Former waiters who are songwriters become former songwriters who are waiters!!
The Old Music Business Model
In the "old days," (say prior to 1999 and the creation of Napster), record companies signed artists, found songs, made albums and sold them to the public.
Songwriters received royalties for each record sold, artists got their slice of the pie and the labels "made a killing" (or went out of business if they backed the wrong artists).
In short, companies made a product and their customers bought it.
The "New" Model
Then along comes Shawn Fanning and he discovers a slick little bit of code (and invents Napster) that combined with that new MP3 compressed music format delivers a perfect storm for the old business model. All of a sudden it's as easy as pie to just steal the music. And everybody does.
Then in 2001, another genius geek, Bram Cohen invents an even better delivery system, "BitTorrent." That supercharges P2P (peer-to-peer) file sharing.
All this time too, the old newsnet/usenet groups that allowed grumpy old dial-up hippie nerds (and the rest of us) to read and blather at 56k realized they had a good thing going. They turned into wonderful little pilfered intellectual property delivery systems. Real fast and even allow complete anonymity if you pay up for the expensive VPN usenet plan and turn on the encryption features of the newsreader.
Not to be outdone, a number of websites (probably in the hundreds by now) discovered a wonderful new business. Why not just steal movies, software, and music and then sell it for a fraction of what one could get it for legally at iTunes or Amazon? (These sites abound in the former USSR mostly beyond the reach of law enforcement.)
So, it grew and grew and soon we had a whole digital ecosystem of websites and companies lovingly providing all sorts of ways (mostly for a monthly fee) to protect your identity from the prying eyes of the RIAA and your ISP.
In short, in the new music industry business model, the labels create albums, sell 1 for every 10 or 20 that get stolen and transfer the lion's share of their revenues to the ever growing maw of a bunch of enterprising crooks.
What a world. The music industry contracts and contracts. Employees get fired left and right. Labels close or merge. Crown jewels (like Abbey Road Studios) go on the auction block. The ripple effect takes out other studios and the engineers who staff them. Publishers close left and right and former waiters who are songwriters become former songwriters who are waiters. The whole mid-level artist tier is getting the ax as we speak and the top artists are selling one third the albums their peers did a decade ago. For new artists, if you don't win or place in American Idol, forget selling more than a million albums. And soon, there really won't be any new artists. The business is contracting to just the legacy artists (like Michael Jackson's posthumous $200+ million deal with Sony—man, that's a pile of new artists that ain't gonna get signed!!).
We could go on and we will elsewhere on this site, but that's enough for now.
The graphic below illustrates this brave new world. ("IP" stands for intellectual property, 'case you haven't figured that out!)
