You gotta love his honesty. We owe it all to artists to stand up to what they believe in and drive us forward. Without them, we would have nothing.

“I’m finding that I have a little bit of trouble with the quality of the sound of music today,” says Neil Young. “I don’t like it. It just makes me angry. Not the quality of the music, but we’re in the 21st century and we have the worst sound that we’ve ever had. It’s worse than in 1978. Where are our geniuses? What happened?”

I can’t agree more.  We need a new format that breathes life into the music industry by improving the quality of the sound that we listen to.   If you are under the age of 22, I will bet that most of you have never really heard a great audio recording.  You don’t even know what I am talking about.

This issue is vital to the future of the music business.  What we have today with the proliferation of ear buds as the primary listening medium and compressed MP3 files is a low res music experience that is the bottom of the barrel, lowest common denominator form of a listening experience there can be.  Really listening to music is simply lost on most people these days, and as a result the art form has lost the majority of its value.

It commonly accepted that crappy sounding music is the norm and people, by and large, have no idea what they are missing.  The MP3 has stripped the emotional value from music today and has reduced it to a commodity.  The audio business has truly been compressed and marginalized and is nearing extinction.  We cannot let that happen to the music business.

As artists, “We can’t control the back end of the donkey, laments Young.  The donkey has two ends, products like Beats and Bose and every little product that comes out for your car, the whole thing – is all about the back end of the donkey.  There is nothing talking about the front end of the donkey, that’s what I’m talking about.  You don’t have to that rich to do this, you just have to be smart…  We are in the low res world, make no mistake that is right where we are…

“I look at the internet as the new radio.  I look at the radio as gone…  People change and do their music, people trade it they do whatever and Apple makes it very possible for you to store stolen or traded songs in the cloud, they opened up the door so that that can happen… its acceptable.  Thats the way it is… Piracy is the new radio, that’s how music gets around, thats the real world for kids, thats the (new) radio… Lets let them really hear it.

“I’m hoping that some people who want the hi-res would have the choice in buying it.  It has to be convenient, people should not associate hi-res with inconvenience.  That’s a myth, we’re living in the 21st century and all of these things are possible.  The technology exists, the internet is fast enough to support it…  If Steve Jobs had lived long enough, he would be eventually have done what I am trying to do.”

Quality.  We need a new format that will deliver better quality sound to drive the business forward.  Period.  Here is a true clarion call for innovation, and something that we all need to pay attention to.   Neil Young cares about music. He is successful enough that he could sit back and ignore the realities of the marketplace today, but instead chooses to push the agenda forward. Awesome. I would not be surprised to hear a new song from Neil about a donkey.  Maybe I can sing backup on it.

See the video with Neil Young and Walt Mossberg from All things D here.

Here is a brief description of some of the technical issues from Thinkdigit.  ”The renewed focus on audio quality in some circles has a sense of déjà vu about it. Some of it recalls the 1970s, back when the term “high fidelity” was thrown around to indicate quality stereo recordings. We also saw this go around again at the turn of the millennium with the introduction of SACD and DVD Audio formats, which brought 24-bit fidelity and surround sound to audio mixes, although neither took off at the time.

So what’s going on here? In a word, it’s about data. More data translates to better-sounding audio files—but those files are largely unavailable to most consumers. Granted, to the casual listener, Amazon MP3 and Apple iTunes Store sound pretty good, as they’re encoded as 256Kbps MP3 and AAC files for the most part. Amazon has some MP3 files encoded at variable bit rates, but most of them center around the 224Kbps to 256Kbps range. AAC generally sounds slightly better than MP3 when encoded at the same bit rate, although recent improvements in MP3 encoding algorithms have largely rendered this academic.

Aside from music purchases, 256Kbps is also iTunes’ default encoding rate for when you rip audio CDs in iTunes (although you can change it), and it’s the size iCloud uses to deliver tracks to other PCs or mobile devices on your network if you’re a subscriber. I’m just using Apple products here as an example; Windows Media Player, Winamp, and countless other apps do similar things. Any way you cut it, 256Kbps files sound a lot better than ones encoded at 128Kbps, which is what Apple used years ago before it removed DRM from its iTunes Store tracks. Granted, 256Kbps files take up twice the space as 128Kbps files, but on today’s devices, that usually isn’t a problem, and the improved sound quality is worth it.

The thing is, 256Kbps still isn’t enough. Higher-resolution, uncompressed, 16-bit audio files match the sound you get on an actual CD. 24-bit sound files even sound better; the increased headroom matches the format most artists and mix engineers have been working in over the past decade or so.

Cheap consumer electronics manufacturers abused the phrase “CD-quality” for many years, but in this case it still has meaning. True CD-quality files take up anywhere from three to 10 times as much as space as an MP3 or AAC file, depending on the latter’s bit rate; 24-bit files take up even more space. They come in several formats: FLAC, WAV, AIFF, and Apple Lossless. (FLAC and Apple Lossless contain some data compression but only in a method that doesn’t affect sound quality. FLAC is much more widely supported than Apple Lossless, though.)”

A new survey from the Gartner group shows digital music revenues forecast to grow less than 5% per year.  This is close to flatlined if you factor in inflation.  Not good news for most of the world.

■ Online music revenue from end users will grow more than 31% by the end of the forecast period: from $5.9 billion in 2010 to $7.7 billion in 2015. By comparison, consumer spending on physical music (CDs and LPs) is expected to slide from around $15 billion in 2010 to around $10 billion in 2015.

■ Online music subscription services, such as Spotify, will be the main growth sector in this market, showing fivefold growth from 2010 to 2015. A la carte sales will drive the bulk of overall revenue.

■ The highest growth rates will be in regions such as Latin America and the Middle East and Africa, which have not historically been strong in paying for tracks or albums from online services or stores (although perhaps stronger in paid-for ringtones from their service providers).

Read more from Gartner here.

“Our band – Moonalice – is inventing new opportunities in music. We would like you all to join us.

I have been a working musician for more than 30 years, and a technology investor for 29 years. I have played about 1000 concerts over the past 15 years, which means I have personally experienced everything in Spinal Tap except the exploding drummers. I also spent three years helping the Grateful Dead with technology and many more advising other bands, most notably U2.

My band is called Moonalice. We play 100 shows a year in clubs and small theaters, mostly on the coasts. Moonalice was the first band broken on social networks. What broke us was 845,000 downloads – and counting – of the single “It’s 4:20 Somewhere.” We’re the band that Mooncasts every show live, via satellite to thousands of fans on iPads, cell phones, and computers. We’re the band that has a unique psychedelic poster for every show. After four years, Moonalice has 371 poster images from the likes of Stanley Mouse, Wes Wilson, and David Singer. Licensing those images will eventually a big business for us. We’re the band that offers the EP of the Month for $5. And we’re the band that uses the latest technology to radically improve both the production cost and commercial value of the content we produce. Now I’m looking for people who want get on this bandwagon with me.

The first question I hope you ask is “Why now?” The world of technology is beginning a period of disruptive change. The old guard – represented in this case by Microsoft Windows and Google search – is under assault and hundreds of billions of dollars may become available for new and better ideas. I hope that gets your attention!!!

The biggest beneficiaries of this disruption should be the people who got the short end of Google’s business model, especially creators of differentiated content. For the past twelve years the technology of the internet has been static. Every tool commoditized content by eliminating differentiation. The most successful companies monetized content created by others. Google was king.

I believe Microsoft and Google are about to get a taste of what the music industry has been dealing with for a decade. Their world is going to change and they won’t be able to stop it. Not so long ago Microsoft’s Windows monopoly gave it control of 96% of internet connected devices. Thanks to smartphones and tables – especially the iPhone and iPad — Windows’ share of internet connected devices has fallen below 50% … and it will fall much further in the years ahead.

Consumers are abandoning Windows as fast as they can. I expect businesses to follow suit.

This is a HUGE deal. Businesses whose employees use smart phones and iPads instead of PCs will save up to $1000 per employee per year in support costs.If corporations buy fewer PCs, they will save tens, if not hundreds of billions per year.

This is happening because today’s strategic applications – email, Facebook, Twitter, LinkedIn, YouTube and other internet applications – don’t need a PC . . . in fact, they are far more useful on a phone.

Microsoft has been in trouble since it first missed the web in 1994. Then it was unable to prevent Google from taking charge in 1998. When Google showed up, the World Wide Web was a wild environment. No one was in charge. The prevailing philosophy was “open source” . . . and free software.

Google had a plan for organizing the web’s information that treated every piece of information as if all were equally valuable. To create order, Google ranked every page based on how many people linked to it.

What we all missed at the time is that by treating every piece of information the same, Google enforced a standard that permitted no differentiation. Every word on every Google page is in the same typeface. No brand images appear other than Google’s. This action essentially neutered the production values of every high end content creator. The Long Tail took off and the music industry got its ass kicked.

Google captured about 80% of the index search business, which gave it a huge percentage of total web advertising. Google’s success eventually filled the web with crap, so consumers began using other products to search: Wikipedia for facts, Facebook for matters of taste, time or money, Twitter for news, Yelp for restaurants, Realtor.com for places to live, LinkedIn for jobs. Over the past three years, these alternatives have gone from 10% of search volume to about half.

As if all this competition wasn’t bad enough for Google, then along came Apple with the iPhone and App Store. Apple offers a fundamentally different vision of the internet than Google. Google is about the long tail, open source, and free, but also had to remove 64 apps from the Android app store for stealing confidential information. Apple is about trusted brands, authority, security, copyright and the like. In Apple’s world, the web is just another app; it is called Safari.

People who have iPhones and iPads do far fewer Google searches than people on PCs. The reason is that Apple has branded, trustworthy apps for everything. If they want news, Apple customers use apps from the New York Times or Wall Street Journal. If they want to know which camera to buy, they ask friends on Facebook. If they want to go to dinner, they use the Yelp app. These searches have economic value and its not going to Google, even on Android.

When Apple and the app model win, Google’s search business loses. Like Microsoft, Google has plenty of business opportunities, but the era of Google controlling all content is over. Consumers compared Google’s open source web to Apple’s app model and they overwhelmingly prefer Apple’s model. Software development and innovation has shifted from “web first” to “iPad first” . . . which is a monster long term advantage. Get this: Apple may sell nearly 100 million internet connected devices this year!

Apple’s strength can be seen best in the iPhone vs. Android competition. There are many Android vendors. Together they sell more phones than Apple does. But Apple gets around $750 wholesale for an iPhone. The other guys get between $300 and $450. This means Apple’s gross margin on the iPhone is nearly as big as its competitors’ gross revenues. Game over.

The other thing that makes Apple amazing is the iPad. No electronic product in history – not even the DVD player – can match the adoption rate of the iPad. Apple may sell another 30 million this year. At this point, the competing products have not put a dent in the iPad. Image what happens if Apple’s share of the tablet market remains closer to the iPod (at 80%) than to the iPhone (20%)?

This sounds like, “Game Over, Apple wins” . . . but it’s not . . . at least, not yet. The open source World Wide Web has finally responded to Apple. A new programming language has come to market called HTML 5. HTML is the foundation of the World Wide Web. For the past decade, HTML has been static, which allowed Google to dominate.

HTML 5 is a new generation of HTML and it changes the game fundamentally. It allows web developers replicate the iPhone experience, but with many extra bells and whistles … and no App Store. One reason HTML 5 matters is because it eliminates Adobe Flash, which has been an inadvertent barrier to creativity

Creativity enables differentiation. Differentiation can be monetized. Huge differentiation can be monetized hugely. With HTML 5, creative people can now use the entire web page as a single canvas. For the first time in a dozen years, web pages will be limited only by the creativity of the people making them. They can create experiences that will be more engaging to consumers and more profitable for advertisers than network television.

New forms of entertainment will emerge. New forms of business. Companies the size of Facebook and Google will develop in categories I can’t guess at. Companies as important as Amazon, iTunes, and Netflix will emerge to support what new content comes to market.

Whether you view Apple as friend or foe, HTML 5 offers real opportunity. Why?

Because you can deliver a better experience than an app . . . without an app. HTML 5 is cheaper to build, cheaper to support, no 30% fee . . . oh, and the apps perform better, too.

I believe Apple’s best response would be to focus on selling hardware and accept that consumers will demand products that happen to bypass the app store. Based on the argument with Amazon, I sense Apple is not ready to concede the point. That’s ironic, because the only way Apple can get hurt would be if they try to force all commerce through the App Store. The would create a real reason for customers to buy a tablet other than iPad.

Let me review my key points so far:

Google and Microsoft will remain huge, but their influence is evaporating, which means we can ignore them

Apple is winning big, which means we have to support their platforms first

For people who make content, Apple is a better monopolist to deal with than Google.

HTML 5 will give you a better product than the Apple app model at a lower cost and with more value.

Now let’s figure out what we can do together. My band Moonalice exists because T Bone Burnett wanted to produce an album of new and original hippie music in the old school San Francisco style. We put together an all-star band with in late 2006 and recorded the album. T Bone was about to win the GRAMMY for the Alison Krauss/Robert Plant album, Raising Sand, so we thought we were made.

We had a budget
We had an A-list PR guy
We had a really fine manager
We had custom label deal with a nice budget
T Bone’s innovative sound technology would make the album cutting edge

Old school music is good. Old school marketing wasn’t going to work for us. About four months before release, I reviewed the media plan with our PR guy. He said, “Sorry, man, but nobody cares.”

A few moments of somber reflection followed. Then, with great regret, I let our manager go. I let our publicist go. I let our label go. For all intents and purposes, we wrote off an album everyone was extremely proud of and which accounted for half of T. Bone’s portfolio the following year when he was nominated for Producer of the Year.

But I freed up most of our operating budget. Real money. And I focused it all on Twitter and Facebook. Our goal was to build an audience of dedicated fans around a Moonalice lifestyle. Three years later, we have 57,000 fans on Facebook and 75,000 on Twitter. We learned a great truth: as hard as it is to get people to spend money, it is much harder to persuade them to spend enough time listening to you to become a long term fan. We traded our music for their time. We discovered we could build an audience by giving away stuff that costs nothing to produce and distribute. These are serious fans who engage with us dozens and often hundreds of times a year.

The first thing we invented was the Twittercast. Before us, no one had ever done a concert over Twitter. Now we have done 103. Our marginal cost is exactly zero. Next we created Moonalice Radio, which has broadcast one song every hour on Twitter for the past two years. Then our drum tech bought a video camera and started recording the shows. Then he bought more cameras, put them on mic stands and started doing live video mixes. About a year ago, he figured out how to mooncast our concerts over the net for free.

Nearly all of our past 100 shows have been mooncast live on MoonaliceTV and then archived. Because we play mostly late shows on the west coast, only 10% of the audience watches in real time. But approximately 3,000 people watch EVERY show on a time shifted basis. Fans like the Moonalice Couch tour because they can chat, make friends, and do things that are not permitted at a live venue. They even buy Couch Tour tee shirts. And they are helping us create a new ecosystem where most of the music is free, because Moonalice art and life style products have huge economic value.

Thanks to HTML 5 and a satellite dish, Mooncasts can now be viewed on a smart phone without an app. Our video quality competes favorably with the best you have seen on an iPhone, and the technology to do all this costs the equivalent of six months of our former manager. He was a really good guy, but a satellite-based tv network is more valuable.

I want to finish up by recommending a course of action for you

Step 1: Remember that HTML 5 is just getting started, but the learning curve is less expensive and more profitable for those who commit to it from the beginning. The new business is going to emerge over a few years, not overnight

Step 2: Don’t wait for the labels to figure this out. Labels are not organized to get this right, which leaves a big hole in the new music market where labels used to be.

Step 3: Don’t wait for major artists to figure it out. The great new stuff is going to come from artists who have nothing to lose. Artists who come out of nowhere will create huge value for next to no cost.

Step 4: Make sure you are successful addressing the needs of next generation content creators … not just listeners. There are WAY more of content creators than you may realize. Thanks to Moore’s Law, Karl Marx is right at last: the means of production are in the hands of the proletariat. At the peak, there were 8 million bands registered on Myspace. They weren’t playing gigs, they were creating stuff, mostly for their own entertainment. Those people spent a lot more money creating the content they posted on Myspace than they did on recorded music. Thanks to Apple’s Garageband, the population of people capable of mixing something is now measured in tens of millions. Making these people successful is the key to creating new markets and new music products.

Step 5: Do everything in your power to encourage new product ideas and new forms of content. HTML 5 is a blank canvas and there is no telling what people will do with it. For all I know, HTML 5 may produce five or even ten amazing categories of product.

Contests, prizes and publicity will give you an opportunity to associate yourself with whoever creates the cool new stuff. If you have local stores, do local events. Think Alan Freed.

Step 6: Near term, focus your platform strategy on Apple.

Step 7: Long term, focus on HTML 5. The sooner you commit to HTML 5, the more likely you will produce something of economic value.

Step 8: Remember that HTML 5 will produce companies as important as Amazon, iTunes, and Netflix. It costs musicians practically nothing to create good digital video and fantastic audio, but they need distribution systems optimized for their content.

Step 9: Make music fun again”

–

And if that isn’t enough, Roger was kind enough to share with me his thoughts on investing in technology related businesses.  TechInvestingHypotheses

For slightly more than $2/mo everybody will soon have access to all the music they can find, steal, share, rip, produce, morph or buy using iTunes Match. Is this amnesty for all the music pirates? I hope so.

As we predicted in The Future of Music, the future is about access to music rather than ownership. With Apple iCloud and iTunes Match, Apple has once again set the bar for all music distributors, while again lining up all the major record labels for yet another lunch. The twist to all of this is – does iCloud grant you immunity from prosecution for copyright infringement for sharing or downloading music however you wish to? We shall see.

Fantasize with me as we did in 2005…

It’s the year 2015 and you wake to a familiar tune playing softly. It gets you out of bed and makes you feel good. As you walk into the bathroom, your Personal Media Minder activates the video display in the mirror, and you watch a bit of personalized news while you get ready for the day. You step into the shower and your personalized music program is ready for you, cued up with a new live version of a track that you downloaded the other day. It is even better than the original recording, so while you dress, you tell your “TasteMate” program to include the new track in your playlist rotation.

You put on your new eyeglasses, which contain a networked audio headset, letting tiny earbuds slip into your ears. You switch on the power, and the mix that your friend made for you starts to play. Music pours into your consciousness. It becomes yours.

During the day, your headset and other wireless devices help you communicate across the network, with your friends, associates, network buddies, and “digital peers.” The headset also keeps you connected to that hard rock collection that you really love to listen to. Meanwhile, a variety of new songs, new versions, and remixes of tracks you truly dig, along with your old favorites, continues to come your way. Using TasteMate, you access and trade playlists, and recommend a couple of songs to your friend in Seattle, and they get added to his rotation. Music propels you throughout the day.

This is the future of music– a future in which music will be like water: ubiquitous and free flowing. In this future, music will be ubiquitous, mobile, shareable, and as pervasive and diverse as the human cultures that create it. Many of the already ill-fitting definitions of copyright and intellectual property and patent laws will be adapted to fit the “music like water” model that we propose–in a way that ensures the enjoyment and benefit of society as a whole, and that allows all involved parties to prosper.

David Bowie encapsulated the current state of affairs in a June 2002 New York Times article:
“The absolute transformation of everything that we ever thought about music will take place within ten years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen. I’m fully confident that copyright, for instance, will no longer exist in ten years, and authorship and intellectual property is in for such a bashing. Music itself is going to become like running water or electricity. [ . . . ] So it’s like, just take advantage of these last few years because none of this is ever going to happen again. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen . . .”

Let’s run the numbers. As I outlined in Forbes, with hundreds of millions of people connected to digital networks, the potential annual revenue stream for this is enormous. At $25 per person, if 200 million people opted in for iTunes Match, the service would gross $5 billion a year just for the ability to provide access to any song on any device, and let you pirate all the music you want to at will. Add to that the money from new songs you purchase, premium access, increased storage, exclusive concerts and the recording industry may see a bottom to its revenue decline, and could begin to rebuild from there. Seem counter intuitive? The record business will never be the same again, but maybe (just maybe) it will not go extinct.

And it remains to be seen if iTunes Match will grant you complete immunity from prosecution for copyright infringement. Kind of like AppleCare for pirates.  There are lots of moving parts to this story.

Welcome to the future.

This piece originally appeared in the Huffington Post.

F.B.T. Productions in Detroit, the producers who helped Eminem achieve his success are paving the way via a lawsuit against Universal Music and others, to larger payouts for digital music sales via iTunes and other digital services both past and future. This effort could unleash literally billions of dollars in unpaid royalties for recording artists.

How much money is at stake here?

This chart from Asymco, shows the accumulated payments made to suppliers of content to the iTunes store over time. You can see that the total amounts paid to the record labels can be approximated at $12 billion dollars since the launch of iTunes through the first quarter of 2011.

Source: Asymco

That would imply that the gross amounts collected by Apple are in the neighborhood of $17 billion dollars for iTunes music downloads.

So I did a little back ‘o the ole iPad calculation and here’s what I came up with.

I want to be realistic about the potential to collect and so will assume that half the music distributed on iTunes is from catalog sales of artists with older label contracts, and the other half is from music distributed from sales of newer artists. SoundScan numbers from last year show 648.5 million downloads of “catalog” singles in the US, meaning songs more than 18 months old, compared with 523 million for current tracks, so this seems like a very safe assumption.

Using this quick and dirty math, the potential unpaid royalties to artists from just iTunes sales would be around $2.15 billion. Admittedly some of this money has already been paid to music publishers, so the number may be overstated somewhat, and could benefit from a finer accounting. But then again, catalog downloads from iTunes could be closer to 80% which would make the unpaid royalty number higher. So the amount is significant. Really significant. Are you with me?

The lawsuit boils down to a distinction between selling “copies” of physical products such as CDs or vinyl recordings versus selling a “license” to reproduce the digital song data. Record labels actually ship physical product (principally CDs) to record stores; but in the case of iTunes it gets a license to replicate and distribute digital files. When the record labels sell “copies” of music, the artist typically receives a 10-15% royalty, but when the labels “license” the music to another entity, most artists typically receives a 50% royalty.

The complaint filed by F.B.T states “Defendants have failed to comply with the terms of the March 9, 1998 agreement and the 2003 Agreement by failing to account and pay royalties equal to fifty percent (50%) of Defendants’ net receipts from the digital uses of the Eminem Masters by the Music Download Providers and Mastertone Providers. Defendants apply an incorrect formula for calculating royalties with respect to those royalties to be paid to Plaintiffs which results in the payment of approximately twelve percent (12%) of receipts instead of the fifty percent (50%) required by the terms of the agreements.”

Universal Music Group, Aftermath Records and Interscope Records appealed against a ruling in the Ninth Circuit Court in December that said they should pay 50% of royalties on digital sales. The defendants took their appeal all the way to the Supreme Court.

However, the US Supreme Court just last week rejected Universal Music’s appeal in the case letting the Ninth Circuit Court of Appeals decision stand that digital music (under this particular agreement) should be treated as a license subject to a 50% royalty payment.

Now to be fair, not all label agreements are the same, and if you signed a label deal in the last 10 years or so, you have probably been excluded from the impact of this decision by contract. Label attorneys have indicated that newer artists are unlikely to be affected by the decision because more recent recording contracts include digital distribution in the definition of “sales” for artist’s royalty calculation purposes. But if you signed prior to the early 2000′s, you may be looking at a significant payday.

That apparently is the thinking by the estate of Rick James, which just filed a class action suit in April against Universal Music, opening the door for a massive settlement involving potentially thousands of artists. The filing can be found here. This is certainly not the last suit that we will see on this issue.

——–

For years I have been arguing that iTunes digital music distribution was a license of music, not a sale. When Steve Jobs and his team negotiated the original iTunes deal with the major labels, the economics gave iTunes roughly 30% of each download, like a distributor/ retailer of CDs would receive and the remaining 70% would flow to the labels and presumably be split as with a traditional CD sale.

But what was rarely questioned at the time, was the way the 70% label share would be split. The labels assumed that these downloads were “sales” of copies of the songs and that artists would receive their royalties based on traditional accounting practices.

Indeed in the early days of payments from iTunes, labels often continued to deduct fees for “packaging” and “breakage” and “co-op” often when there were no actual costs being incurred. Hardly anyone questioned whether iTunes downloads were “licenses” versus “sales” – which would have swung the payments heavily in favor of the artists.

Steve Jobs himself referred to his deal with the labels as a “license” in his rare and open “Thoughts on Music” letter posted February 6, 2007. Interestingly, this letter has disappeared from and is no longer available on the apple.com web site but you can still find excerpts via Google. Hypebot reported that “Although he (Jobs) consistently referred to Apple ‘licensing’ music from ‘the big four music companies’, when deposed in this case he claimed not to know whether his company’s relationship with Universal was, in fact, a license.”

——–

This potential $2.15 billion represents approximately 12.5% of the gross revenue collected to date by Apple, and that 12.5% figure could apply to all the other digital distributors including Amazon, Napster, and others. With Apple’s iTunes music revenue running around $300 million per month, that is another $37.5 million per month up for grabs at the present rates from Apple alone.

This ruling has the potential to forever transform the very nature and structure of the recorded music business. Certainly all of the cloud-based systems like Amazon Cloud Player and those being contemplated by Google, Apple and others will be commissioned under licenses, especially when you consider that multiple instances of files will be available on a PC, mobile device or streaming. The very idea of copies just does not make any more sense in the digital age.

This is a significant development for artists and the creative community. Artists and managers joined together could make it happen and see this incredible change of fortune through. This ruling will help transform the music industry for the better and redistribute the money in a way that is more sustainable. Certainly it will continue to be a painful transition, but finally there is some light at the end of the tunnel for creative people looking to sustain a career as a musician. And an indication of a better music business model for independent artists.

What do you all think of this?

Read more from the New York Times here.