NEW YORK ( TheStreet) -- I often count my blessings: I'm a lucky guy to be able to make a living out of taking relatively meaningless matters so seriously.During these reflective moments, it's natural to think about the amount of power -- material and psychological -- we assign to Apple ( AAPL). Because, in the grand scheme of things, who really cares what new product Apple comes up with next? It's not like they're committed as an organization to the early detection of cancer or something. But we care. Because we are lucky. Or maybe caring about Apple helps divert our attention from the things that dog us in life. Whatever the case, it's nice to catch some perspective from time to time. To see the world from a vantage point that extends beyond your nose. With that said, please do not construe this as an attack on Glenn Peoples, the excellent Billboard writer. I read everything he writes with respect and a keen eye to learn. But I just cannot make sense of his latest. It's an article arguing that Apple is giving independent labels a solid deal for inclusion on iTunes Radio. Before Peoples' piece, I make my opposition clear in Apple Should Be Ashamed Of Itself. Peoples' defense of the deal Apple is "offering" indies rests on the following premise:
iTunes Radio could be very valuable to labels if Apple can convince listeners to buy downloads at a healthy clip.Otherwise, Peoples states "labels will be paid a decent royalty until iTunes Radio becomes effective at generating revenue." (I guess what's good for Apple can't necessarily fly for Pandora ( P), but digress I do). He doesn't make mention of key factors I brought up in my article:
1. Apple constructed a deal that allows it to stream some music without paying a royalty; and
2. This, for most indies, appears to be a take it or leave it, my way or the highway deal. I'm sure if Taylor Swift's label, Big Machine, objects Apple will make some adjustments, but it's unlikely to budge on pressure from the relative no-names it continues to screw.Here's my question: If we all agree -- and it seems this is the one thing we actually do agree on -- that streaming is the future, who in their right mind would call a deal that only gets marginally better on the backs of digital sales a good one? Allow Apple to dictate the terms of engagement for the music industry. Allow Apple to keep the industry stuck living in the past without the sort of vision to, once and for all, move things forward.
LOSER OF THE WEEK: Digital sales. Earlier this year, iTunes, Amazon MP3 and the rest seemed invincible - according to Billboard, sales jumped 16.2 percent in the first two months of 2013. But then came a steep decline, worrisome for a record industry that has spent the last 10 years staking its future on iTunes et. al. This week, the trend continues, as digital sales are down three percent compared to the same point last year.So, yeah, Peoples is correct -- a download (though hardly a windfall for most artists) is more valuable than a stream, but for how much longer will that be relevant? Should musicians continue to hold onto the sales model, something that, in its current state, remains in Apple's best interest? Should they allow Apple to effectively steal streams simply because it pseudo-promises digital sales? We're told we should buy Apple's implied prediction it will sell more music -- as it (kind of, sort of) deemphasizes streams -- but, at the same time, the music industrial complex tells us we should discard Pandora's promise that a more favorable royalty system will lead to more competition and larger pie for artists to split. Apple is taking these cats to the cleaners. Steve Jobs used to say consumers didn't want the subscription models on-demand services such as Spotify and Rdio (and now, on the radio side, Pandora) continue to grow. But he was only protecting his best interest at the time -- the digital sales, the download model. The Apple executives Jobs left behind do not have the vision he had. Jobs likely would have embraced the subscription model once he saw the sales model set to wane. And, based on the numbers I cite earlier in this article, it looks like we might be there. Sure, iTunes continues to set revenue records, but, teasing out music sales -- and looking at them as a whole -- they're down, suddenly, over the last two months. Why are they down? I reckon it's because consumers absolutely are embracing the subscription model. When I discover a new band on Pandora or, eventually, iTunes Radio, I have virtually zero incentive to buy their songs or an entire record via traditional channels (CDs, where sales are down; digital downloads, where sales have also trended down the past two months). All I need to do is go to Spotify or Rdio and add the entire record or just the songs I like to my "collection." These companies are out in front of the new model -- the digital access model. They're throwing the digital download model out the window with the bath water and the music industry's fate. It's time for music people to let tech people into their world. Allow tech visionaries -- who are in and care about the music business -- to help make the rules, not Apple, a company willing to experiment in a space that impacts a tiny fraction of its overall revenue. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.