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#DigitalSkeptic: Music Industry Carnage Most Definitely Is Not Over

Stocks in this article: P AAPL

"Overall, 2013 sales results show the continuing emergence of streaming music models as meaningful contributors to the industry revenues," wrote Friedlander.

But Morgan is livid when investors, regulators and consumers overlook key findings in data like the RIAA's. He points out that overall revenues remain flat for the industry, at about roughly $7 billion for both 2012 and 2013. Meaning, music revenues are basically melting away at whatever global inflation rate investors care to choose.

And if analysts are willing to dig deep into the music market data, they will see what pisses Morgan so. Sales in once-lucrative digital products like downloaded singles and ringtones have collapsed, dropping about 5% and 42% respectively. Worse, the growing streaming services simply do not produce enough profits to pay artists reasonable fees.

"I saw Bette Midler tweeted that she just had 4 million streams on Spotify. And she made all of $100," said Morgan.

"That is not even the cab fare to the airport."

Back to the Music Biz's Future

Now comes Morgan's big point: He argues that the future of the music business actually lies in its past. That is, facing the fundamental inequalities that have lurked in music for generations -- namely large radio station groups do not pay the same royalties as the Internet or other outlets.

"If Pandora (P) had said that they are happy to be paying the royalties they do, and that it's a disgrace that a Clear Channel can make billions playing music and not pay those same fees, musicians would have flocked to them," said Morgan.

"But now streaming is trying to match terrestrial radio by paying less to artists," he said. "And that has galvanized musicians to finally take action."

What Morgan is seeing is his colleagues finally have a taste for standing and fighting for what few dollars remain in their profession. Morgan says it has become relatively common for performers like David Bryne to openly question the economics of the music business. That is change of attitude is what will finally transform the industry -- not some app or yet-to-be-invented music technology.

"The economic worst is not over," he said. "But at the same time, musicians are stepping up more than ever.

That is why I am 100 percent sure we are going to win."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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