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Apple Hosed the Music Industry

Stocks in this article: AAPL P

(Here's a link to a The New York Times story on that. I'm not riffing on it much here because I have spent the last two years articulating what went wrong, what things look like today and why and how things would ultimately transpire. I'll leave the rearview mirror analysis to the Monday morning armchair QBs).

So, for all intents and purposes, the music industrial complex ended up relying on Apple for exposure. The very same thing Pandora and the rest of Internet radio provides. Curiously, however, the industry loathes -- or at least love/hates -- Pandora and Spotify, but spews absolutely no venom Apple's way.

That's nutty. But probably explainable.

The industry likely viewed Apple as a partner ...

Translation: Enabler!

Anyway, Apple's not in the music business. It's not even really in the business of selling songs or apps or software or services. It's in the business of selling high-margin, premium hardware that everybody has, wants and will infinitely upgrade.

The music guys had to be a part of that. They must have figured that if Apple was smart and savvy enough to change the world, they could create an environment where a dollar-per-download could produce the same amount or more revenue than $12.99 per physical CD.

They banked on the notion that "Complete My Album" and, later, iTunes Radio would drive download sales that would miraculously change the laws of basic mathematics. Of course, during this time of imbecilic passivity, the music industry could have been building out their own direct-to-consumer digital platforms, organized on their terms and for their benefit.

Instead the record guys have sleepwalked into a world driven by Apple, Pandora and a handful of other players as well as an attitude of every man for him or herself.

There's no uniform (and, as such, industry-wide lucrative) approach to streaming songs, selling bootlegs, live streaming concerts and marketing music in ways it hasn't been effectively marketed before. There's no logic -- other than that supplied by the aforementioned self-interested others -- to anything the record business does. There hasn't been any for years.

These guys have failed so miserably, they're most likely left with only one viable option: Submit to outsiders yet again.

That means finally embracing everything from Pandora's version of radio to a somewhat established subscription service such as Spotify to relatively struggling startups like Rdio. It also means telling the tech companies that have led the streaming revolution that we (the music industrial complex) screwed up. We should have gone all-in with you guys in the first place, but we didn't and now, well, we're left with the two charts Rocco used for one of his recent articles.

So we're here. Use us and abuse. Tell us what to do. And we'll do it. We'll submit to the dynamic combination of technology and data. We'll put the power in your hands -- not necessarily Apple's -- and we'll hold out hope that the outcome, ten years down the line, is better than what we're left with today.

That's not necessarily a portrait of action for the music industry, but it's marginally better than the inaction that has come to define it. 

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

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks. Rocco Pendola is a columnist for TheStreet. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.
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