As the media world combines with the new media world US courts deal with the fallout of legal squabbles between large record companies and online media start up companies. Record companies are not taking the financial hemorrhaging from the digital music revolution laying down. Though there are legal music and mp3 download sites such as Amazon and itunes other music sharing sites are a thorn in the side of the music recording industry which they fully intend to eradicate.

A few factors played a role in the decrease of profits for record labels and one major factor was greed. After record companies understood how profitable the music business could become with the help of media saturation marketing campaigns and new technology, mainstream music shifted quality driven models to quantity driven models. The internet made crossing over internationally easier and the focus changed from creating music artists with the potential for long careers to fast breakout successes with or without the ability to sustain a viable music career. Record labels began taking financial short cuts in the developing of talent . The popularity of music videos allowed some companies to virtual bypass talent for easily marketable artists and contribute to the downward spiral of quality of mainstream music and music artists.

Another factor that led to a decline in profits for music recording labels was the transition from CDs to digital music downloads. Subsequently, distribution costs decreased allowing artists to deliver their songs to retailers without the additional costs of pressing Compact Discs. In the old model of the music industry distribution power was held by a small number of companies creating a funneling system where music artists wanting their works delivered to music retailers (major and independent) had to go through these third parties ensuring them a profit from virtually all sales from music Cds.

The digital music downloading and MP3s have dramatically decreased the income of the major record companies with distribution abilities could collect leading to a rise in 360 deals where companies get a percentage of all of artists revenue and package them to maximize their amount of revenue streams (product lines, endorsement deals , etc.) The shift to MP3s has also made it possible for music artist to retain more of their profits. In the new music industry model the bulk of financial income now derives from merchandise, tours, product lines, endorsement deals and music licensing.

In the late 90's free music sharing sites like Napster began popping up and basically allowed fans to obtain music with artists, record companies and other invested parties to receive financial compensations for their works. The RIAA (Recording Industry of America), originally went after the downloaders charging random music fans exuberant fees. The swapping of free music did not stop and the lawsuits became a public relations nightmare for the RIAA after news coverage of the downloaders revealed many of them to be minors.

Record labels went on to legally pursue the file sharing sites themselves causing them to shut down or be bought out. The music industry also adapted to the demand for MP3 s by starting legal online distribution. Unfortunately some online media companies operate from a grey area or run sites based on a complete violation of US copyright laws and pay a heavy price. Online video site Veoh declared bankruptcy in 2010 after a legal battle with Universal Music and more recently online website MP3tunes filed for bankruptcy in April of this year after a legal showdown with EMI. Websites like YouTube try to adhere to copyright laws by removing content they believe to be in violation by committing copyright infringement. Their task is a difficult one because users can upload music videos on YouTube faster they can screen them for copyrighted material. On the flip side YouTube also has an advantage over competing video sharing sites in that it is owned by internet giant Google and less likely to be decimated by record labels in court.