If you work for or own any sort of Internet radio company, we’re really, really sorry for you. Because, if the layoffs at Rhapsody or Pandora’s announcement that they’re going to continue to lose money are any indication, you’ve had a rough week. And it’s not going to improve any time soon.
Apple And Google Are Coming
Google’s internet radio apparatus, All Access, is already up and running, and Apple is about to launch iTunes Radio. Google also has a YouTube based service on the way, which is essentially the stuff of everyone’s nightmares. There’s reason to be skeptical that either service will somehow magically become profitable, but unlike most Internet radio companies, those are losses Apple and Google can cheerfully eat. It’s likely that Internet radio services are about to start losing users.
Royalties Are Not Going Down
We’ve taken Pandora to the woodshed for this, but the truth is, it seems unlikely they’re going to be able to pay less money for music any time soon. The music industry is still struggling with the idea that technology has irrevocably changed their economic model. So Pandora, unless something great happens for them, gets the squeeze.
The Audience Is Too Fractured
Finally, there’s the problem of audience fracturing. Internet radio is squeezed pretty tightly already, and bands are beginning to chafe under what they see as an unfair and abusive system. Internet radio doesn’t really have the tools to fix this, unless they want to go non-profit.
In other words, there are large, intractable problems Internet radio companies either can’t fix or are entirely out of their control. So, if you know somebody working at one of these companies, take pity, and send them a box of Rolaids.
(Image courtesy of Thomas Hawk on Flickr)