The business model of the music industry will go through a disintegration before reforming, predicted Billy Corgan, the lead singer of The Smashing Pumpkins.
He added that the music industry is currently run by people who have no clue, including tech companies, because artists do not realize their true value.
"Tech companies keep cycling back to music artists and music artists need to figure out their true value in a free-market society, which they've been slow to do because you have that old model of telling artists that they are not worth anything. They are disposable," said Corgan in an interview with CNBC's "Squawk Alley."
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Corgan added that the music industry differs from sports and movie industries because athletes and movie stars have a level of independence that allows them to have their own terms.
"When it comes to athletes and rock stars, or music stars, those are two people that can sell a level of independence that works with marketers that nobody else can sell," said Corgan.
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Some artists attempt to create their own business model. A recent example is Jay Z with the music streaming service Tidal.
"The problem is that although I celebrate the idea of him creating his own model, it leaves a lot of people out," said Corgan.
Saying that Tidal is altruistic and benefits everyone is not true, he said, because there will be some losers and winners.
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For Corgan, the fragmentation of the music industry is comparable to the Wild West because of all the changes and the power struggle going on. For many artists, the future is in brand identification, and not touring.