It is widely expected that Madonna will bypass traditional record labels and sign a $120 million deal with Beverly Hills based Live Nation, to coordinate her recorded music, merchandising, and (the real cash cow) her live concerts. This comes in the wake of Radiohead, Nine Inch Nails and other artists abandoning record labels and selling their music themselves, primarily online.
Meanwhile, the labels fritter away their time and energy filing 26,000 lawsuits against their customers, and have financially ruined Jammie Thomas, an American-Indian single mother of two who the labels (the RIAA) sued and won a judgment of $220,000 for copyright infringement, which is effectively 10 times her annual after-tax salary. The irony is Ms. Thomas has a very large, paid-for CD library, and was still targeted and ruined by a cabal who refuse to adapt to changes in their industry.
The music industry, specifically Universal, fights tooth and nail against Steve Jobs, who singlehandedly organized the best defense the labels have against file-sharing, that being a coherent method of downloading music at a rational price. The music industry, emboldened by their slice of revenue from every Zune sold, want a piece of every iPod sold, stating that the iPod's success is built on stolen music. Should NBC or the other networks get a piece of every TV sold? And why does the music industry persist in viewing its best customers, people who really love music, as criminals?
David Bowie once stated that recorded music would ultimately become a utility, "like water." Subscription services such as Rhapsody are bearing this out. The industry is changing, but the major labels cannot remove their heads from their posteriors long enough to notice, adapt, and prosper.
So while the labels alienate and lose their artists who provide their product, they are also managing to alienate and lose the customers who buy it. They ruined Jammie Thomas and lost Madonna. Quite a management feat.