What is needed is a Startup License that lets startups quickly and flexibly license music from the majors and largest indies for a set duration. After this duration, startups would still have to negotiate, but at least they’ve got their products figured out and investors will have a better understanding of what the business is potentially worth. The license should allow startups to opt in or out of territories. If you want to do UK-only, fine. If you want to pay more and do something global, it’s possible. A global startup music license would do tremendous things for innovation in music.
The problem is, it’s not in the interest of a powerful part of the music industry. For one, all of the larger music corporations own shares in music startups. Many of these startups still have to prove themselves, so you can see them as bets by the industry on what’s going to work. If it turns out it doesn’t work, the industry can stop licensing them, let them fail and move on to the next thing. If you want to launch a startup that seems like it undermines one of these bets, you’re going to have a difficult time getting it licensed.
If there’s anyone who can manage a paywall, it’s the music industry. Napster may have snuck through, but once that stable door was closed, nobody else was getting through without permission (or equity).