In the time I've made a living in the music business (10+ years), I've come to recognize patterns of behavior that the music industry seem to constantly adhere to in the face of technological advances. As my specialty is royalties, I suppose this makes sense: Spending hours pouring over reports looking for pennies has presumably sharpened my skills in pattern recognition. There is one pattern however that constantly presents itself without fail: The music industry's complete inability to ask the very simple question:
What happens next?
The major story in the last few days is the launch of Amazon's Cloud Player and Cloud Drive. In a nutshell, this service allows people to store music they purchased (or otherwise obtained) "in the cloud" and they can playback said music from the web or via an Android app.
Many labels are pissed about Amazon's new offering and there are rumblings of litigation.
The grievance of many labels is two-fold: First, they had their feelings hurt because Amazon didn't tell them this was happening when it launched. Hurt feelings are almost always cause for litigation...
Second, they want somebody - and it doesn't matter who - to pay them every time a customer streams a song from the cloud.
"But didn't the person using the cloud service purchase the music and should therefore have the ability to play it however and wherever they like," you ask?
Well yes, but labels are going to argue that "technically" the cloud from which the consumers are accessing their content doesn't belong to them and therefore does not constitute "personal use".
Ok, so for the sake of argument and - as completely asinine as the "personal use" argument might seem to the layperson - let's assume that streaming music from the cloud (music the customer purchased) is deemed illegal.
What happens next?
Well, Amazon is also one of the single largest retailers of physical CDs in the world.
Let that sink in for a moment.
I'll wait.
Taking this into account, if Amazon's Cloud Player / Cloud Drive service was deemed illegal and forced to shut down, what would stop Amazon from telling the labels that they no longer want to sell CDs? Amazon could make up any excuse they wanted (i.e. overhead is too expensive for physical storage, lack of consumer interest, we don't want to rip off our customers by selling products whose time has clearly passed, etc.). In reality, if Amazon pulled the plug on CD sales, nearly every label would have to pack up shop based on their current business models.
But, as history has shown us, labels have to sue somebody for something. That's what the big labels have spent the majority of their time doing since the dawn of the digital era instead of doing anything innovative or creative but I digress.
Ok, take a drastic leap of faith and assume the music industry doesn't file an injunction to have the service shut down. They instead spin their litigious web in another form: File suit against Amazon to obtain customer information under the assumption that customers have uploaded content they obtained illegally.
Great.
So the labels file suit against Amazon which will be drawn out for a minimum of three years.
What happens next?
If the labels lose, they'll have blown a metric shit-ton of money they really didn't have to begin with, stock-holders will give up entirely and everybody loses.
But suppose after years of litigation and having spent a fortune on suing Amazon - instead of financing artist development (what's that?) - judgement is awarded in the favor of the labels and they obtain the customer data they were seeking.
What's happens next?
Well, they could fire off another wave of lawsuits (if they have any money left after suing Amazon) against the individuals that are suspected of storing music they obtained illegally. For those of you that are unaware, they've been down that road and have collectively lost their asses for the past ten years in trying to sue fans. But that doesn't matter, they keep suing fans. The definition of insanity is….
However, imagine a worse scenario: Imagine Amazon was forced to turn over customer data regardless of whether or not the content a customer uploaded was illegal.
How many of those paying customers do you think would ever buy something from Amazon again if their personal data was handed over the the music industry?
Not one.
And if Amazon was forced into that outcome, could the same thing happen to Apple or Google with their respective music/cloud services?
Who knows but it's an interesting thought.
In addition to completely killing Amazon's music sales customer base in one fell swoop, if the Cloud Service is deemed illegal and is shut down, the only message that will be conveyed to consumers is this: You can only listen to the music you purchased in the manner we (the labels) dictate.
So what happens next?
Well, hopefully labels will let Amazon proceed with their cloud service without so much as a peep but history tells us that is highly unlikely and there's already stirring in the hen house.
In the unlikely event that the labels simply move forward without issue, what could they do in addition to allowing Amazon to proceed?
Well, label subsidiaries in the US could quit screwing around and license their content to Spotify for a US launch and scream from the hills that everyone should check out their service in hopes that steady and rapid growth in the streaming sector will at least slow the rapid decline of music revenues from physical and digital sales.
Additionally - and this might scare the crap out of people - they might even consider instantly ceasing all litigation against fans, disbanding the RIAA and begin a campaign of public apology to their artists and the fans that bought records. In addition, if they didn't hold back any licensing opportunities, and released an album globally instead of staggering releases by territory, they could simply begin a campaign of encouraging people to consume music: Wherever and however they wanted. Because when seamless and affordable options are everywhere (from freemium to premium) and the music people want is available on all mediums simultaneously, the desire for people to steal it will eventually subside. When it's available, there's no need to steal it.
Side note: In the near future however, labels are really going to shit when some kid creates an application that takes the data from a users cloud library and when an album has finished playing, Pandora kicks on and plays similar artists…
