Monday, January 14, 2013

When will Big Tech buy Big (Small) Content

Currently, the music business is dying. It isn't that we aren't listening to music. Artists haven't stop making music. What HAS happened is that the big record companies have stopped being able to print dollar bills just by printing CDs.

But content isn't dead. People pay for Netflix. People pay to go to the movies. People sign up to premium music streaming services. Music attracts a lot of attention on the internet and a lot of Ad dollars.

The rise of the Internet has cut the record companies out of a lot of the business, though. Bands can find a following on the Internet and distribute music on their own. Or they can build a faithful audience and make money playing concerts and selling memorabilia. Bands such as the Grateful Dead and Phish have been following that business plan for years. The Internet just makes it easier.

So what are record companies to do? They still own content, but they can't produce the returns that they used to be able to. The business has changed. They can't manage technology very well (people hate VEVO and its technical glitches). They can't drive the eyeballs the way that they used to.

So what's going to happen?

I have a theory. Big tech companies such as Google, Apple, and Amazon will buy record labels in order to cut out the middleman. What can fat cats in LA studios do to help us listen to music? Why can't social media pick hot artists and tech companies promote them through their technology.

The record companies who have mostly been bought out by media conglomerates are not releasing financial numbers, but it is safe to say that they haven't been perform well. Sooner or later, their parent companies will demand better performance and divest themselves of their music catalog. Who better to buy them than Google, Apple, Amazon, or Facebook?

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