I don't see any way to keep physical media from being phased out, and if that's inevitable I prefer a streaming model to a rebuy-for-each-new-digital-format model.
Spotify Premium costs $10? We have to assume the average listener listens to less than $10 worth of music. Find the amount each genre listens to, and charge just a dollar over that (but less than $10) for, say, the current top selling 100 albums and the genre of the subscriber's choosing.
Say, $5 for hip hop, $7 for rock, $3 for country, etc. Hulu could do the same with scifi, drama, comedy, film, TV, and documentary packs all at cheaper prices, all along with their current "everything for the top fee" charge.
/edit: Similarly, as they've done with StarTrek.com and SouthParkStudios.com, I can't imagine why every show hasn't offered their full series online. Especially those brands with many shows and fan-bases that could be brought together.
The bottom line is that I pay a lot less for music now than I used to, and most people do, which means there's just less money from recordings in the pot that can go to artists.
The big record labels have to die. They've been mostly killed, and we're definitely past their point of utility, but they hang on and on and on.
Nielsen's methods of measuring probably favor established record companies over independents. But the fact remains: sales are UP among the big four in 2011.
Price per album has of course dropped like a stone with the switch to digital. But so have distribution costs.
And do you know what happened when the price dropped? The number of units sold went up! This is mad, MAD, I tell you, an outcome never even dreamed of by any economist ever.
Their profits aren't quite as obscene as they used to be perhaps. But they are still making money hand over fist.
This myth that the big record companies are dying needs to stop. It gives weight to their whining about piracy. Which is the real long-term danger.
[1] http://www.businesswire.com/news/home/20120105005547/en/Niel...
An increase from 326 million in 2010 to 330 million in 2011 is not a recovery. Really, it's just a couple of extra hit albums.
Still, I take issue with your characterization of the big record labels as having "been mostly killed." $4.158 billion dollars in sales is not "mostly killed."[2]
If I owned a significant proportion of a company that had that kind of revenue per year, well, I would not just throw it in the trash and advise they close up shop ;)
[1]http://theunderstatement.com/post/3377858909/album-prices [2]330 million * $14 per album (from [1]) * 90%
False. The notion that Spotify just doesn't pay very much to artists is simply unfounded. The figure's close to 70% of their revenue.
Relevant: https://www.techdirt.com/articles/20120622/16193319442/myth-...
But neither is Spotify: http://mediadecoder.blogs.nytimes.com/2012/08/24/pandora-and...
Personally I think the Bandcamp model is the way forward.
What's great about Spotify, is that artists get paid per listen, which favours artists which make great, lasting music, and against those who produce one hit wonders. If people continue to listen to your music over a period of time, the artist will continue to get paid, and that's great (and those who produce one hit wonders get paid a lot at the time, and virtually nothing afterwards).
The problem, of course, is that Spotify doesn't pay very much to artists. Spotify says this is because artists have shitty deals with labels (and I'm sure this is true), but independents also complain about the amount passed on. Spotify, however, last I checked, isn't profitable, so they can't afford to pass on more money anyway. I would happily pay more, but I use it near-constantly at work and at home (easily 6+ hours a day on average). I suspect I'm a minority here.
Ensuring artists get paid enough is a problem we haven't solved yet. I tend to think it'll go the way of free-or-near-free streaming (a la Spotify or Youtube), with albums becoming collectibles like Vinyls, and the vast majority of artist revenue coming from live shows. Unfortunately, this is going to mean labels are going to have to negotiate a cut of live shows with artists to cover album production costs (assuming they're not independent, obviously). I don't mind a one-or-two week delay on streaming sites to give people who really want a listen to buy it first. Of course, this helps drive piracy back up, but for artists, their aim shouldn't be minimising piracy, but maximising the profitability of their work.