No on-demand streaming subscription service has enough customers to matter to the labels. The labels would starve if they had to live on the revenues. So the existing services all had to accept the deals they could get without any real leverage, and these came with brutal – barely survivable – terms.
Once some service has enough customers for the revenues to matter to the major labels, the deals will be renegotiated. $200 million dollars split between all the stakeholders in the recording industry would do the job. At $10/month that’s 20 million subscribers, which happens to be about the size of Sirus/XM.
And then things will get started for real. For now we’re still in the prelude.