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To Cheat Death, Music Industry Should Look to Spotify, Pandora, Not Clear Channel

Stocks in this article: CCMO P AAPL

That said, the underlying current here -- as with the deal Apple (AAPL) shoved down the indies' throats -- holds out hope that all of this (not-so-new) promotion will prompt listeners to buy music again. Total pipe dream. Physical sales -- whether CDs or downloads -- are dead. And no amount of "promotion" or royalty workarounds from Clear Channel, Apple or any other giant can or will change that.

Simply put, we're watching the music industry -- and, sadly, not just the major labels -- put itself in a position to get screwed again.

The first time around it was probably unavoidable. Executives couldn't deal with Steve Jobs, who effectively killed the notion of the record album in favor of an a la carte, on-demand model at $0.99 a pop. As Apple sees that dying, it wants to keep the model alive if it can. And unimaginative record executives can't come up with any ideas beyond putting their faith in Apple. But Apple wins either way as it pumps up its mobile advertising business by shortchanging labels and, worse yet, artists.

The music industrial complex has so little vision, it's not only allowing Apple to dictate its fate, it's placing its destiny in the hands of debt-ridden, late-to-the-party Clear Channel.

Music critic Bob Lefsetz said it best last month in Variety:

Every week the antiquated record industry trumpets its sales figures and the even more ancient media industry repeats them. And to say they're unimpressive is to say you took the family goat to prom.

Lefstz points to Imagine Dragons, a band selling about a paltry 25,000 records a week, putting it in Billboard's top ten:

Have people just given up listening to music?
No! It's just that the industry keeps pointing people to lame metrics.
On Spotify, the supposedly rip-off system with no traction, Imagine Dragons' "Radioactive" has been spun 122,988,750 times. Put that number in the paper, it'll wow people! It's almost unfathomable -- it's got too many commas for most people to be able to interpret. And the band has another track at over 50 million and two in the 30 million play range.
These numbers are spectacular!

Bingo.

Sweetheart deals between remnants of the once-mighty music industrial complex are absolutely not the answer. The idea that you can get 850 Clear Channel radio stations nobody gives a damn about anymore to drive anything -- streams on iHeart Radio, downloads, CD sales, whatever -- is absolutely absurd.

Warner and the rest of the industry should tell Clear Channel to "share" its "revenue" with the entities that carry its debt. Then they should embrace Spotify, Pandora and the rest of the Internet radio pioneers, not desperate knock-offs like the one Pittman hastily conceived at Clear Channel.

In a sentence and a closing paragraph, Lefsetz puts it all too rest:

It's not whether someone buys it but whether they play it.
... Right now, these Spotify numbers are real. And important. And as soon as we stop vilifying these streaming services and start trumpeting their metrics, the sooner the rest of the world will take music seriously, the sooner artists will realize that there's a ton of money in music and it's worth it to take the risk as opposed to play the game because you can go straight to your audience and people are hungry for something new and different.

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

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.
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