• TechCrunch, Monday, March 9, 2009 12 PM

It's easy to look at Big Music these days and think, "these guys haven't got a clue," with their endless piracy lawsuits and "mafia-style collection rackets from venture-backed music startups." Music will obviously be free in the future, so aren't the record labels simply delaying the inevitable?

As it turns out, that's exactly what they're doing, says TechCrunch's Michael Arrington, and they're fully aware that music will be free in the future, too. At least, that's what one major industry executive tells him-that it's all part of a master plan. The exec says the labels fully understand that recorded music, whether streamed or downloaded, will be free in the future, amounting to "little more than marketing collateral" in the sense that the Internet services being sued today for copyright infringement will soon be embraced as a means of getting the word out about new music. Indeed, the tables will soon turn for these services, as the labels will soon pay them instead of the other way around.

Arrington argues that by 2011 or 2013, the labels will reorganize their business models around peer-to-peer file sharing services and music sharing sites. "No longer will the labels be tied to revenue limited to sales of master recordings," he says. "By then most or all artists will be under 360 music contracts that give the labels a cut of virtually every revenue stream artists can tap into -- fan sites, concerts, merchandise, endorsement deals, and everything else." However, until that day comes, lawsuits and rev-share/equity deals with music sites will continue to make sense for the labels.

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