Maybe Google Should Straight Punish the Major Record Labels

'Cause that's a system that needs to burn. For turning its customers into adversaries. For pushing garbage music on the world. For resisting technology at every turn (like technology is a thing that can actually be resisted). For imagining that it has anything to offer art and even commerce in today’s world. Gah. The only reason the major label system exists is because it has power, albeit lingering. From 1999 to 2008, the total record industry shrank by about a third, with a way disproportionate share of that shrink shouldered by the majors. I know, I know: no shit, the industry is going to heck. But clinging on through a variety of unreasonable means—like fighting file sharing by suing consumers for hundreds of thousands of dollars (for 24 songs).

So, here's this, from Wayne's World, a digital music industry spotter/blog:

The latest rumor to emerge from the Google campus is that the company's much anticipated music service is just about at the end of their rope with the major label licensing process. A source close to the negotiations characterizes the search giant as "disgusted" with the labels, so much so that they are seriously considering following Amazon's lead and launching their music could service without label licenses. I'm told that, though very remote and my guess is that it would never come to this, Google may go so far as to shut down the music service project altogether. Though, as I reported last week, Google is frustrated from the grief they seem to be getting from all of the labels, much of which appears to be coming from WMG. Observers say that WMG has staked its future on the cloud and the label's head of digital, Michael Nash, is said to be convinced that Google should be charging users $30 a year for the cloud. Google, in response, is said to think that is way too much and wants the first 500 tracks stored by users to be free of charge. At this point the negotiations are said to have gone sideways and Google execs are looking at alternative strategies.

Amazon, if you'll remember, basically said fuck it and went the Girl Talk license-agnostic route with its recently-unveiled cloud music service, much to the labels' chagrin. How that will play out is probably with Amazon eventually negotiating a license deal. (Read my rant linked above for some background.) I think that'll look like a huge, unfortunate win for the labels and an Amazon with tail firmly between legs. It's a bad way to start off the world's first stab into real-deal cloud-based music storage/streaming.

The labels argue that cloud streaming will in some way to be determined lead to more piracy. It's another route to sharing and the sharing of music is always bad, is the general complaint. But streaming, much like the mp3, is just another inevitable force of technology. In a connected world, there's ultimately no reason to store a music file locally. (How connected of a world it actually is might be a another debate.) Storage in the cloud costs basically nothing, and it's in principle just another place for a consumer to store their property.

The industry's view, however, is that the it should be receiving more money for music stored in the cloud and listened to via streaming. Understand that this isn't really a situation of artists standing to lose money or not be fairly compensated for having their music that's been purchased fairly by a fan/consumer stored in this way. In other words, the license money sought by the major labels is not replacing anything. It's a new revenue stream and the record industry is desperate for new revenue streams. You probably would be too if you were becoming obsolete.

So, back to Google. According to the rumors, the Warner Music Group is the sticking point in the negotiations. Here’s a funny thing: As of today, WMG is worth $2.79 billion. It takes in about that much per year as revenue. Meanwhile, Google is worth $139 billion, and takes in $39 billion a year. Add the values of all four major labels together, and it's still well in Google's shadow.

I don't particularly like the idea of an all-powerful Google, but I also can't deny the immense satisfaction that would come with seeing the giant stomp the major label industry, whether that’s buying it or just plain torturing it (buying out slight majority stakes and keeping old-timers around just to watch them squirm, perhaps). At the very least, Google has some conception of the future. The labels do not.