The day the muzak (didn't) die

With the digital revolution, the drumbeat of failing music-related businesses has been a constant rhythm for several years now. So when it was announced last week that the Muzak brand was retiring, it was hardly a surprise.

However, it turns out that the Mantovani of music isn't as moribund as many of us thought.

Purchased by Canadian firm Mood Media two years ago, Muzak continues to deliver custom music channels to retailers and public spaces (yes, including elevators) around the world. That includes those saccharine cover songs we've all come to deride, but what will now simply be called Mood also offers stations with original tracks from the likes of the Beatles and Inxs. However, there's a lot more competition today than there was in 1934 when the Muzak name first appeared.

There are countless streaming music options now, with services of every stripe (Slacker, Pandora, Rhapsody, Spotify, Rdio, Mog, 8tracks, Grooveshark). And traditional radio stations have also gone online, including Internet radio aggregators like TuneIn and Shoutcast. These Internet services, it is often said, are killing the traditional music business softly with their songs (never mind about pirated songs).

Certainly, CD sales continue to decline. A Nielsen SoundScan and Nielsen BDS report notes that disc sales fell a further 13 percent last year (although it's still a dominant format). And while digital track sales are up -- just over 5 percent compared to the previous year -- as more people switch to smartphones and smart TVs, streaming music services are expected to supplant digital downloads someday.

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In the U.S. streaming music services, while still in their nascent stage, threaten to overturn the music applecart. Pandora has 65.6 million active users, a 38 percent jump from the same time last year. Spotify, which has been in the U.S. about a year, has 20 million active users worldwide, with about 5 million paid subscribers. Rhapsody has about 1 million subscribers. Depending the service and their licensing arrangements, listeners have access to 16 to 20 million songs online.

'Internet delivery is more of an opportunity for us.'

— Randal Rudniski, a senior vice president at Mood Media

You can listen to streaming services any where, in your car, on your phone, and at home. The other day I glanced out my window, and saw not American Idol or the Knicks but Pandora on my neighbor's TV. (And no, I'm not a peeping Tom; they've just got a really big flat screen.)

What is truly amazing about Muzak, er, Mood, is how it has withstood the digital revolutions in the music business. While labels have fallen, local radio stations have succumbed to corporate pre-programming, and many bands have seen sales dwindle, Mood has continued to chug right along.

"Internet delivery is more of an opportunity for us," points out Randal Rudniski, a senior vice president at Mood Media. Traditionally, Mood's music came into stores using satellite receivers, but a growing percentage is now delivered over the Web. And the company has plans to take further advantage of the Internet. A new partnership with Shazam will allow customers to identify a song they hear in a store using their smart phone and then have the retailer offer a special promotion to the customer while they are still standing in the store.

Furthermore, Mood is holding steady. It has north of 400,000 commercial customers in the U.S., with another 100,000 in Europe. The company has decades of experience dealing with convoluted licensing and copyright fees, as well. (Yes, it's technically illegal for your local pizzeria to pipe in their own iPod playlists.)

Moreover, most of the streaming services can't compete with Mood, yet. Pandora has had a similar commercial subscription service for some time, but it works through hardware partner DMX, which is owned by (you guessed it) Mood.

Unfortunately, even with millions of tracks available in streaming and downloadable form, the music market still can make a fan's ear drums ring. Some artists come and go online, depending on licensing arrangements. One day I'm listening to Liz Phair and Chris Isaak; the next day, they're offline (and then Chris came back, go figure). Others, like Led Zeppelin are all-but complete holdouts--although Zep is reportedly in negotiations with streaming companies now. And still others are available exclusively on particular services. Spotify has an exclusive deal with Metallica; Rdio boasts Pink Floyd.

(Pandora has an unusual advantage: it's got Metallica, too. It even has the same Rovi-written biography that Spotify posts. Punch in Metallica and you'll get your own fist-pumping station that even includes AC/DC. The catch: you can't call up a particular artist or song on demand.)

Nevertheless, the music business' VU meters continue to swing back and forth. One week, online music is killing the labels and shortchanging the artists, the next, the services themselves are on death's door. One thing is for certain at least for the time being: This is not the day the Muzak died.

Next week, John R. Quain will be speaking at the DMW Music conference in New York City. Follow him on Twitter @jqontech or find more tech coverage at

Mood Media, a firm outside of Toronto, bought Muzak Corp. two years