What if Music Streaming Collapses?

MOST critical coverage of Spotify, Pandora and the like has concentrated on the frustration of musicians. But a tough, provocative new piece asks, What if these streaming companies simply fail to make profits, and disappear? Here is Michael St. James — extending the recent David Carr story — on RebelMouse:

Not one of the music streaming companies has made a profit yet, not one. Most are involved in corporate growth quarterly suicide, driven by large sums of VC money, or public pressure to return shareholder value. That’s fine, but that’s no way to nurture a creative company. I wish them all well, but honestly, that doesn’t seem like a good situation for the industry or consumer, maybe the VCs and shareholders, and money managers, but not us.

Streaming is sort of the second (or third) wave of digital disruption. First came Napster and related piracy, then came paid downloads on iTunes and the like; both helped chip away at sales, though iTunes brings in some revenue. Streaming has continued the process: it earns some revenues, some of which reach musicians, but record sales and even downloads have fallen as that’s happened.

St James speculates what could happen next. “There is no guarantee that any of these companies will be around by the end of the year,” he writes. “I know that’s hard to believe, but they could, literally, just close up shop, count the money and go home.”

If that happened, it would be a bit like the the Border’s that came to town, wiped out your local indie bookstore, and then folded up itself a few years later. Or the Wal-Mart that arrived on the edge of your city and destroyed the mom and pops on Main Street. (In some cases, as Douglas Rushkoff has documented, the government, and your tax dollars, paid to knock down Wal-Marts that didn’t make it.) Digital disruption won’t discriminate — it will destroy just about anything in its path. It could be your favorite shop, or your job, next.