Apple's iTunes Radio Will Fail the Music Industry

NEW YORK (TheStreet) -- Outside of my June 28 article, Apple (AAPL) Should Be Ashamed of Itself, nobody has a bad word (or, in most cases, even a word) to say about the iTunes Radio deal Tim Cook shoved down the music industrial complex's throat.

Actually, it's independent labels and artists, particularly the small ones, you should feel badly for. The majors have never had a problem being led into the depths of hell by a company that couldn't care less about its fate.

If you think Cook pulled off a brilliant coup, similar to Steve Jobs taking $14.99 album sales and turning them into 99-cent a la carte singles sales, you're wrong. He miscalculated.

Ultimately, this miscalculation won't hurt Apple's business -- music downloads and even ad revenue generated from iTunes Radio is and will remain a paltry fraction of its multibillion dollar hardware juggernaut. But, as usual, the music industry, in its lack of vision, fear of change and allergy to innovation, will get the short and wrinkled end of the stick. After spending five minutes with iTunes Radio, something we knew all along becomes clear -- Apple wants streaming radio to gateway users into more music downloads. Based on the deal the indies signed with Apple (presumably the majors agreed to something similar), they're holding out hope that the company that revolutionized music listening and buying ends up right again. Why else, in an age where some artists can't stop whining about how little they receive in royalties from Internet radio, would you agree to a deal where Apple pays exactly zero for so many plays. Just review my June report -- here's the link again. If a song you stream on iTunes Radio is in your iTunes library, Apple might not have to pay a royalty. Stream a song from an album you own songs from -- but not the one you streamed -- and Apple might not have to pay a royalty. Apple was thoughtful enough to set a two songs per hour, per user cap on this highway robbery. Promotional "heat seeker" tracks -- also exempt from royalties. And, if Apple decides to use some indie music to promote talk, weather, sports and news programming -- no royalties! During the iTunes Radio beta, which could last up to 120 days (I'm unclear as to when that period begins -- or began -- and ends), no royalties.

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And, somehow, the musical industrial complex labels Pandora (P) the bad guy. It's astounding.

I have written about it every which way -- using approaches from hard numbers to strong rhetorical takes ...

The days when a so-called music-buying public existed are fading and soon will be history, just like the record album.

Capitulating to Apple's desire to keep iTunes Store sales rattling and humming will go down as the single dumbest move the record industry ever made. Steve Jobs knew what you wanted before you did. He knew how you would act before you even knew such action could become joyful force of habit behavior. For as much as I have defended Tim Cook this week, he's just not that guy. He's attempting to force behavior, not encourage a lifestyle people subconsciously craved, but never knew they wanted. There's no longer a reason to buy music. You can have it served up personalized for free (or for a small fee) or, when you know exactly what you want, you can fire it up for free at places such as YouTube and Vevo or for a more than reasonable monthly price at one of the many Internet radio platforms that offer access to every song under the sun. That's called the access model. That's the future. And a good chunk of it is here ... now. We don't even need plutonium or a flux capacitor. Royalties remain the perceived easy way out for an industry stuck in the 90s. For one too lazy to harness the opportunity the marriage of technology and big data brings. Thankfully, so many musicians (and even label executives) are hard-working, creative and incredibly bright. The perfect type of entrepreneur. These are the folks finding ways to make their music work for them beyond royalties. Like the access model, that's the future and, it to, is here now. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.