Rules Don't Apply to Apple, Amazon, Netflix

NEW YORK (TheStreet) -- The various cogs of the music industrial complex, as well as others associated with it and those who claim to be constrained by it, make me want to curl up and die. They represent the uninspiring antithesis of Apple (AAPL), Amazon.com (AMZN) and Netflix (NFLX).

Over at Billboard, Steve Knopper wrote a fine article about the prospects of live concert streaming. It's just too bad he had to, by and large, interview a bunch of stiffs with "I can't" attitudes to put it together.

Throughout the piece we're hit with reasons why the music industry can't get live concert streaming off the ground ...

The production cost can be prohibitive ... There's often union fees. Bandwidth is actually a sizable hurdle. You also have promoters who aren't into it -- they think it'll affect ticket sales ...
One huge barrier is securing rights to performances, whether the artist is signed to a record label or playing a cover version of a song owned by an outside publisher. "There's clearly an open lane. No one has cracked the code to being the destination for consumers for live music in the digital space. Everyone's toying with it at this point," says Alex Luke, a former iTunes and EMI Music executive and a principal with venture capitalist The Valley Fund. "I can't, at least in the near future, foresee a situation where 99 percent of the artists are going to be comfortable putting their live recordings out there."

Prohibitive. Hurdle. Barrier. Can't. Comfortable.

That's the type of language framing the conversation. And it's the perfect illustration of the broad ineptitude that put the music industry, as we know it, on the brink of death.

But the most alarming quote comes from Jason Dimberg, who heads up Yahoo! (YHOO) Screen:

Could you offer everything on tour? I'm not sure how successful that would be.

I can't help but think the Billboard article and Dimberg's comment was, to some extent, a response to a line I've been reeling lately in several articles, including Marissa Mayer's Biggest Game Changer Yet. I argue Yahoo should take the multi-billion dollar live concert streaming opportunity and run with it because:

  • Those with the resources aren't trying or they're not trying hard or smart enough; and
  • The companies making the right moves with the right attitude lack the resources to pull it off on a grand scale.

If Dimberg isn't sure "how successful" wide-ranging live concert streaming "would be," he needs to have his head examined after Mayer fires him.

In the above-linked article, I make the (what I thought was) obvious case as to why live concert streaming wouldn't merely be successful, it would be a ****ing goldmine. And I'm talking about live streaming -- and archiving -- entire tours, namely from big-name artists.

Fans of acts ranging from Bruce Springsteen to Taylor Swift -- and many cult names (e.g. Phish) and smaller musicians with passionate followings -- would pony up per show or via monthly subscription to access a live stream, along with post-show archives, of every show on a tour. It's a no-brainer.

Enough with the excuses and defeatist attitude ... Because this is like this and that's like that we can't do this or that or the promoters worry about ticket sales. For goodness sake, establish some blackout rules in local markets and you're all set.

The music industry and its partners -- everybody from the major labels to Live Nation Entertainment (LYV) to Yahoo! -- need to adopt the same type of attitude that led Apple, Amazon.com and Netflix to otherworldly success.

This George Bernard Shaw quote, via Robert F. Kennedy, applies:

There are those who look at things the way they are, and ask why... I dream of things that never were, and ask why not?

That's exactly what Apple did with iTunes and, subsequently, iPhone.

Steve Ballmer laughed at Apple's plans for iPhone:

And, for the last how many ever years, Apple has had the wireless telcos by the balls and millions of halo-effected customers wrapped around its finger.

Meantime, Amazon disrupted retail so much so that its competition essentially claimed it cheated. Amazon singlehandedly changed the rules of the game to suit its groundbreaking business model. And then the rest of the industry fought -- and won (though Amazon still dominates) -- to change outdated rules surrounding e-commerce and taxation. But they never thought to change the legislation until Amazon had completely disrupted the old way of doing business. That should tell you something about the visionary capabilities of Amazon's so-called competition.

Simply put, Amazon ended up getting punished for disrupting and crushing physical retail. It created a new space and dominated it before most others even realized the extent to which the new space would pervade our lives.

Together, Apple and/or Amazon combined to change everything from how we communicate to compute to shop and, last but not least, purchase and consume music.

To accomplish greatness, however, both companies had to either ignore existing rules -- as if they didn't apply to them -- or create new ones.

Structure. History. Laws. Unwritten rules. Cultural and corporate mores.

None of this mattered (or matters) to Apple, Amazon and companies like Apple and Amazon. That stuff just gets in the way so they pay no never mind to it. If a stubborn entity -- entrenched or otherwise -- doesn't want to go along with the pace and face of change, they're run over and left behind.

It's that simple.

And it's precisely the attitude the music industry and its partners need to take up on the live concert streaming opportunity as well as other areas, such as royalties, that keep them from reaching their full potential. For decades, mismanagement and the can't do mindset I articulate here has left billions on the table. Because there's no question -- you can sell anything via the power of music.

All of this to say the music industry needs to come together and remove any and all obstacles that hold live concert streaming back. Just because it's been done one way for so long doesn't mean it needs to be done the same way going forward, particularly when one way for so long has produced abject failure.

If rights issues exist, remove the rules that create them. Replace the old rules with new ones that allow untapped areas to flourish so everybody gets paid.

If there's a union problem, deal with it. If you can't, get rid of the union. If you can fight Pandora (P) in court, why can't you fight the unions?

If bandwidth is a problem, deal with it. Funny how Netflix manages to work around similar issues.

And so on and so forth.

Apple, Amazon, Netflix -- these companies have the will to not only succeed, but dominate. Nothing gets in their way. And if something does, they remove the obstacles with friendly fire and/or, if need be, by getting down and dirty. That's how tech executives and tech companies roll, which is why the comment from the dude at Yahoo! surprised me. And I assume it would give Marissa Mayer a pause as well. I don't know.

However, I do know that I'm 110% correct with respect to what holds the music industrial complex back. They'll say I don't understand. That I'm simplifying long-standing, historically-rooted and incredibly complicated issues.

I'll call bull and ask why none of the above ever seems to come up and delay, derail or put Apple's, Amazon's or Netflix's plans on the back burner. Why do these companies achieve what others (as in most of the rest of the world) once thought was impossible?

It comes down to vision, will and confidence. And these characteristics come down to individuals. To the people who populate the organizations that make up industries.

If the present regimes at the record labels, at Live Nation, at Yahoo! Screen and elsewhere can't start acting and thinking like tech leaders, they need to go. Today. Right now. No more excuses.

--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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