Monday, August 18, 2008

Radio killed the radio star

One of my favorite Internet radio stations, Pandora, may finally be shutting down thanks to the recent hike in royalty fees. I think the only way that people may start to notice is if an Internet radio giant takes the fall. No one ever notices a problem until a staple goes down. One wonders just how record companies plan on making a profit in the future. CDs are not selling and everyone is praying for its demise. Digital distributers of music are closing shop, causing people to fear downloading anything having to do with DRM.

I guess this quote signifies how little record companies understand capitalism: "SoundExchange officials argue that because different media have different profit margins, it is appropriate to set different royalty rates." Really? Do record companies pay more for the raw materials to make CDs? If Jack White and I walk into a guitar store and purchase the same guitar, does he pay more? Surely, he will make a lot more money with that guitar than I will ever make. If I'm not mistaken, isn't charging two different people for the same product illegal when it results in decreasing competition?

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