While some digital music services appear to be catching on, few are profitable and others already show signs of fading. The blame, according to Charles Caldas, the head of indie label licensing powerhouse Merlin, lies with the continuing influence that major labels have over many new music services.
Major label power may have diminished from the days of buying their way onto limited shelf-space, but their working to reassert it. "By its very nature, the Web can offer music fans a vast array of opportunities to discover new music," Caldas said in a GigaOm op-ed piece "However, new digital services often construct their services based on physical market shares. Major labels, who are actively trying to reconstruct their old-world advantage in a new digital economy, are undoubtedly influencing these startups."
Both fans and the startups end up being the losers, according to Caldas: "Instead of providing what listeners want to hear, music services end up building their consumer offering around what the majors force upon them as a cost of getting to market."
"If you are a startup music service looking to attract the digitally active, early adopters (the key demographic you need to build hype so that you may ultimately reach a broader market), you need to recognize that Arcade Fire, Grizzly Bear and the National are more likely to be at the top of the search lists, not Gaga or Maroon 5."