How the Music Industry Makes its Money

Stephen Baker

Think back to the heyday of Napster, when a befuddled music industry was confronted for the first time with massive file sharing. It was a crisis. Since then, the tech market has responded with all sorts of innovations: Selling songs online, subscriptions, packaging music with video, and limiting file sharing through software. Compared to those early days, content companies have lots of ways to make money in the era of broadband--even though file sharing persists. Mark Cuban provides examples.

My question, as the Supreme Court debates Grokster, is this: Is the music industry fighting to survive, or simply to return to the days of easy money?

Fact is, both extremes are unlikely. No matter what happens with Grokster, the traditional music industry will keep on swinging. But the days of easy money are long gone.

Before it's here, it's on the Bloomberg Terminal.