay these higher fees.

SoundExchange also argues that Internet radio stations could do a lot more to increase their revenue, become profitable, and pay their (arguably high) fees. As much as it pains us to say it, there may be a point here.

I think a bigger issue here is whether the music industry really represents musicians anymore and how disconnected they are from modern paradigms.

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Tags: music industry, online business models, Pandora