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Downloads Die, Apple Lives, Music Industry Suffers

Stocks in this article: AAPL AMZN P NFLX

Independent labels appear to have accepted iTunes Radio terms from Apple (AAPL) that emphasize downloads. Because today a download is worth more than a stream. And, of course, it's in Apple's best interest to get as many free streams as it can, push iTunes Store music sales and offer a relatively minuscule amount of revenue sharing.

But, because Apple "promises" to keep the download dog and pony show going, it's all good. I have yet to see objections from the indies. And I assume the majors all signed on to a similar, if not the same deal.

You never win when all you do is protect your existing business model.

Some folks will try to make Netflix comparisons, but they fall short. Consider this one from BGR that attempts to link a sales-related issue in the music industry to shifts in television:

Are Netflix and its ilk going to demolish 70% of the TV and movie content industry sales and then reignite growth on their own terms? Kill the whale in order to gorge on its blubber, so to speak?

No and no.

These questions tend to miss a crucial and distinctive point.

While the major players -- mostly old guard entities -- own the content in both music and television, the music guys tend not to and have shown little interest in delivering it themselves. That's not the case in television. The old guard TV media certainly continues to protect it's cash cow model of charging retransmission fees, but they're merely managing the transition to digital because they can. Again, they own and have pretty solid platforms -- their own platforms -- to deliver content digitally as they see fit.

So if the music guys are going to rely on third parties almost across the board to get their stuff out to the masses, they better damn well have a solid handle on the future, particularly if they never plan on taking control of it.

You can show me today's numbers all day long. Twist them any way you like. But have some respect for history and something resembling vision. Digital downloads will end up like CDs, the cassettes, 8-track and vinyl records that came before them. It's only a matter of time before the music industry wonders where digital sales went just like they were left wondering what happened to physical sales.

To not come to the table and take full advantage of all forms of Internet radio and the data and technological prowess the space is so chock full of has industry-wide suicide written all over it. Why the music industrial complex would so willingly play ball (or Russian roulette) with Apple, a company that, at day's end, will survive just fine with or without digital music downloads, yet fight Pandora (P) and Spotify every step of the way is beyond me.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.
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