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Again, Apple Proves It's Smarter Than a Dumb Crowd

Stocks in this article: AAPLP

NEW YORK ( TheStreet) -- It feels drug-induced surreal.

Not merely watching a phenomenon unfold before your eyes, but observing as the very people who should take advantage of the dynamic continue to sleep at the wheel. The seemingly increasing, abject cluelessness from the music industrial complex makes me think Elliott Smith got it right: A Distorted Reality's Now A Necessity To Be Free.

I provided what could be exhibit A in a story of endless examples Thursday morning in Starbucks Does More for Music Than Apple Ever Will. And the following qualifies as exhibit B, but there's no particular order in a situation ruled by controlled chaos.

As in, many established members of the record industry are making this whole thing -- what amounts to their fate -- far more complicated than it needs to be. Don't confuse the above-linked article with a shot at Apple (AAPL); as usual, that company operates in the driver's seat, ahead of the game and set to succeed even if it fails.

Tim Cook wins even if he loses. The music industry just loses.

A considerable handful of powerful people want to deny it -- or, at the very least, refuse to deal with it -- but digital music sales continue to decline. The trend I wrote about in June continues to take shape.

Billboard has the details, but, in a nutshell, digital music sales continue to plummet. And the decrease is only intensifying.

Digital track sales are down 3.4% for the year, off 6% in Q3 after 3.3% and 1.3% declines in Q2 and Q1, respectively. Digital album sales, which were showing a hint of life (up 2.6% year-to-date), fell 5% in the July-August-September quarter.

Plus ...

Overall album sales are down 6.1% to 205.2 million units for the first nine months. The CD's driving the overall decline in album sales as the disc format dropped 12.8% to 113.1 million units. Vinyl albums, meanwhile, are up nearly 30% to 4.1 million units.

I got news for the music industrial complex: The hipster cats and music geeks who waste away hours in dusty record stores and file their vinyl in empty milk carton crates are not going to save music's ownership society. It's as good as dead.

We have entered a world of access to music with subscription-based services such as Spotify and Rdio and personalized Pandora (P) radio set to dominate, if they do not already.

And then there's Apple, bamboozling and ultimately failing the music industrial complex yet again with the genius idea of iTunes Radio. It's not genius in that it's a knockoff of what Pandora has already perfected and Apple can never match. It's genius because it puts Apple in a win-win situation.

Apple can appease the music industry's fears by cutting sweetheart deals in exchange for the faux promise of this new streaming service driving downloads. As I explain in each of the links in this article, that's not only not going to happen, it's not happening.

The days of streaming driving sales are dead. Gone.

Old, bloated record label executives need to remove their cigars from their mouths long enough to catch a breath of fresh air and realize what's happening. They're not protecting their sorry legacies by feebly attempting to prop up music sales. They're setting themselves up to look worse than Miley Cyrus after a live performance at a nationally-televised awards show.

Embrace streaming. Streaming of all flavors. Stop putting all of your eggs in Apple's self-interested basket. Hatch them with companies that have the best interests of the music industrial complex and, more importantly, musicians in their DNA.

-- 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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