Giving Away Music to Make Money: Independent Musicians on the Internet
First Monday

Giving Away Music to Make Money: Independent Musicians on the Internet by Michael Pfahl

Abstract
No one has felt the impact of music on the Internet more than the independent musician. The recording industry has dominated the production and distribution of music for many years. The big six recording labels are making a push to incorporate the Internet into their distribution process. Standing in their way is the issue of security.

It seems that music files on the Internet, no matter how secure they may seem, are susceptible to tampering. This will force a shift in distribution away from selling music on the Internet in compact disc or MP3 file form and towards artists creating communities of shared interest that provide music to their audiences for free. New revenue sources will be created using streaming audio and video technology in a pay-per-view format, among others. This will drive the demand to see an artist in concert and increase the revenue that is generated from live performances.

This paper will address the current state of the industry and the battle between the Internet world and record companies. Next, various plans will be discussed that create and distribute music on the Internet. Finally, I propose a comprehensive strategic plan for successful Internet commerce by independent artists that will be based on artists giving away all of their music for free via the Internet.

Contents

Industry Overview
Creativity and Financial Support: The Musician's Dilemma
Plans for the Future
A Solution
Concluding Thoughts


Is it possible for music to be delivered via the Internet without complete protection from hacking and/or tampering? Carol Kuester replied "The transfer of any data across the Internet is only as secure as its weakest link. Even with the highest encryption available (which, I believe, has been cracked to some degree) there is no guarantee that the sources or recipient is secure, ever" [1]. Her reply reflects the effect of the Internet on the movement of information, such as digital music. The music industry is the latest that has been forced to address tough questions about its current structure.

No one has felt this effect more than the independent musician. This mainstay of the music industry is poised for either a boom of creative control and distribution or a bust that will see it increasingly difficult to be heard, let alone make a living from their art. The creativity and passion of these musicians fuels music around us. Without them, there would be no music.

This paper will address the current state of the industry and the battle between the world of the Internet and traditional record companies. I will then examine the various plans in place to create and distribute music on the Internet. Finally, I will suggest a comprehensive strategic plan for successful Internet commerce by independent artists, that will be based on artists giving away all of their music for free via this networked medium.

 

++++++++++

Industry Overview

Traditional recording labels

Many believe that the Internet has caused confusion and uncertainty in the recording industry. Actually, these changes can trace their beginnings back to the 1980s and early 1990s. At that time, there was a great deal of merger and acquisition activity taking place, due to many factors including market share, publishing rights, global market penetration, and the need for quality, marketable musicians.

Keith Negus noted "Throughout the 1980s greater levels of investment [had] been required to record, market, and promote artists. At the beginning of the 1990s, a major record company in Britain anticipated having to spend between £250,000 - £330,000 over the first 12-18 months of an average [recording] deal for a new act; roughly broken down into £100,000 to advances to the artists, £150,000 for recording costs, and £80,000 for basic promotional expenses" [2]. In addition to this financial risk, the companies also ran the risk of over-signing acts and not having enough staff available to service and promote them properly.

This period of consolidation, coupled with a significant sales slump, forced record labels to take a smarter business approach to their operations. They began to look back towards the independent, smaller artist for new talent. "Small upstart labels began to thrive. As recording costs were forced downward ... more and more people could afford to record" [3]. This produced a resurgence of unsigned artists recording music that people actually liked to hear instead of what record labels believed they would like to hear. The artist-listener relationship grew closer than it had been for a long time.

By the early 1990s, independent musicians had revitalized the recording industry and encouraged a second wave of corporate mergers and acquisitions. "The alarming result was that six corporations now control 93 percent of the records sold in America" [4]. Today that number has been reduced to five.

These labels are now moving towards the Internet and merging or acquiring Internet companies who provide audio content over the Web. Profit difficulties and a slump in 2000 music sales added to these moves. In 2000, sales worldwide were worth $236.9 billion, as units sold fell 1.2 percent on the back of falling singles and cassette sales [5]. America Online and Time Warner partnered to create a massive media conglomerate with Bertelsmann Music Group and EMI to form a powerful force in online music. They will license their music catalogs to MusicNet, a Real Networks subscription service on the Internet, via the Napster platform in a non-exclusive agreement (which means they will be able to license their catalogs to other services) [6]. The three companies have a total of 43 percent of the music market in the United States and potentially that much in world market shares [7]. Vivendi and Sony (38 percent total U.S. market share) have formed Duet to add their online presence. This leaves just 19 percent of the American/world market for independent labels.

"Record companies have been doing business a certain way for a long time and making a lot of money, and they are comfortable doing business in that way. Now the industry is changing ... on the Internet, you can reach out to the consumer, at virtually no cost, and market your products, services, your art, anyway you wish," says entertainment attorney Rose Meade Hart [8]. Independent musician Bill Lonero of the United States, remarked that "right now, the record industry is working off a formula that they know will make them money. There is no experimentation anymore in popular music. They know what the kids are buying and they are mass producing it. Hopefully, true artistic expression will make a comeback" [9]. Derek Gibson, Web designer for Julian Lennon's site, said something similar when he spoke about Julian's experiences with record labels. "Julian, in common with many artists, has had a number of regrettable experiences with record companies and distributors. He now feels that his Web presence provides the opportunity to disregard the traditional route of record releases" [10]. These views reflect those of many independent artists; the Internet may bring about a return to the independent musician as the center of the music world.

The Internet

How well will music sell on the Internet? Table 1 below provides one picture of the projected sales of music via the Internet through 2006. These projections do not mention or take into account the kinds of security measures that will be necessary to protect digital downloads. The estimates of sales, however, suggest that music on the Internet is here to stay.

Table 1: Online Music Sales, by Distribution Method ($US million), 2000-2006 [11]
 2000200120022003200420052006
Traditional Formats9061,4212,1613,0603,9114,8935,796
Digital Downloading622862585849891,601
Subscriptions19561884409391,4942,270
Total Online Sales9311,4992,4353,7585,4347,3769,667

The recent history of the Internet has seen several styles of music distribution appear, the first being Napster and Gnutella. These systems allow users to swap MP3 music files without paying royalties to recording companies and artists. Recent cases involving DVD technology have tried to prohibit users from cracking security codes. This has led to a legal battle involving major industry players with security as a major issue hindering efforts to deliver music profitably over the Internet.

Battle lines have been drawn on copyright infringement. The Digital Millenium Copyright Act (DMCA), signed into law on 28 October 1998 by U.S. President Clinton, is being touted by labels and users. The key lies in "the copyright owners [having] monopolies on their works and deserve to profit from them. Yet, as a buyer of a copyrighted work, one should be able to get full use of out of what was paid for, and not be hassled by restraints on the usage of an item for which a substantial sum was paid. It is the last part that is an issue with the implementation of the DMCA" [12].

The debate over open source code for computer software has spilled into the Internet music battle. Richard Stallman noted that "any kind of information that can be stored on a computer, conceivably, can be copied and modified. Napster is a big example ... of the public deciding to exercise the freedom to copy instead of giving it up" [13]. On the other hand, artists have been testifying in front of U.S. Congressional committees to defend their right to collect money over the use of their works. Singer/songwriter, Lyle Lovett, testified before the U.S. House Subcommittee on Courts, the Internet, and Intellectual Property on behalf of the American Society of Composers, Authors, and Publishers (ASCAP), remarking "let me say as clearly as I can that there isn't a songwriter I know who opposes new technological ways to perform music. And as long as we are being compensated fairly for that listening pleasure, we are better able to feed our families, pay our bills, and sustain careers as songwriters" [14].

Another area in development is the development of Internet-only radio stations or Webcasting. The key to success for these stations hinges on advertisers getting their money's worth. "Webcasters say that the biggest obstacles to growth are the need for credible third-party metrics and the need to continually educate advertisers and agencies about the value of Webcast advertising. Almost one-third (30 percent) of Webcasters feel that the lack of metrics is the biggest obstacle to selling advertising, followed by advertiser awareness (24 percent), lack of a coherent sales message (23 percent), and technology issues (10 percent)" said Bill Rose, general manager and vice president of Arbitron Webcast Services [15]. These Web radio stations "are not exempt from a copyright owner's digital performance right for sound recordings when transmitting over a digital communications network such as the Internet" [16]. This has prompted action by Web radio stations so that they could be included in blanket music licenses granted by the U.S. Federal Communications Commission (FCC) [17].

These differing formats all are trying to move towards a personalization of music, searching for the perfect method of identifying an individual and their musical preferences and delivering music in a smooth and efficient manner. Napster and Gnutella provide options that are free; in the case of recording labels, there is a price for this service.

 

++++++++++

Creativity and Financial Support: The Musician's Dillemma

Independent musicians have had a difficult time assessing the ultimate value of creative control compared to fundamental need for royalties. They have constantly asked for more control over their work, but realize that they cannot live without the benefits provided by record labels, that is until the Internet arrived on the scene.

Creative control

Creative control is at the heart of the relationship of independent artists with their recording companies. Musicians believe that they know how to find and produce the kinds of music that the listening public wants. Over the years, labels have tried to take that control away from musicians. This control allows the recording companies to manage the entire musical production system and maximize their revenues, but it means that musicians are often left behind as musical fashions and fads change.

Riordan says that, "When I was contacting top industry pros for a seminar, I was amazed that some of them said they actually preferred that the artists they work with not understand the industry ... blindly trusting [the record companies]" [18]. One marketing director at a record label said that no label goes to an artist, signs them, and then plans what they will wear, what they will do, and how they will act [19]. However, in some markets and countries such as Thailand, this sort of control is exactly what happens.

Grammy Entertainment, like other Thai record companies, caters to the teenage market, producing "pop" music and contrived stars. The company has an extensive network in Thailand that links television and radio programming, magazines, and advertising with its music division, thereby controlling all facets of the production, marketing, and promotion of its artists. The downside is that the company tends to make "the artists into copies of previous successes, [for artistic development to occur] they [Grammy] must let the artist develop their own style. Eventually, the teen market will not be able to support the music business as it is. You can only produce so many similar products before they begin to lose value in the eyes of the consumer" [20].

However, not all blame can be laid at the door of the recording labels. Rose Meade Hart noted that "artists often have unrealistic expectations and one of those expectations can be that if they sign with a major label, they'll immediately release a huge, hit record. No one seems willing to start out small and grow into a superstar. Perhaps the Internet can be used as a new way of cultivating bands and helping the artists get the exposure and experience. The record company's goal is to promote and sell records. And sometimes, I think that the artistry can get lost along the way as the focus is only on the bottom line. Given the new alternatives and options for the artist presented by technology, I expect artists will be looking harder at these opportunities and doing their own cost/benefit analysis" [21].

Internet record labels promise to be different than their traditional counterparts. However, Lonero says that in his experience, "Internet labels never promise what they offer. Sometimes, they say things like 'send your material to them and they'll put it in the top ten on their site'. The problem with that is, if 100 people send in the press kit, how can 100 people be in the top ten? Most of them that I have seen fall by the wayside within 6 months" [22].

Financial support

The structure of payments to musicians has been relatively the same for over thirty years. Some say that it is fair, while others maintain that the system is out of date given the new resources of distribution and technology.

The most obvious source of revenue is by record album sales. In the case of these sales, artists receive a percentage of sales as described in their contracts. "The current rate is 7.55 cents (U.S.) per track per album, making royalties from a record around ten percent of the wholesale cost" [23].

Royalties are essentially payments made to songwriters in order to use and distribute their work. Publishing has been a hot topic over the last twenty years as record labels acquired publishing companies or have started their own to capitalize on re-issued music, television, movie use, and other means of generating income. Royalties are paid whenever a given song is used. Songwriters and music publishers contract a performing rights organization (PRO) to issue a blanket license covering all songs represented. The price that the user will pay depends upon many factors, including how many people may hear a given song and how many times it is played. The PRO calculates royalties earned and processes payments to the artists. Maryann Barletta of EMI says that "a hit song that is played regularly on radio and television can generate performance royalties of more than $100,000 in a single year" [24]. Universal/Vivendi is in the midst of a lawsuit claiming that they illegally breached their contract with their artists when they launched digital music without paying royalties. Theoretically, an artist should be able to buy back the master copies of their songs from their labels, but usually they cannot afford it. Digital record labels are trying to bridge the gap by offering to share the royalties "50/50" with their artists. In this case, artists may not have the sales figures they would have with a major label, but they are receiving a larger portion of revenue. "Instead of $1 or $2 they might make per CD sold through publishers, a band might sell CDs for [half the price] of a CD sold in a store, and still clear $5 to $6 in profit. And if they're good, they get to keep all of it, including the rights to their own music. If they market on the Web, they can also keep control of their fan mailing list and Web site and they don't have to worry about major labels attempting to censor their lyrics" [25].

The right of the label to control an artist's Web site, sometimes in perpetuity, has flared as a recent trouble spot between artists and recording companies. The labels view these rights as insurance, whether or not a given artist becomes a star upon signing. The companies would allow an artist to "do specific things on their own site, but the artist had to state in the contract what they wanted to do" [26]. Musicians argue that no one can predict exactly what their Web site will look like, especially given the pace of advances in technology. Giving up their rights to control a site, as well as any potential revenue generated from the site, is generating further debate over control and creativity.

 

++++++++++

Plans for the Future

These developments describe the current situation facing independent musicians everywhere. Certainly, the choice between recording companies and independence is made more difficult by the Internet. Since there is no perfect way to distribute music over the Internet, the playing field is still wide open.

Two interesting areas developing on the Web feature the recording of music using Internet based software and tools and the marketing and distribution of music by musicians. We will examine these developments in order to suggest a new strategy.

Recording music via the Internet

Companies such as the Rocket Network and mH2O.com have made serious efforts to use the Internet for musical recording. Rocket Network is, in the words of Sara Perkins their public relations manager, "a business-to-business company. We lease Internet recording studios to other companies that already have software or hardware that we can build into ... We sell groups of studios as studio centers to our partners who are basically online resellers, and they can brand the Internet recording studio and sell or lease them to their existing communities of users" [27]. This has important implications for musicians around the world gathering in virtual studios. In these studios, they are able to record their parts and upload them to a main center where they can be downloaded by others, to be analyzed, critiqued, and changed. This is not done in real-time, but close enough to offer a non-linear recording process. A chat window allows conversations to take place about the music.

mH2O.com is based on the open source concept. The site offers a virtual studio to accommodate most musicians. Members of mH2O.com take previously recorded samples and edit them as if they using a word processing program. Samples are available from unknown as well as known artists; a majority are available for downloading free of charge while others are downloadable in customizable bundles. Registration is simple; membership for a monthly or yearly fee provides access to a complete suite of services. The site also offers downloadable MP3 music, a tutorial service, a copyright service, music competitions, and search engines. The site even has a live streaming video feed of concerts from around the world with interactive chat with the performers during the concert, as well as Internet radio stations. Artists that win competitions have a chance to sign with the site's record label and receive a major portion of the revenue generated by sales of their music.

Distributing music via the Internet

There are a number of sites designed to make marketing easier as well as distribution. Garageband.com, avantnoise.com, Dotclick Digital Music Network (www.dotclick.com), and the Independent Musicians WebRing all offer different methods for independent bands to be heard on the Internet.

Garageband.com is a record company that brings customers and musicians together through the Internet. The site's advisory board included Sir George Martin, producer of the Beatles, Brian Eno, Steve Earle, George Massenberg, and others. Online reviews of bands by the public, via a proprietary software system, are at the core of Garageband.com. The audience has near total participation in a musician's success. Garageband.com achieves this "by integrating and filtering the active participation of both musicians and fans through the Internet, the Lathroum Preference EngineTM provides important consumer research data, identifing promising artists. This research is then combined with a variety of marketing, professional, and promotional services that assist bands in advancing their musical careers" [28]. Garageband.com is trying to remove one of the most costly parts of the recording business, new talent search and development (also known as A&R or artist and repertoire). The chances that featured bands will land a Garageband.com recording deal increase with each user that responds and pushes a given band's rating higher.

Avantnoise.com is a site that allows artist to set up their own home page, upload their music, and sell it at a price of their choosing. It is free and open to everyone. Visitors to the site search for music by genre, listen to free samples, view artist information, and purchase tracks they like. Downloads cost between $US.50 to $US1.00. There are community areas and direct access to the artists for the fans. Future plans for the site include a music resource center that has information on retailing, tutoring, and recording studios, among others. Purchases are made with a personal debit account, based on funds transferred with a credit card. Avantnoise.com views itself as an interactive center for musicians, managers, fans, and record labels. Management, publishing, and copyright options are also available.

The Dotclick Digital Music Network is

"the only Internet marketing services company focused exclusively on empowering the entertainment industry to create one-to-one relationships with online music fans. DotClickTM is a free plug-in to today's media players that provides music fans with a convenient, personalized way to discover more about the music they listen to online. DotClick provides a platform combining the power of relationship-marketing and viral marketing, enabling DotClick affiliates to better understand, reach and increase their customer base. Affiliates receive a co-branded version of DotClick, targeted marketing services and detailed online marketing reports to increase customer satisfaction and loyalty, drive traffic and generate revenues. DotClick has already established affiliations with 150 entertainment, music, and consumer brand companies, which are using the software as an integral part of their online marketing strategies" [29]

An example of DotClick's relationship with artists can be found at Artemis Records. Their agreement with the record label states that "a number of Artemis' artists will build on-line communities utilizing DotClick's Digital Music Network. [The software] enables people to link directly with each artist's on-line network, learn about the artist, instant message other fans, be alerted to upcoming performances, purchase CD's and get personalized music recommendations" [30].

The Independent Musicians' WebRing offers independent musicians a chance to link their Web sites to those of other musicians on the WebRing. Artists vary from a Tokyo-based female electronic pop group to a New England-based jazz singer/songwriter. The site is Yahoo! based. This specific WebRing only has nine members; to join you simply fill out an online information sheet and choose a password. Each musician controls their own Web site; navigation among the various sites is easy thanks to WebRing's links.

 

++++++++++

A Solution

Music on traditional formats like compact discs will never completely disappear, and with it an entire production and promotion industry. For independent musicians to achieve any form of success in a medium like the Internet, they will need to take radical steps that will shake the traditional music industry to its very foundations. Suppose independent musicians do something completely unexpected such as providing music for free on the Internet. This idea is the complete opposite of most schemes today considering Internet distribution of music; it may be the only way for independent musicians to take control and ultimately achieve success.

Music companies are interested in developing a completely foolproof digital rights management or security system for music distribution. The question they should ask really "is a completely foolproof digital media rights system possible for any media?" The answer is no. Some have suggested that piracy or theft is naturally built into a retail operation; in fact, the technology driving Internet-based file sharing potentially permits greater piracy than ever. "There is no hack-proof method to transfer files, nor does it seem that there will be, as long as people with smarts and a desire to reverse engineer software exist. The SDMI (Secure Digital Music Initiative) found this out when it held a contest to see if anyone could circumvent what they hoped would be hack-proof security measures" [31]. The challenge was met by a team at Princeton University; legal action has been threatened by SDMI to keep the results out of circulation [32]. Given that an uncompromisable digital media security system will never happen, there no longer will be a perceived scarcity of products, which the music industry thrives on. More well-known music and performers will be more highly pirated than small town acts, but the results will be the same for everyone, thanks to piracy. Music companies will have to battle pirates at all levels, from large-scale operations in Asia, burning and selling compact discs for the equivalent of a few U.S. dollars, to individuals distributing a few songs to friends, the same individuals that the industry hopes will also be customers.

The Grateful Dead are probably the most well-known example of a band with a high tolerance of pirated music, in order to encourage long-term popularity and the sales of diverse products. The band created a vast following by not preventing - and sometimes even encouraging - the distribution of their music via copied tapes. They created an environment that people enjoyed and wanted to be a part of, a kind of lifestyle. Those that truly supported the Grateful Dead's ideas and music ensured that the music survived in one form or another and that the artists in the band never suffered financially. The Grateful Dead's marketing strategy proved that musical success, even longevity, could be achieved using non-traditional means.

Unfortunately the music industry has not learned much from the example of the Grateful Dead. While the traditional music industry argues over security standards, much independent music is being lost. In turn, it will be more difficult to convince people to buy into various subscriptions services that could be offered as alternative distribution schemes. "If the process of listening to a song on the Internet is made burdensome by too many security concerns, then consumers will look elsewhere for the easiest way, whether RIAA-sanctioned or not" [33].

Technical Security Issues

There is absolutely no way that music can be distributed on the Internet without compromising it. Since Internet-based music is essentially bits, it can copied and redistributed. Security measures ultimately fail because they are always reactionary instead of proactive. In the past, copies of vinyl albums could be made and transferred to a more mobile medium like tape. Tapes however could not be distributed widely in a cost efficient manner. The Internet has changed all of that.

The early adapters of Napster technology were college students and serious computer users. As word spread, more and more mainstream computer users bought into the idea. Improvements on the Napster idea have multipled, such as Fasttrack. Fasttrack claims one million users, but Webnoize estimates these figures at around eight million and 370 million files downloaded in June 2001 [34]. Fasttrack seems to be more flexible than Gnutella and faster and more reliable than Napster without having a central server to monitor. "Fasttrack users can find and download video, images, documents, and software, making the copyright issues Napster faces seem like child's play" [35].

The dilemma facing the industry was best summarized by Larry Powers who noted that "the core issue is what's next after a major label has paid millions committing to one technology plan? Will another idea reduce your investment to the residual value of [the] catalog and the hoped-for results of more lawsuits?" [36].

Communities

To achieve success, artists will need to incorporate themselves at the outset, becoming record companies to maintain control of their own careers and, most importantly, creativity. Their presence on the Web cannot be solitary. Instead, a given artist will form communities with like-minded musicians to share costs and create a more effective marketing force. Examples of this strategy include Rocket Network, mH2O.com, Avantnoise.com, and Garageband.com. However, the difference will be that the music is free. These communities will have the freedom to become entertainment sources unto themselves with the only limit being the creativity of their members. These communities will be able to align the interests of the artist with the interests of the fans, enlarging in turn the fan base. The independent musician will no longer have to search for an audience; instead the audience will search for music that meets their preferences, thanks to new technologies that will be increasingly efficient. These changes will induce an important behavioral shift as the relationship between musician and fan is a strong emotional one. The alignment of interests will enhance this relationship far beyond today's industry-imposed barriers. "Julian [Lennon] [believes] that his Web sites should continue to be developed as a source of entertainment in their own right and not just another promotional tool" [37]. For example, Julian's Web site will feature unique items for all of Julian's fans, including the younger ones. "A move to communities of interest and action rather than an individual personalized customer market focus" is how Stuart Henshall envisions marketing on the Internet; his ideas certainly apply to the marketing of music [38]. Jeff Wood, Director of Content for the now defunct audiohighway.com said, "It is expensive to secure a customer ... the more we personalize the site, the more we can get people back ... from chat rooms to artist chats to artists performing in live venues ... content itself is essential and it is important that the content is wonderful" [39]. "The benefits of a musician having direct contact with their audience extend further than sales" [40]. Recording artist Brenda Carol has had experience joining community sites and says that "[we] have found great community morale among other independent artists" [41].

These communities will be based around the creative and musical aspects of the artists, the basic reasons why fans are drawn to musicians in the first place. Already, Radio Free Virgin is launching it's "Inside the Music" segments on their Internet radio network. The segments are 30 to 60 seconds long and are recorded exclusively for the company, allowing fans a unique perspective on specific artists [42]. In the future, the artists will be able to speak directly with their fans; a given artist's own ideology and beliefs will be searchable, allowing fans to connect with artists at several levels. For example, Bill Lonero used his music to organize a charity concert for AIDS; a substantial sum was raised. He noted that "I had six bands total including mine and it was quite successful. Everyone was very cooperative and were more than willing to help" [43]. Brenda Carol's Web site provides advertising for another site that promotes the search for Tiffany Rain Fordham, a young woman who has been missing in Japan for three years. This is one form of proof of the power of the independent musicians and their fans, coming together through the music. In addition, all of the recording, producing, feedback, and distribution of music, both paid and free, can be done by the artists and distributed through their communities on a daily, if not, hourly basis.

The communities also offer a way to generate revenues through alternative methods. The first of these is subscription. If a site has 100 bands and the music is available for free, a subscription fee is charged to access the site on a daily, weekly, monthly, or yearly basis. That charge is standardized; it does not matter how many downloads are completed or if they are distributed for free.

The site will utilize streaming technology to provide live concerts, interactive chats, and tutorials. For example, Julian Lennon's Web site will eventually incorporate video to capture Julian working with his band in the studio. He can then upload the music tracks from the studio to the site for fans to sample and provide feedback [44] in real, or near real, time.

Streaming audio and video allows you to charge on a pay-per-view basis, a constant revenue stream provided the content meets consumer demand. Software could also be used to allow fans to donate funds to musicians based on the number of downloads completed. If fans are pleased with the music they hear, they can provide feedback to works in progress, and form an emotional bond with the artist. They can also support a musician financially with a credit card donation to a third party donating company, who in turn will pay the artist cumulative donations at some fixed period. Eliminating the album concept means that fans can contribute directly to the artist, not the music label, and thus provide the artist with a greater percentage of revenue than is possible under existing traditional contracts. The fact that artists are willing to provide the music for free adds an incentive for fans to treat them fairly.

Thus, the Internet can return music and creative control back to the performer. Today, bands are manufactured like cardboard boxes; mass-produced figurines based on the results of a marketing survey. In the new music industry, musicians with talent will return to the spotlight as artists "take it to the virtual streets". Artists will be able to create some music for downloading, while retaining many other songs for live performances. Free downloads will drive demand for an artist's music, which will drive demand to see the performer live in concert. The Internet allows these concerts to be broadcast everywhere, but in a pay-per-view format. In this situation, a local fan of a musician in Cleveland, Ohio will be able to see the artist more often than a fan in Bangkok, Thailand, but both will be paying some funds to see that artist whenever they can. Riordan believes that record companies want the following when creating the musical "product": Hit Records, Vocals, and Live Appearances [45]. With the Internet, live appearances will take on greater value for the artist and their audiences. The more popular an artist becomes, the greater the demand for live performances, and the greater the fees venues will pay for them to perform, which in turn generates even more revenues for the artist.

The benefit to fans is obvious - free music, closer contact with their favorites, and access to a wide range of new talent. Those new Internet-based communities that successfully bring along new talent will have the best chance to be profitable. In turn, these successful communities will generate sales of merchandise, yet another revenue stream for musicians.

 

++++++++++

Concluding Thoughts

No one can predict the future of Internet music. However, most believe it will give independent artists more control over their careers. Security issues will force a drastic overhaul of the current music industry, but the result will be a far more interactive, productive relationship between fans and musicians than exists today.

Musicians will be able to harness the connectivity and distribution potential of the Internet to support their live appearances and promote their music to people all around the world who may never be able to see them live. Whatever path musicians may choose, ultimate creative control will belong to them and true artistic ability will return to music. End of article

 

About the Author

Michael Pfahl is a management and marketing lecturer at Bangkok University (International College) with a BBA from Ohio University (International Business, Marketing, and Sales) and an MBA from the University of Toledo (Management).
E-mail: PfahlME@go.com

 

Acknowledgments

Special thanks to all of the artists and fans of music that contributed to this article. Without your passion for music, there would be nothing to write about.

 

Notes

1. Kuester Interview 2001, p. [1].

2. Negus 1992, p. 40.

3. Riordan 1991, pp. 19-20.

4. Riordan 1991, p. 20.

5. Economist 2001, p. [1].

6. Gwin 2001, p. 5.

7. Powers 2000, pp. 1-3.

8. New Media Music Rose 2000, pp. 1-5.

9. Lonero Interview 2001.

10. Gibson Interview 2001.

11. New Media Music Informa 2001, p. [1].

12. Grimm 2001, p. [1].

13. Transcript 2001, pp. 2, 5.

14. ASCAP 2001, pp. 2-3.

15. New Music Media Webcasts 2001, p. [1].

16. Cantos and Porcelli-Fine 2001, p. 23.

17. Albiniak 2001, p. 16.

18. Riordan 1991, p. 29.

19. Negus 1992, p. 65.

20. Pfahl 2001, p.17.

21. New Media Music Rose 2001, pp. [2,4].

22. Lonero Interview 2001.

23. Petersell and Grimm 2001, p. [2].

24. Barletta Interview 2001.

25. Fiedler 2001, p. [2].

26. New Media Music Rose 2001, p. [4].

27. SMW Internet Rocket 2000, p. [2].

28. New Music Media Garageband 2001, p. [2].

29. Dotclick 2001, p. [1].

30. Artemis 2001, p. [1].

31. Grimm and Marshall 2001, p. [2].

32. Bowman 2001, p. [1].

33. Grimm and Marshall 2001, p. [2].

34. Powers Improvements 2001, p. [2].

35. Webnoize Fasttrack 2001, p. [1].

36. Powers Improvements 2001, pp. [3-4].

37. Gibson Interview 2001.

38. Henshall 2000, p. [3].

39. New Music Media Wood 2000, p [2].

40. Sumpton 2001, p.14.

41. Carol 2001, p. [1].

42. New Music Media Virgin 2001, p. [1].

43. Lonero Interview 2001.

44. Gibson Interview 2001.

45. Riordan 1991, p. 340.

 

References

P. Albiniak, 2000. "Paying for Net Play," Broadcasting and Cable, volume 130, number 15, p. 16.

Artemis, 2001. "Artemis Records Teams With DotClick Digital Music Network to Build Online Relationships Between Artists and Fans," at http://www.newmediamusic.com

ASCAP Legislative Matters, 2001. "Statement of Lyle Lovette on Behalf of the American Society of Composers, Authors, and Publishers (ASCAP) On the Internet Uses of Music Before the House Subcommittee on Courts, the Internet, and Intellectual Property," at http://www.ascap.com

M. Barletta, "Personal Interview" (EMI Records), at http://www.emimusicpub.com

L.M. Bowman, 2001. "SDMI hack draws legal threats," ZDNet News (23 April), at http://www.zdnet.com/zdnn/stories/news/0,4586,5081595,00.html

L. Cantos and L. Porcelli-Fine, 2001. "Copyright Office Rules that FCC-licensed Radio Broadcasters, Like Other Web Casters, Must Pay Royalties For Streaming Music Over the Internet," Intellectual Property and Technology Law Journal, volume 13, p. 23.

B. Carol, 2001. "Personal Interview" (Independent Musician), at http://www.brendacarol.com

Economist, 2001. "World Music Sales," at http://www.economist.com

D. Fiedler, 2001. "They Don't Get the Web: The RIAA vs. MP3," at http://www.webdeveloped.internet.com/noname/noname_033099.html

D. Gibson, 2001. "Personal Interview," at http://www.julianlennon.com

S. Grimm, 2000. "The Digital Millenium Copyright Act Goes Global?" at http://www.newmediamusic.com

S. Grimm and P. Marshall, 2001. "Fingerprinting Foolery: the New Anti-Piracy Hope," at http://www.newmediamusic.com

S. Grimm and Y. Petersell, 2000. "Publishers Protest, Labels Balk, and Utopia of Online Music is Delayed," at http://www.newmusicmedia.com

P. Gwin, 2001. "Latest From the Digital Music Wars," Europe, number 405, p. 5.

S. Henshall, 2000. "The COMsumer Manifesto: Empowering Communities of Consumer through the internet," First Monday, volume 5, number 5 (May), at http://firstmonday.org/issues/issue5_5/henshall/ http://dx.doi.org/10.5210/fm.v5i5.747

C. Kuester, 2001. "Personal Interview" (Executive at an Independent Musician's Resource Web site), at http://www.idiom.com

B. Lonero, 2001. "Personal Interview" (Independent Musician), at http://www.billlonero.com

K. Negus, 1992. Producing Pop: Culture and Conflict in the Popular Music Industry. London: E. Arnold, pp. 40, 65.

New Media Music. 2000. "Rose Meade Hart, ESQ. The Future of Record Contract Negotiation: Keeping Them All Happy," at http://www.newmediamusic.com

New Media Music, 2001. "Online Music to Become a $10 Billion Business by 2006," (Informa Media Group), at http://www.newmusicmedia.com

New Media Music, 2001. "Garageband Launches the New Deal," at http://www.newmusicmedia.com

New Media Music, 2001. "Radio Free Virgin Debuts 'Inside the Music' Series Offering Listeners an Uncensored Look into the Lives of Their Favorite Artists," at http://www.newmusicmedia.com

New Media Music. 2001. "Webcasts Embrace Advertising According to New Arbitron Survey," http://www.newmusicmedia.com

M. Pfahl, 2001. "Grammy Entertainment Inc.: A Case Study and Review of Corporate Strategy of the Music Division," Unpublished (Bangkok University), p. 17.

L. Powers, 2001. "Strategic Lifestyles of the Rich and Famous: BMG-EMI-AOL," at http://www.newmediamusic.com

J. Riordan, 1991. Making it the Music Business. Revised and updated. Cincinnati, Ohio: Writer's Digest Books, pp. 19-20, 29, 340.

D. Sumpton, 2001. "Wither the Music Industry Now That We Have the Web," Marketing, p. 14.

J. Townley, 2000. "On the Trail of the Virtual Recording Studio," at http://smw.internet.com/audio/reviews/rocket

Transcript, 2001. "Copyright and Globalization in the Age of Computer Networks," at http://www.media-in-transition.mit.edu/forums/copyright/transcript.html

Webnoize, 2001. "Webnoize Finds Fasttrack Poised to be the 'Next Napster' and Far More," at http://www.newmusicmedia.com

J. Wood, 2000. "Interview. Success Based on Content, Design, Ease, and Creative Partnerships," at http://www.newmediamusic.com


Editorial history

Paper received 4 June 2001; revised 18 July 2001; accepted 20 July 2001.


Contents Index

Copyright ©2001, First Monday

Giving Away Music to Make Money: Independent Musicians on the Internet by Michael Pfahl
First Monday, volume 6, number 8 (August 2001),
URL: http://firstmonday.org/issues/issue6_8/pfahl/index.html





A Great Cities Initiative of the University of Illinois at Chicago University Library.

© First Monday, 1995-2014.