Neil Strauss describes just how messy it’s become: Online Music Business, Neither Quick Nor Sure [pdf]
In the last decade a new record business has been forming online. It has been coalescing by trial and error, largely error. And its evolution is in no way complete as it moves toward a finish line at the rate of one step forward for every nine-tenths of a step back.
[…] Clearly, Sonicnet’s music store was more of a me-first venture than a moneymaker, but the message was clear: the Internet was a place for artists to control and directly profit from their music. But in most online services today that dream has been lost, with the services functioning as online arms of the record companies while the artists receive pennies (or fractions of pennies) for each download.
The second dream from the golden age of music downloading was summarized in a catchphrase: All you can eat. The future of the business was in allowing fans access to all the music they wanted for a monthly fee. So far, only the free unauthorized services have accomplished this, chiefly ones that are now defunct, like Napster and Audiogalaxy. The reason the authorized downloading services haven’t accomplished this goal is not because the technology or will is lacking, but because full cooperation from record labels and publishers has not been forthcoming. They fear they would become obsolete.
Thus the authorized services online today are all compromises.