Last week Warner Music Group reported more losses and announced write-downs of its investments in music tech startups imeem and lala. RealNetworks announced wider losses than analysts expected, and concert giant Live Nation said that tickets sales are down 22.6%. Only EMI reported that things were looking up, but most of their gains came from cost cutting rather than new initiatives that are admittedly in their early stages.

In recent weeks, shutdowns mounted from Seeqpod to Spiral Frog. Others like imeem are struggling to survive and the venture capital to save them or to fund new companies is disappearing faster than free beer on Bourbon Street. Mix in several years of sales declines plus a troubled global economy and you see just how deep the music industry’s problems are

Despite all of this, perhaps even because of it, I’m optimistic about the music industry.

They say it is often the darkest before the dawn; and just as an addict has to hit bottom before committing to recovery, the music industry needed to be shocked into facing the new realities. Certainly, there are many holdouts and others who talk the talk, but don’t really walk the walk. There are however, many hopeful signs.

More and more smart men and women with vision are being hired at the major labels, particularly in digital and marketing.; and some are being elevated to positions of real influence. I also see more music tech startups emerging from unlikely places that understand the power of launching lean

But my greatest source of optimism for the music industry comes from the rising musical middle class – a middle class not just of artists who from Jill Sobule to Corey Smith and other artists are finding success on their own terms – but also of indie labels like Asthmatic Kitty, Park The VanSuburban Home and ABB who are finding success by nurturing great music music and embracing music 2.0 instead of swimming against the rising tide. They are the future.

Despite all of the real gloom and doom; the sky is not falling on the music industry. Gone are the helicopter rides from Cannes to Monaco for lunch; and MIDEM may have to start running buses from the train station instead of just from the airport. But this was always about the music. Some of us just let the money get in the way.


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