The Creator of imeem on the Future of Music Subscription Services (it isn't bright)

On a recent episode of The Big Web Show, a podcast primarily about Web design, Jeffrey Zeldman interviews the creator of imeem and App.Net, Dalton Caldwell.

As the creator of imeem, a social network and legal peer-to-peer music sharing service, Dalton Caldwell has an insider's perspective on dealing directly with record companies. In the interview, Caldwell offers insights as to how music subscription services are paid for by the companies that run them, and why services like Spotify and Pandora are doomed to remain (or eventually become) unprofitable ventures.

Licensing fees, he says, besides being astronomical, are also totally arbitrary, and subject to change at the record labels' whim. Building a business model around arbitrary, changeable fees means companies like Spotify and Pandora are in incredibly weak positions: if the fees go up (and they have, and do), they must either raise their prices, increase ads, use other revenue-generating business models (like selling their users' data), or shut their doors.

He also describes why it's in the major labels' best financial interests to price their content out of reach of music services, thus forcing them to shut down.

The interview offers fascinating insights into how exactly these services strike deals with the recording industry. Caldwell also talks about the origin and purpose of App.Net, but the parts about the music industry were interesting, even if you're not into Web design.