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The Stupidity of the Music Industry Is Absolutely Stunning

By: Rocco Pendola | 07/28/14 - 08:00 AM EDT

Stocks in this article: PSNE

NEW YORK (TheStreet) -- Word from Peter Kafka over at the artist formerly known as All Things D is that the owners of Vevo are looking for a buyer.

That's noteworthy because Universal Music Group and Sony (SNE) Music control the music video streamer. That's worth mentioning because, as is the case with Spotify, record labels appear to treat these entities as little more than revenue streams they're happy to share (or divest) with anybody willing to foot the bill to help run the thing.

It's shocking that with the emergence of streaming music and the death of downloads (not to mention the compact disc) the music industrial complex doesn't seek complete control of everything from Vevo to Spotify to Pandora (P). When the labels saw Pandora break out alongside the release of Apple's (AAPL) iPhone, they should have attempted to take it out via an acquisition or by building their own streaming platform(s).

Why would an industry effectively cede control over its product to technology companies and financial firms with different and, quite often, competing goals? It didn't make sense as Pandora was emerging. It makes even less sense now. It's truly nothing short of stunning that the record labels sit back and watch Pandora make better use of data derived from music (to sell advertising) than the labels themselves.

Has the music industrial complex forgotten what Apple did to it via iTunes? Is it not witness to the battle it's mired in with a Pandora that seeks to pay as little as possible to license music? These companies are, at best, frenemies to the music industry. At worst, they're adversaries or downright backstabbers. But wait ... maybe Google (GOOG) will take sole control of Vevo. They would never even think of hosing the music industry! 

At the very least, the record labels should fight to move toward a situation where they can say to a streaming radio/music platform: We'll only let you play our music if we get to see all of the data you can see via dynamic platforms we help you create.

But, better yet, why not strive to jettison third parties all together? Take control of your product from distribution to monetization via traditional means as well as new data-driven options we have only begun to conceive. Shift focus from royalties -- this idea that one play or spin or sale derives X amount of revenue which gets split between Y different stakeholders -- and move into new, more relevant ways of running your business. A model that maximizes digital technology and data. Not one that tweaks old and antiquated rules and regulations that don't deserve tweaking in the first place.

As longtime music industry executive Lyor Cohen said recently, he has spent his entire career not knowing who his customer is. Unless they're forced, don't expect Apple, Pandora, Google -- not one of these self-interested tech companies -- to deliver this information to the music industry. And, quite frankly, they have no obligation to do so. The music industrial complex needs to -- for once -- take control over and steer its own destiny. 

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

Rocco Pendola writes 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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