Copyright holders that are demanding more and more in licensing fees could endanger the viability of legal streaming options like Spotify and Pandora. That's the conclusion drawn from an article published by tech website Techdirt.
While streaming revenue is becoming ever more important for the music industry, the companies that pioneered music streaming, Spotify and Pandora for examples, are finding profitability a difficult prospect. The problem comes from royalty and licensing payments that record companies are demanding, and even knowing the difficulties faced by Spotify and Pandora, copyright holders are still demanding more.
This is all despite royalty costs being a huge chunk of both company's revenue, 50% for Pandora, and a massive 75% for Spotify.
It is this demand for even more royalty payments that, Techdirt says, could endanger the future of services like Spotify and Pandora.
Techdirt's Mike Masnick believes this is due to the industry overvaluing content over the services that deliver the content. Whereas in the past, the music industry had control over both content and delivery, new tech players like Spotify have squeezed into this pace thanks to the industry's reluctance to embrace the Internet. This, Techdirt believes, is the battle being fought right now in the streaming scene, and a battle that may kill off some of the services we've now know and love, to the detriment of consumers and the music industry alike.
"They consistently kill the golden goose because they hate the idea of any outsider having success, even as they fail to innovate," writes Masnick.