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I don't have any sympathy for the labels -- if their old ways are failing, it's time to come up with something new. But they're too used to the old way of raking in the dough for practically nothing, so the work of actually coming up with something new is scary.
I think its now obvious that the business model will change, but actually I think some of the labels are slowly realising that. Spotify could only happen because it had the backing of all the major labels - which means they've agreed to stream albums in full, for free! This could point towards a business model in which we mainly stream music without owning it, but advertising between songs gets money back to the labels. Alongside good quality, cheap downloads, I think that could be great.
It seems like everyone here is talking about major labels... of course a lot of music is released on indies and I have a lot more sympathy for them, most of them aren't out to make massive amounts of money but just love the bands they release.
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It shows me that, no matter how great of a musician I am, I can't expect to make money by selling music I've recorded.
It might be harder to make a lot of money on a major label, but if you wanted to release it independently without any label, it would be much easier for you to do that with the internet, and any profit would be yours.