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Don't Blame Google for Being Horribly Unethical and Opportunistic

Stocks in this article: AAPL GOOG AMZN P

NEW YORK (TheStreet) -- There's no question -- it's horribly unethical and disgustingly opportunistic for Google (GOOG) to treat independent musicians the way it is. To tell them you're gone from YouTube if you don't agree to the terms we shove down your throat for our forthcoming subscription streaming radio service. Though I should note, my friend, Ari Herstand at Digital Music News, says that's not going to happen. Either way, I'm less concerned with the YouTube aspect of the story and more concerned with the, as Ari calls it, "unbalanced" deal Google wants labels to accept to be included on the streaming service.

It's not the first time this type of thing has happened and, if the music industry doesn't somehow get its failed act together, it won't be the last.

Take it or leave it deals for the indies. Amazon.com (AMZN) floated one prior to the launch of its Prime streaming music service. Apple (AAPL) did the same with iTunes Radio. I spewed discontent with regards to that last summer in Apple Should Be Ashamed of Itself.

That said -- for as bad as I feel for individual performers and songwriters (especially the songwriters), I cannot muster the same level of compassion for record labels, major or independent. Many love to lament the deals Google, Amazon and Apple offer or deride Pandora (P) for not paying enough to license music, but few are willing to look in the mirror. The music industrial complex rendered itself impotent thanks to years of inaction. If you don't use it, you lose it. Put that on the nameplates of label executives who can't see it hiding underneath their fat and happy stomachs.

As their bellies were getting big, most record labels -- major and independent -- did absolutely nothing to take control of their business. Instead, they ceded control of their business to technology companies.

First it was Napster. Then, more importantly, Apple. Apple singlehandedly squashed the need to purchase entire record albums (in physical or download form) in favor of the now standard $0.99 (or so) a la carte model. Meantime, Pandora was building out the premier streaming radio platform. And the music industrial complex sat limp. To date, their response has been little more than charges of unfair play and a stake in Spotify that, for some inane reason, they reportedly want to relinquish.

Instead of being submissive to technology companies, the music industry should have become one big technology company, rewriting its old, antiquated rules and taking ownership of its product in the process. It should have built its own Pandora or Spotify. It should have turned music into a multi-faceted marketing tool that the major and independent labels -- working together -- own and control. But it didn't do that. It opted for impotence and now it has resigned itself to living with the results.

The once-mighty music industrial complex operates from the ultimate position of weakness. The regulations that govern the industry might as well not exist because they're moot in a world where technology companies dictate fate at the label and individual artist level. Making Google (and others) the enemy only highlights the original predicament. However, it does nothing to solve it.

The status quo rolls on. Mid- to low-level musicians continue to get the shaft from a business that would be difficult to succeed in even with righteous rules and leadership. And tech companies continue to procure music for free, relative to their bottom lines, to help sell the products and services that actually make them money. The music industry spreads itself thin, collecting little more than pieces of a pie it should be slicing and serving as it sees fit.

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

Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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