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Is Apple Screwing the Music Industry?

Stocks in this article: AAPL GOOG P

NEW YORK ( TheStreet) -- It seems "everybody" wants to call Google's (GOOG) new music platform and Apple's (AAPL) forthcoming iRadio respective Spotify and Pandora (P) killers.

Point missed. Again.

This has become common in media coverage of Internet radio. As much as I love LinkedIn, they're a guilty party. Out of the universe of Apple iRadio stories the professional social network could choose from, it decided to feature this tripe on Tuesday ...

Nice headline. Slips easily off of the tongue, but fails to dig deep into the actual meaning of why companies such as Google and Apple enter a space that will produce rounding-error type revenues for their multi-mega billion dollar businesses.

LinkedIn could have disseminated a much more thoughtful piece from Timothy Stenovec over at Huffington Post where he astutely muses:

But unlike any of those other companies, Google's music service could fail to capture market share from the big players and still be a success. That's because delivering music and new accounts is yet another way for Google to amass personal, intimate details about its hundreds of millions of users -- information that enables it to better target ads.

Another smart guy I have sparred with on CNBC, Drew Olanoff of TechCrunch, covered similar ground with respect to Twitter's new music service. The data Twitter collects on music listening habits can help the music industrial complex do a better job at promotion (not to mention generating new, more sustainable revenue streams) in the digital age.


But there's a question Stenovec and Olanoff did not ask. I wish I could take credit for it. But it must go where it's due. To a Nashville-based Twitter follower, Danny Murphy, who has misplaced more knowledge about the music industry than I'll ever possess:

If the music industry only receives a cut of iRadio revenue (and Google All Access-related revenue), but not a portion of the overall iAd business at Apple, for example, it's selling itself short. Getting screwed. Again.


Because I would be flat stunned if Apple or Google agreed to share ad revenue outside of what is directly generated by their music platforms with the music industry. Let's operate from that relatively safe presumption.

This hands music publishers, yet again, the short end of the stick.

It appears the deal Apple signed with Warner's publishing arm provides it with more than double the ad revenue Pandora (P) pays publishers. Pandora pays 4%. Let's assume, as I have seen reported, Apple will give up 10%.

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