streaming music startups don’t want more people using their service, because they lose money from every one of them, and the perceived success from having more users makes it harder for them to plead with the labels to give them better deals.
The big music labels don’t like streaming music because it doesn’t help them offset declining CD sales, and the evidence now suggests that streaming doesn’t lead to music downloads. Everything we’re hearing says that the labels would like to see streaming music startups just go away for now so that they can focus on maximizing paid downloads and extend that ultimate surrender date.
So when you hear about labels renegotiating streaming deals to help out music startups, be skeptical. They’re likely lowering the rates from 1 cent down to something closer to .4 cents per stream. And all that means is that these startups will bleed a little slower. But they’re still going to go out of business, because the venture firms are done investing in them.
One complaint about this TechCrunch piece: it's easy to be negative and indeed pundits are always negative about internet music, unless they're writing about Apple. We're really not that fucked. Just challenged.