Despite better-than-expected business in the first half of 2011, the recorded music industry remains plagued by a decade-long decline in CD sales—still its core product—and insufficient digital revenue to make up the difference.
Discrete downloads and ringtones were once hailed as promising revenue streams but both have fizzled. Even the company that pioneered the legal download model, Apple, is now pushing a cloud-based alternative, iCloud. Amazon is making a similar push with its Cloud Drive.
The key to the long-term survival of these services is whether they can generate enough revenue for themselves, copyright holders, music publishers and other rights owners in the recorded music value chain.