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How Internet Radio Should Handle the Music Industry


NEW YORK ( TheStreet) -- As it battles the royalty fight on several fronts, Pandora (P) struggles with the blessing and curse of disrupting two of the world's most unimaginative industries -- music and radio.

Picture old, fat white guys wearing gold bracelets and over-sized wristwatches puffing cigars. These are the people single-handedly destroying -- or at least slowing down -- trajectories to sanity and progress as the consumption of music moves almost wholly to a digital access model. But it goes beyond consumption -- merely listening to music -- they're working overtime to kibosh a holistic approach to promoting every aspect of the process. From "record" sales to touring to branding and beyond.

There's a fundamental problem that doesn't get talked about much. The leaders of Internet radio companies -- and I'm not just talking about Pandora (P) -- tend to be more tech-minded individuals.

They launch and run startups in the spirit of Apple (AAPL) and Google (GOOG), not dusty old record labels and slow-to-act-and-react bloated corporate giants such as Clear Channel (CCMO). It's a bit like the relationship between Tesla Motors (TSLA) and the entrenched automakers, but only more extreme. Tesla is a technology company; it doesn't "sell cars" the same way Ford (F) and General Motors (GM) do.

Oil and water. However, "little" startups actually operate within companies such as Ford (and, I think, GM), particularly around the issue of in-car entertainment. These guys are not afraid to let Apple or Google or Microsoft (MSFT) or BlackBerry (BBRY) into their worlds literally and conceptually.

The same even applies to old guard media. There's no question the big boys -- Time Warner (TWX), News Corp (NWSA) and such -- control the pace of change, but they're certainly not resistant to it. They just do a better job managing it, carefully and smartly implementing along the inevitable road to entirely new ways of doing things.

That's not the case with the music and radio guys. They have always kicked and screamed towards change, resisting every step of the way. They're, at best, adverse, though more often openly hostile to tech. That should bewilder you, given the fact that technology drives practically all of the success the music industrial complex -- and, ironically, the radio business -- has had over the last decade.

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