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Are Labels To Blame For No REAL Competition Between Digital Music Services?

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Sadly, the announcement that Beyond Oblivion went into proverbial oblivion comes as no surprise to TMV. Whilst familiar chatter has abounded implicating extortionate major label ransoms, can this be the only real attributable reason? It is already common knowledge that the recorded music industry gives with one hand and takes via ‘black box income’ with the other. But what are the wider implications for competition in the digital music retail space?

Firstly, it is important to have major labels answer how the advances they received from Beyond Oblivion are going to be fairly distributed to the artists in the catalogues of music they sign. This requirement also stands on every single digital music service labels have ever licensed their artists music too.

TMV have stated on numerous occasions that it is often in labels own interests to help ensure a new digital music start up never truly sees the light of day. Why is this you may well ask? Put quite simply, it is a fact that labels still get to keep the advances they receive from such services and artists do not get to see a cent. Instead, it goes straight into what labels call ‘non-attributable’ income – commonly referred to as ‘black box income’.

TMV are very surprised that several heritage acts have not challenged the fact that labels are not paying through these advances received by labels from digital music services – to artists. The fact this money IS legally required to be split up amongst each labels catalogue of artists is backed up by numerous conversations we have had with lawyers on both sides of the Atlantic.

TMV would go as far to state that many major labels would be close to bankrupt without this clear-cut case of trading on artist music and not paying what is due through to the creators. Non-attributable income is a black and white method of continuing the decades long Mafioso like stealing from artists. This has occurred since the birth of the modern-day music business in the 1950’s. Numerous artists’ stories outline the scam of the modern-day music business.

Getting back to the issue of competition in the digital music retail space, it has been clear that the major labels do not want competition as they are ‘owned’ by Apple according to one senior executive TMV spoke with. Apple says jump and the recorded music industry jump like a slave being whipped to work harder.

Numerous executives still currently employed have told TMV their hands are tied by Apple’s dominance. Ironically the labels have allowed themselves to get into such a situation, generally through clueless management at the top. So, whilst labels have ensured Apple is a global monopoly in the digital music retail sector, new entrants have never ever really been provided with a level playing field. This in itself points to labels baring some blame for the current situation where one company owns more than 70% of digital music retail sales globally.

If labels were serious about competition, they would ensure competition authorities in the United States and the European Union investigate Apple’s monopoly position and insist on a break up. The fact labels have not done so speaks volumes in terms of their responsibility for ensuring a monopoly in the digital music retail space.

The fact is, two massive players with a similar global reach and standing in consumers eyes – Google and Amazon were denied equal terms to Apple. As such they launched cloud services without licenses and have obviously proved a point because not one label has challenged them legally.

TMV have heard from numerous sources that both Amazon and Google walked away from talks with labels not because of advances demanded but because of percentage splits. To TMV this is code for the fact labels refused to offer them 30% of retail price.

So, are labels to blame for the lack of competition on the digital music retail space? Clearly, they have to take a substantial level of blame. However, it is clear that in the case of Beyond Oblivion it was not just labels, to burn through $77 million USD in less than a year in the first instance shows total managerially incompetence of the highest order.

Furthermore, the fact the investment was an initiative from one of Rupert Murdoch’s companies pretty much ensured its failure from day one. One only has to look at how Murdoch’s company destroyed MySpace to understand Murdoch’s companies do not understand the music business. As such TMV would state in the case of Beyond Oblivion that blame should be split equally between the greed of labels, incompetent company management and the fact the start-up was initiated by Rupert Murdoch.

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