Record Labels Are Finally Adapting

Earlier this week Warner Music partnered up with Google for an upcoming online music subscription service. The deal will give Google the licensing rights to Warner Music’s catalog for Google’s two upcoming on demand subscription services; One based off of Google owned YouTube video property and another through Google’s online music subscription service Google Play. In addition to Warner Music, Google is also in talks with other major labels Universal Music, and Sony Music for access to their catalogs as well.

The deal with Warner Music will allow Google to pave the way for their own online music subscription service that will rival Rhapsody, Spotify and Slacker for the online subscription service crown.  Labels are starting to understand the benefit of working with online services rather than trying to box them out completely. This a far cry from what the relationship between online music services and record labels used to be.

Sites such as Napster were public enemy #1 for labels. It was a phenomenon that the industry had never seen. People were now downloading/streaming music and these sites (to the chagrin of the record labels) were providing these services for no cost. The recording industry went into panic mode and terms like “music piracy” became the rave for record execs to harp on in the early 2000’s.  The problem with the record labels logic is that while working diligently to shut down these sites they were missing the opportunity to capitalize off of the innovation happening right before their eyes. Record labels should have been working not to eliminate online music sites but work with them to open up another revenue stream for their catalogs. The bigger issue for the recording industry should have been how to handle the shift of consumers getting their music via physical copies (CD’s, Cassettes etc.) to online content readily available.

Fast forward to 2013 and the labels finally understand; Change is good.  Record labels are negotiating deals with sites such as Napster (bought by Rhapsody in 2011) to allow them access to their catalogues in exchange for revenue on the back end thru ads and subscription fees. Now with Google entering the game already as the leader in worldwide video content, record labels are working feverishly to work out deals in time for Google’s online subscription service to launch (expected to launch later this summer).

The record labels are finally adapting, even if it is 10 years late, but like the saying goes “better later than never”.