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TheStreet Open House

Startups, Not Apple, Lead Music Industry's Rebirth

NEW YORK ( TheStreet) -- Given the constant sniping over royalties it might not seem like it, but we're in the early stages of the best days the music industry has ever seen. Of course, the music industrial complex doesn't know this. And it suppresses most positive whiffs of change because the notion of the old way of doing things disappearing scares the hell out of its entrenched figures.

The executives who run record labels fear young, bright, thoughtful, well-educated or self-taught tech-minded entrepreneurs. Known entities such as Tim Westergren of Pandora (P) to relative unknowns such as Harvard-educated Dan Gurney. I wrote about the company Gurney co-founded, Concert Window, Monday on TheStreet.

As Gurney explains in this excellent blog post, the days of middlemen in the music industry are going away. Fast.

That's exactly what terrifies cigar-smoking label execs. Because it's really an across-the-board phenomenon, sort of like what we witnessed (and are witnessing) as Amazon.com (AMZN) transformed (and continues to transform) the book publishing industry.

The music industrial complex desperately wants Apple (AAPL) to save it from itself, however, as I have explained in detail elsewhere, Apple looks out for nobody other than Apple.

Steve Jobs redefined the record album, shifting the business to an a la carte digital download model. Now, with that route dying, Apple hedged its bets by introducing iTunes Radio -- in part, as a promise to keep people buying music via its one-click system. As I discuss in the above-linked articles, if this strategy fails, Apple still wins and the music industrial complex loses. Apple can rest easy on its mobile advertising revenue bump, partially fueled by streaming radio, and the use of iTunes Radio becomes just another feature to sell hardware.

It doesn't take a scientist who takes apart rockets (dissects frogs or runs rats) to figure that much out. It doesn't even require a Harvard grad. However, given the number of blind eyes turned to reality among established music people, I guess these flavors of accomplishment and intellectualness help.

As Gurney does in the aforementioned blog post, I'll take things a step further with this Apple analysis.

Apple rides both sides of the fence -- between downloads and the access model (meaning you don't have to buy music, you can access it for free or for a nominal monthly fee). This company is nimble enough to shift to wherever the consumer market shifts. Plus the revenue it derives from selling music means little, if anything, to it. Again, for Apple it's all about selling hardware.

Apple doesn't care how it delivers content to customers. To reiterate -- it just wants to sell iPhones, iPads and Macs. For as much as Apple disrupts, for all intents and purposes it sits on the sidelines vis-a-vis this unprecedented music revolution.

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