NEW YORK (TheStreet) -- It's getting to be tricky to sing the digital music and media tune. Investors in Pandora (P), Apple's (AAPL) iTunes and even Netflix (NFLX) are having a hard time deciding if reasonable quarterly results and some subscriber and usage growth are enough to merit fresh value in these stocks.

But if investors bother to look at the underlying macroeconomics of the global music market, getting the tune right should not be hard. Music is still very much sings a grim and sad song.

About a month ago, the global riff on the Recording Industry Association of America, called the International Federation of the Phonographic Industry, released its Digital Music Report 2014. This report, "gives an excellent overview of how the music industry is investing and adapting to the digital world," wrote renowned tenor Placido Domingo in the document, who also happens to be chairman of IFPI as it more commonly known.

Sure enough, once investors get past the full-page ads for online music services, like Deezer and Qobuz claiming 'We See Clear Skies Ahead," this report does offer remarkably intricate detail on the state of the global music industry.

Certainly there was coverage in the music press that not all the news from the report was toe-tapping stuff. "Despite positive signs of growth from many European and Latin American markets, coupled with an increase in the global uptake of streaming and subscription services, the music industry is not out of the woods quite yet," is how Richard Smirke at Billboard summed up the document.

But since I've started digging deep into this thing, I am beginning to wonder if our aging new-media business is beginning to have senior moments. Because, by any conceivable measure, this in industry that seems to have forgotten what truly bad news looks like.

Where's the Money?

For those of us who make our living combing through documents and disclosures, The Digital Music Report 2014 has a bad habit of trying to hide the ugly bits in the fine print. The report says in its opening summary that so-called "Trade Terms" music revenue in the United States grew by .8%. Never mind that this point-eight percent was just half the 1.5% increase in consumer prices as defined by the Bureau of Labor Statistics for early 2014. In the fine print below this disclosure was a footnote that revealed, in terms of actual retail revenues, sales in the American music industry actually dropped by .5%.

Or many times less than the domestic American inflation rate.

Wouldn't you know it, but the notion that the music industry is melting in front of investors' eyes was more than confirmed by the Recording Industry Association of America's own data. It disclosed in its News and Notes on 2013 RIAA Industry Shipment and Revenue Statistics, published earlier this year, that American music revenues have stayed essentially flat, in the $7 billion range, not for just 2013, but for roughly the past half-decade.

And inside this no-growth global music market are some simply shocking collapses. Even though the IFPI brags that global digital music sales now account for 39% of total revenue, these total revenues are going utterly south in some markets. Critical tech bellwether Japan saw its music revenues fall by 16.7%!

"Japan, the world's second largest national markets, which accounts for a fifth of global revenues, is in a challenging phase of transition to digital," the IFPI report said. The sharp decline in physical sales was coupled with an evaporation of the ringtone business."

Though this report gushes about the potential for services like advertising-supported streaming, subscription services, synchronization deals and performance rights, the report finally does fess up to the true sad state of global music. Just as it has for most every year since 1999, revenues dropped dramatically: 3.9% from $16 billion in 2012 to $15 billion in 2013.

In the other words, investors have definitely not yet touched the bottom of the global music market.

Playing the Zero Sum Musical Game

Worse, this collapsing sales story is matched by nearly invisible profit margins in emerging digital music companies. Sure, some investors believe that eventually Pandora becomes Facebook  (FB) and makes money. But these days, net margins here are far too close to zero for companies in this sector.

Meaning the confusion about the value of digital music may not be confusion at all. But an understanding that what's driving value in this sector is simply when buyers outnumber sellers. Or visa-versa.

And what kind of long term investment thinking is that?

At the time of publication, the author held no positions in any of the stocks mentioned.

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.