The album has reigned as the prince of popular music formats for nearly a century. Yet, it’s become unclear how long this reign will last. Digital technology has transformed the way many listeners experience music and fueled a resurgence of the short-form single.

For the past several years bloggers, critics, industry pros and consumers have contributed to countless articles and comments discussing the merits of this transformation. Most of these discussions have revolved around business models and economics. If the album becomes obsolete, what will it do to industry profits? How will artists continue to make money? Conspicuously missing is any thought given to how all of this will effect music as an art-form.

I recently stumbled across an interview between Exclaim’s Vish Khanna and songwriter Sufjan Stevens that approaches the issue from a very different perspective.

For many years Sufjan Stevens was known for his prolific songwriting and ambitious projects. Between 2000 and 2006 Stevens released seven expansive albums. This month he will release two new projects, Run Rabbit Run which dropped on the 6th and multimedia set the BQEwhich will be released on the 20th. However, the last conventional album he released was back in 2005 with Come on Feel the Illinoise.

Many of his numerous fans have been wondering what’s up, and speculation came to a head a couple of weeks ago when Stevens made some comments that some took as an  announcement of retirement.

When Vish Khanna asks Stevens to clarify he quickly dispels any rumors that he is calling it quits, but he goes on to give some insight into why he has waited so long to put out a true follow-up to Illinoise.

I definitely feel like ‘What is the point? What’s the point of making music anymore?’ I feel that the album no longer has a stronghold or has any real bearing anymore. The physical format itself is obsolete; the CD is obsolete and the LP is kinda nostalgic. So, I think the album is suffering and that’s how I’ve always created—I work with these conceptual albums in the long-form. And I’m wondering, what’s the value of my work once these forms are obsolete and everyone’s just downloading music?

What does an artist do when his medium suddenly becomes irrelevant? The pundits are usually quick to urge the artist to simply switch to a new medium, because their concerns are typically focused on the business aspect. Other artists and die-hard fans will generally encourage the artist to stick to his convictions and forget about what the rest of the world is doing.

The pundits are obviously missing an important point, which is that music is not simply another product to be bought and sold. It’s an art, and the album is an art-form. The artists – and especially the fans – often forget that music is also a business and that the artist has to make money if he’s to continue making art.

So what’s a guy like Sufjan Stevens to do?

First of all, the album isn’t dead, nor is it likely to be anytime soon. Blogger hyperbole and personal existential crises aside, nobody ever said Stevens can’t continue putting out full-length conceptual epics for the remainder of his career.

It can be easy to look at the current state of the industry as a whole with all of its transitions and tribulations and lose sight of the fact that each artist and each fan’s experience is different. Just because the market is moving away from a particular format doesn’t mean everybody needs to abandon it immediately or risk becoming obsolete.

Sufjan Stevens’ fans love his work largely because of the way he has used the album format to communicate his artistic vision. If he continues to release in the album format his fans are likely to continue buying and listening to his music that way.

The same goes for any artist. Don’t get so wrapped up in the latest fashions and buzz-words that you lose sight of your own unique offering. If an established career artist like Sufjan Stevens isn’t immune to this I would imagine that many more new artists stumble get caught up in it all the time. You want to put out nothing but epic concept albums? If you can find the audience then I say go for it. You want to write 90 second musical haiku and release it in bundles of 20? If that’s what you’re passionate about and you can find a way to make it work financially, who has any right to stand in your way?

I have come to advocate a model of continual creative output where an artist releases a song or two at a time in shorter intervals for the purpose of increased fan engagement. I feel strongly about this type of release strategy because I believe it gives emerging artists the best opportunity to cultivate a strong base of core fans and keep them connected. I’m not alone in that opinion – the concept has begun to really catch on recently. But don’t confuse any one model’s acceptance with the idea that you have to give up your own vision. Maybe Sufjan Stevens would find success in smaller, more frequent releases. Or maybe he’ll come up with something completely new. But if you can’t really get behind it as an artistic form then it likely won’t work well for you anyway.

Write great music and present it in the way that best expresses what you’re trying to say. If you start there and you are serious about building your career the business models and economics will fall into place over time. Read everything you can about what is working for others and incorporate what you feel will make you successful. But don’t lose sight of your own vision and your own style in the process or you’ll risk stalling your career, in some cases before it really begins.

A new report from the Forrester Research Group has been getting a lot of buzz lately, fueled largely by the fact that due to its hefty $500 price tag very few people have actually read it. Nothing like a bit of mystery to spice up what is being heralded by some as “a plan to save the music industry.”

The 18 page report is called Music Release Windows: The Product Innovation That The Music Business Can’t Do Without by Mark Mulligan. The Forrester Group was kind enough to send me a copy, so I thought I’d put together a brief summary of the report, adding my own two cents as I go. If you really want to drop five-hundred bucks on a copy of your own, by all means click here.

The Context

The report is built on the premise that free digital distribution has transformed recorded music from a scarce good into an infinite good. In Mulligan’s words “content scarcity is dead.” Digital music files can be copied an unlimited number of times without degradation and without cost. Infinite goods are next to impossible to monetize, unless they can be paired with other forms of scarcity that add value. So far so good. I don’t think there are too many people out there who still disagree with this concept. If you don’t quite get what I’m talking about read this before going any further.

Mulligan suggests that this presents the music industry with the opportunity for the “album straight-jacket” to be thrown off so that “releases can become part of a continual artist-fan relationship.” He goes on to say something we’ve been saying around here for a while, “We want to see labels empower artists to think outside the confines of the album and maintain steady, continual streams of creative output.” (Emphasis mine.) This includes not only recorded music, but other types of content as well such as music videos, interviews, behind the scenes features, etc.

The Plan

The bulk of the report deals with Mulligan’s plan to “establish structured release windows that communicate value.” Mulligan argues that the “proliferation of new music services makes it difficult for consumers to discern any one service’s relative position in the product range and to understand value and premium.” Basically, with all the options consumers now have to discover, enjoy and purchase music it has become too hard for them to figure out how much music should be worth. Some services are paid, some are free, etc.

Mulligan’s answer to this is to establish a 3-tiered system of release windows, similar to what has been used in the movie industry for years. Music is first released to premium channels, then to mainstream channels such as conventional retailers, and finally to “free and feels like free” services like online streaming. The chart below provides an illustration of how this might look.

Aside from establishing a clear hierarchy of value, Mulligan also proposes that this system would provide additional value through the scarcity of convenience. “At the top of the release window chain will be highly convenient services that deliver real premium value with the best content first. At the other end will be services  that are less convenient with less content last.” (Emphasis mine.)

The Problems

Unfortunately, this plan doesn’t really do what it sets out to do. It doesn’t add convenience – it only adds an artificial sense of convenience.

Right now, when music comes out it just comes out. You can get it online, you can get in the store, you can stream it on Last.fm, – all at the same time. Listeners have the choice to get their music the way they want it. What Mulligan’s plan does is put up artificial restrictions to keep various groups of consumers from having access to content until as long as six weeks have passed. This may establish a value hierarchy, but it also completely ignores what consumers actually want. As Mike Masnick of Techdirt puts it, “Artificially holding [content] back doesn’t do much good and doesn’t give anyone a reason to buy.” Sounds more like inconvenience, doesn’t it?

Which brings us to the elephant in the room: unauthorized file sharing. These release windows are meaningless if someone leaks the content early. If the U2 album bundled with that fancy black and red iPod suddenly becomes widely available, for example, the value of that ‘premium channel’ goes way down.

Here’s what the report has to say about that:

Of course, music will still leak onto file sharing networks and reduce the scarcity. But that’s why we’re focusing on convenience first. And there will even be content scarcity of sorts: in the legitimate arena. This will still be important, as it will be a valuable asset for high-end buyers who want to pay to get stuff first. Freeloaders will still turn to filesharing, but that’s not who the services at the top of the release window chain are aimed at.

I agree that in the ‘legitimate arena’ content scarcity still exists. I purchase every track that I download. I don’t download unauthorized music and I won’t even if Mulligan succeeds in convincing the industry to make me wait six weeks to stream an album to find out if I like it enough to buy. But there remains a large number of people aren’t likely to play along with this plan.

The report attempts to address these issues, but isn’t very convincing:

It might seem a bit contrary to be talking up the idea of release windows just as the movie industry is compressing its windows as global TV release schedules start to become harmonized. But we think there are valuable lessons to be learned (including learning from the movie industry’s mistakes.) Also, it is worth noting that movie releases are unlikely to ever end up entirely compressed and that global release synchronization is both long overdue and essential in the digital age for TV as much as it is for music. If you don’t synchronize globally, BitTorrent and a host of others will do it for you. (Emphasis mine.)

Isn’t this very report suggesting that the music industry un-synchronize?

Conclusion

All in all I found the report to be a mixed bag.

The good:

• Recognizes the need to add scarce value to recorded music.
• Attempts to establish a clear value hierarchy between various music formats.
• Embraces the idea of artists producing a steady stream of creative output rather than staggered album releases.
• Advocates an increased focus on product innovation. (I didn’t cover this idea much in this post due to space. I will talk a lot more about it in a subsequent post.)

The bad:

• Fails to produce a true value-adding scarcity
• The convenience offered to some consumers by release windows is only relative to the inconvenience they impose on everyone else.
• The effects of unauthorized file sharing are all but ignored.
• The solution offered (release windows) is a step backward at a time when the industry should be looking to the future.

That should just about cover it. I tried to be as comprehensive and clear as possible for those of you who have not had a chance to read the actual report. Let me know if you have any questions about it that I don’t seem to cover here.

What do you think? Are release windows the way forward or a step backwards?

Share it if you like it:

]]> http://www.creativedeconstruction.com/2009/09/forrester-report-the-way-forward-for-the-music-industry-or-a-step-backward/feed/ 12 http://www.creativedeconstruction.com/2009/09/the-paradox-of-choice-in-the-music-industry/ http://www.creativedeconstruction.com/2009/09/the-paradox-of-choice-in-the-music-industry/#comments Wed, 02 Sep 2009 16:10:32 +0000 refe http://www.creativedeconstruction.com/?p=1922

There has been an explosion of choice in music. Technology has made it easier and cheaper than ever before for just about anybody to record and distribute their music. An unprecedented number of new artists and new albums flood the market every week, every day.

Not only is there an abundance of choice in new music, but listeners now also have increased options for acquiring and enjoying that new music. CD’s, vinyl, digital downloads, torrents, online streaming, radio, satellite radio, etc.

In spite of all this, music as a driving force in culture appears to be on a steady decline. Recorded music has clearly lost value in the eyes of consumers – the dominant mentality today is that music should be free.

The product of music is also losing market share to other forms of media and entertainment. Games are quickly gaining ground, as are mobile applications. Music is often a large component of these mediums, but as a stand alone product – or as a pure art form – it’s losing prominence.

This bugged me for a while. It seemed to me that when it comes to music the guiding principle should be ‘the more the merrier.’ Perhaps in a perfect world it would be. But the market just doesn’t seem to support this idea.

Instead, it appears that the music industry is suffering from what psychologist Barry Schwartz calls the ‘paradox of choice.’

Barry Schwartz has made a career of studying morality, decision-making and the relationships between science, economics and society. His book, The Paradox of Choice (Ecco 2003) deals with the way that societies with great abundance are witnessing a “near-epidemic” of depression. He argues that a surplus of choice in western culture is actually making us miserable.

Conventional western wisdom says that the way to maximize the welfare of citizens is to maximize individual freedom. Free individuals are able to maximize their own welfare, taking the burden off of the larger society. The best way to maximize freedom? Maximize choice.

Schwartz disagrees.

He argues that the explosion of choice that the western world has seen in just about every corner of society – retail, healthcare, identity, family, music – has actually had very negative effects on individuals. We experience paralysis – with too many choices to make, many people become overwhelmed and make none at all. When we do make a choice, we end up less satisfied. There’s always that nagging feeling that one of the other options might have been better.

And finally, the more options we are given, the higher our expectations rise. The feeling is that with 100 options, one of them had better be perfect. Of course, no choice is ever perfect, so we’re left with the feeling that we could have done better if we had just looked harder, or done something differently. The old adage proves true: “everything was better when everything was worse.”

In the music industry, the explosion of choice has had similar side-effects. Last year my wife and I each received thirty dollar gift cards to iTunes. Sixty bucks worth of free music – not bad, right? You’d think that we would have run right to the iMac for a downloading spree. But we didn’t. In fact, it took us six months to use up the sixty dollar credit on our account. Why? Because we just couldn’t decide what to purchase. There was always the feeling that there was something out there that we’d rather listen too. There was always some new album that was going to be released the next month that we wanted hold out for. The shear number of tracks we had to choose from paralyzed our ability to make a decision.

One of the benefits of the massive amounts of new music in the market today is that there’s a lot more room for experimental and niche artists that never would have made it past the old gatekeepers. So everyone should be able to find that perfect artist, right? Well, no. But the expectation for many has become that they should. All this serves to do is ensure that these listeners will be a little bit more disappointed in the music they do find.

It remains to be seen whether this abundance will be a long-term issue for music industry, and the western world as a whole. My guess is that systems will emerge to regulate the flow of new music somewhat – new gatekeepers. Until that day, we as artists and listeners should enjoy the benefits that do exist as a result of this explosion of choice. We should also do our best to support quality artists who are producing quality music. It’s still possible for talented artists to cut through the noise, but they’re going to need all the help they can get.

Schwartz did a presentation for TED Talks back in 2005 that is worth giving a look-see if you are interested in going into a bit more depth on this subject. It’s a great presentation, if a bit long – about 20 minutes.

Do you agree with this theory, or disagree? Can you relate to any of this? Let me know – I’d love to hear your comments.

Here’s a recap of what went on in the music industry this week. Make sure to check out anything you might have missed and leave your comments. Know something we don’t? Submit a story.

Also check out my guest post over at www.OneMovementWord.com, the official blog of Australian music industry conference One Movement for Music Perth. One I was asked to write on the topic ‘What will it take for artist, industry and fan unite?’ That’s a rather loaded question and I’m not sure how qualified I am to answer it, but I did my best. I’ll be re-posting it here on Creative Deconstruction early next week, but I’m sure my Australian friends would appreciate it if you stopped by to check it out. Let me know what you think.

Most Popular:

Is ‘Joel Fights Back’ really the David to the RIAA’s Goliath? – Many, many people want to see the RIAA knocked down a peg, but was this the right case to try and make that happen?

Sufjan Stevens to release BQE Multi-media set in October – It seems quite a few people are anticipating new material from Sufjan.

This Week:

What the music industry and the credit crisis have in common – Some interesting and worrisome parallels I have observed…

New music releases for August 11th 2009 – Modest Mouse, Japandroids, Fruit Bats, and more.

The return of the Supergroup – Surely declining record sales have nothing to do with this, right?

Imogen Heap shows us that DIY pays off – and takes a lot of work - Some great discussion happening here over the past few days. Check it out and add your thoughts.

Music Video Picks:

Coldplay Strawberry Swing – Stunning new video. You’ll never look at sidewalk chalk the same way again.

This Week in Music History:

1977 – Elvis Presley was found dead lying on the floor in his bathroom by his girlfriend Ginger Alden, he had been seated on the toilet reading ‘The Scientific Search For Jesus’. He died of heart failure at the age of 42. His first record for RCA, ‘Heartbreak Hotel’, was also his first US No.1. He starred in 31 films. Elvis holds the record for the most entries on the US Hot 100 chart with 154. (This Day in Music)

I stumbled on an interesting animation that attempts to explain the United States’ ongoing credit crisis in easily understood terms. It’s a great video, which you can see in its entirety here.

At a certain point in the video the narrator begins to explain the problem of sub-prime mortgages. Basically, the banks and investors were getting so rich buying and selling huge groups of mortgages that they began running out of qualified home buyers. But the scheme was working so well that they weren’t willing to give it up. Banks began giving out mortgages to unqualified buyers without any of the safeguards they used to require – down payments, good credit, etc. Meanwhile, house prices continued to rise. Eventually, these unqualified home buyers ended up getting in way over their heads and couldn’t repay their loans which resulted in a huge number of foreclosures. The bank’s revenue dried up, investors weren’t paid back and eventually everybody was so broke that no one could get a loan. A vicious cycle was born.

The video explains the situation much better than I, but you get the idea. As I listened to all of this I was struck by the parallels that can be found with the current state of the music industry.

Think about it:

For years the recording industry was getting rich selling vinyl and later CD’s. The business was so lucrative that eventually they began to run out of quality acts, but CD sales had to keep rising. So they begin to take middle of the road talent (or simply manufacture their own) and hype it so big that it had to sell. Eventually these acts fizzled out or listeners simply moved on and more and more acts had to replace them. Meanwhile, the price of CD’s kept on climbing higher and higher. Before long the listeners realized that they were paying way too much for way too little and began searching for cheaper ways to get better music. File sharing takes off and CD sales plummet.

Of course, instead of recognizing the root issues at the heart of the new ‘crisis,’ the industry retreats deeper into the safe-but-mediocre product it had been pushing for years, and spent the remainder of its resources fighting to bring back the status quo.

Kind of eerie, isn’t it?

Fortunately, this crisis has left a gaping hole for independent artists and entrepreneurs to fill. The same innovations that sent the old guard into a tailspin have given resourceful indies a powerful boost to find an audience on their own. There are likely similar potential opportunities waiting to be seized as a result of the nation’s credit crunch. That’s the great thing about crises – whether credit, music or whatever else – they have a way of deconstructing old boundaries and setting the stage for incredible progress.

The future of the music industry as we know it will depend on how it responds now that the product on which they’ve built their empire is no longer profitable. While the major players are intrenched in red tape and beauracracy, independent artists and record labels have an incredible opportunity to adapt and thrive under the new market conditions. So here’s the question: what do listeners and consumers value, and how can artists provide it to them in a way that enriches the experience of their music?

Six Different Forms of Supplemental Scarcity

First a little recap. Recorded music lost a lot of value when it transitioned to digital formats. Digital files can be freely copied an infinite number of times, which means that demand can never catch up. How can finite demand compete with infinite supply? (Read more about this subject here.)

That’s where ‘supplimental scarcity’ comes in. The idea is that if you have an infinite good such as digital music, something scarce (as in, existing in limited supply) must be offered alongside it in order to add value. There is a fantastic article at the Technium that has become something of an Internet classic. In it, author Kevin Kelly describes eight different forms of supplemental scarcity.  I have chosen the six concepts that I felt were most relevant and applied them directly to the business of being an artist. I’ll talk about three of them here and the rest in a separate post due to length.

1. Personalization

Fans love feeling like they are part of the music - part of the experience. Personalization makes the experience that much more valuable. The different ways that an artist can personalize their products for their fans are limitless. Jill Sobule, in an effort to fund her next album and avoid signing with a record label, offered personalization in exchange for donations on her site. Donate 10 grand and you get to sing on the record. Five thousand dollars bought you a private concert in your living room. There were different “gifts” at each donation size, each one welcoming the fan further into the process in some way. Sobule’s fans loved it and she reached her goal of $75k in only 53 days.

A more classic example of personalization would be to utilize packaging to engage fans. Radiohead recently charged an arm and a leg for a special-edition vinyl package of In Rainbows. Imagine what they could have charged if they had offered to sign and dedicate a limited number of copies. Offer something unique at key gigs in order to drive ticket sales, and make sure you aren’t offering it anywhere else. Provide functionality on your website that caters the user’s experience based on a profile they create for themselves. I could go on and on, but you’ll be most successful if you and your band figure out what kind of personalization would be most valuable for your core fans and working out a way to give it to them.

2. Interpretation

Authors have been doing this for decades at their book signings. They come to a local bookstore with their new hardcover novel displayed prominently, and their fans show up to hear them talk about the new book. What was the author’s inspiration? What was his process? Where did he write it? What does it mean to him? They go out of their way to meet the author in person so that they can hear his interpretation of his work. This kind of interpretation is even better suited to music because lyrics are so often somewhat cryptic and mysterious. Find an unique way to let some of your fans in on your secrets – I guarantee they will be more committed to your art when you are finished with them.

3. Authenticity

The music industry has suffered a huge blow in this category over the past decade. Elements of pop music have always had an element of fake-ness to them – those acts are meant to provide entertainment, not create art. Yet, from the assembly-line boy bands to the Britney Spears albums written by pale-faced men in their fifties, I think the industry has overplayed its hand. Listeners want something real.

There are a lot of different ways to let fans know that what they are getting is authentic. Release a studio b-side of something you recorded when you were just goofing around. Live albums can have a similar effect. Think about the prevalence of online file-sharing and illegal copying. If a listener is downloading a track on Limewire she has no idea what it will sound like once it’s finished. Yet, if she knows that the download is coming straight from the band itself she can trust that she’s getting the very best quality out there – first generation stuff. Kevin Kelly writes, “Digital watermarks and other signature technology will not work as copy-protection schemes… but they can serve up the generative quality of authenticity for those who care.” Find ways to set the products you sell apart from those who resell them. Bonus tracks, bundled music videos, etc. Anything that will let your fans know that what they are purchasing has come straight from you.

Share Your Ideas

So there you go: personalization, interpretation, and authenticity. I have only related the basic concepts here – there is so much that can be done with this list. Let me know what you think, and please post what you come up with in the comments section so that everyone can benefit! If you follow a band that has done something creative or innovative with supplemental scarcities please share that as well. The last three items on the list, embodiment, patronage and findability are described in Part Three. I’ll try to have it finished up and published here by tomorrow so check back soon. Also, remember that you can find out when new articles post by following me on Twitter.

In the CD’s heyday the average price of a disc reached nearly $19. Record companies took in huge margins and saw unprecedented growth. Now, less than a decade later entire albums are being given away free of charge all across the Internet. Even superstars are giving their records away. So… what happened? How did the recording industry go from lucrative cash cow to staggering giant in such a short span of time?

Supply and Demand

There are a host of reasons for the declining price of recorded music, but at its heart is the issue of supply and demand. The more demand you have for a product that is limited in availability (generally known as a ‘scarce good,’) the higher the price of the product will rise. Conversely, if the availability of the product exceeds demand, price will be driven lower in an attempt to increase demand and move excess units. It shouldn’t come as a surprise to anyone that at this point the supply of recorded music far exceeds demand. In fact, it just about obliterates it.

One reason for this is competition. As the production of recorded music becomes cheaper and easier, more and more bands are flooding the market with their tracks, hoping to get heard. The choices available to listeners have become nearly limitless. There are just too many artists vying for a finite number of fans. Bands are giving away their music in an effort to increase their share of the listener pie.

Infinity vs. The Recording Industry

There is more to the issue, though. The transition from physical CDs to digital downloads has introduced a new challenge into the industry. The model of supply and demand is built upon the concept of scarce goods – if there is no limit to the availability of a product, it is impossible for there to be enough demand to make it profitable. How can finite demand overtake infinite supply? This is exactly the challenge with monetizing digital music files. Digital files are infinite goods – they can be copied ad infinitum at no cost, and no significant investment of time. This is why the price of music has dropped, and this is why so much recorded music has been made available for free. The transition from physical to digital made free recorded music an inevitability.

Three Ways to Respond

Inevitable or not, this decline in value presents artists and rest of the music business with a real challenge. Strategies have to change. If digital music files themselves hold little value, value has to be added from somewhere else. The industry has three main options for accomplishing this, all of them related to adding scarcity to the infinite-ness of digital music.

1. Artificial Scarcity

Otherwise known as DRM. What Digital Rights Management is designed to do is place artificial limits on digital files that prevent them from being copied. I call this ‘artificial scarcity’ because while real scarcity has a direct, positive effect on value, DRM actually decreases the value of music. DRM has been proven time and time again to inhibit consumers from legitimate use. Even as a kid I remember being frustrated that I couldn’t bring a video game over to a friend’s house because it was only registered on my PC at home. I wasn’t going to copy it for him, we just wanted to play it while we were at his house! Regardless of their own personal experiences, most people can’t stand DRM. The consumer backlash has been so overwhelming that even Apple – notoriously IP centric – decided to get rid of DRM, and was even willing to raise prices past their trademark 99 cent/song in order to get the major labels to drop it. Consumers aren’t fooled by artificial scarcity, they just get irritated and take their business somewhere else.

2. Legislative Scarcity

Otherwise known as the RIAA. I’m referring here to the practice of issuing threats or actual legal action against individuals and institutions who engage in sharing digital music. This is by far the least sensible approach. First of all, it just isn’t practical. RIAA – you’re really going to go after individuals one by one until you have fined every single file-sharer or frightened the rest into compliance? How’s that going for you so far?

More importantly, though, these aggressive and costly lawsuits are a PR disaster. The record industry has never had the best image with consumers, but now they have taken whatever they had and dragged it through the gutter. The RIAA, with the blessing of the larger recording industry, has turned consumers and fans into crooks, thieves and pirates. Never mind that these same people have shown themselves to be the industry’s single largest group of paying customers. It’s just bad business!

3. Supplemental Scarcity

 The idea here is simple: accept the fact that technology has decreased the value of digital music files and find something else to sell.  It is sad to think of music in any form as being devalued, but the benefit of this approach is that it is the only one that embraces innovation rather than trying to suppress it.

So what do we sell? There are many ways to use this new market reality to the advantage of the independent artist. I will talk more about the different scarcities that can provide value along with recorded music in Part II,  as well as how those different revenue streams can add up to a successful career for an independent artist. So stay tuned, and please feel free to add your comments below.

In a conversation yesterday an artist declared that she planned on fighting file-sharing by never allowing her next album to touch a computer. I asked her if she would also release her next music video exclusively on LaserDisc.

What is the first thing fans do with a CD once they purchase it? Upload it to their computer so that they can listen to it on their iPod. The only CD player most people own these days is the one in their computer anyway. File-sharing or no file-sharing, refusing to offer your music in the format that your fans want doesn’t make much sense, and is certainly not good business.

As an artist, I don’t understand why you wouldn’t want people to share your music. Bands like Death Cab For Cutie got a huge boost through online file-sharing – that’s how their music ended up in the hands of the music supervisor who got them on the OC. Metallica (ironically enough) got a record deal because someone copied their demo tape and it ended up with an A&R guy. Death Cab sells more records than ever now because they embraced this, and Metallica…. doesn’t – because they fought it and sued their fans.

This is true from the fans perspective as well. I first heard Sufjan Stevens when a friend of mine burned me a copy of one of his CD’s. I have since purchased my own copy of that album (online) as well as several other albums in his catalogue. But I may never have been exposed to this artist if not for my friend’s CD burner.

This is also consistent with independent research which reveals that people who engage in illegal file-sharing also spend four and a half times more on legally purchased music than anyone else. That means that people who share files are the record industry’s biggest paying customers.

Giving away free downloads doesn’t mean you don’t also offer your album for sale. It means that you recognize the inherent promotional value of your recorded music and want to utilize your fans as a world-wide online ‘street team’ to spread your music and your name across the globe. If these people are promoting you, reccomending you, raving about you AND spending 4 1/2 times more on your music than anyone else, why would you want them to stop?!

Taking a stand on principle is great – illegal file-sharing is illegal. Illegal = wrong. But if you don’t look any further and you are unwilling to see the larger market trends that are actually working significantly in your favor you will miss many opportunities to take advantage of the digital world to enhance your career and increase the base of people who enjoy your art.

Free markets are cyclical. Economic trends will start out slow, pick up speed, boom, plateau, BUST. Take our current recession – three years ago even someone like me could afford a McMansion and a four car garage (boom,) and now we’re losing sixty-thousand jobs a month (bust.) The same can cycles can be found in the cost of goods and services.

Apply this principle to the cost of music and you end up with what Seth Godin has coined “the new free.” Here’s what he writes in a recent post to his marketing blog:

Free online has two distinct elements. Breakthrough free, like the first free ebook or the first free email service, and sample-this free, which decreases the cost of trial and lowers boundaries of the spread of an idea.

As the market for free gets more crowded, we’ll see more and more people promoting their free products, stuff that people used to have pay for. A complete shift from ‘you will pay’ to ‘it is free’ to  ‘I will pay for ads to alert you it’s free’ to ultimately, ‘I will pay you to try it’.

Mr. Godin is not a prophet – this cycle has already begun to run it’s course in the music industry. In fact, as we reported several weeks ago, at least one band has reached what Godin might call the final stage of free. The industry should have seen this coming a long time ago when CD’s began climbing higher and higher in price until they became downright ridiculous. A bust was always imminent.

Where does this leave musicians?

I’ve been telling people to give their music away for a while now, and I don’t plan on stopping. Regardless of where the market cycle is taking us most indies don’t have the resources to stand alone as the sole band still charging for their recorded music. If you don’t give your music away you won’t find the audience you need to fill venues and build a solvent career.

On the other hand, more progress needs to be made in the search for ways to add value to recorded music. We really can’t get to the point where everybody is pulling an Officer Roseland and paying fans to download – where would those resources come from?

I can tell you right now that the first place bands should be looking as they evaluate how to elevate their music above the din of a saturated market is the quality of their songs. It sounds simple, but in the social-media driven world we live in it can be easy to focus all of our energy on marketing and PR and forget about quality all together. Are your songs really all that good? Are they better than the thousands of other songs freely available to the same listeners you are trying to hook? That may sound harsh, but it’s what it will take now that you can’t price your music any cheaper.

While President Obama was still Candidate Obama, he won support from a variety of prominent folks in the “free” camp. He secured endorsements from Google CEO Eric Schmidt and Stanford Law professor Larry Lessig – who Cnet.com calls the “doyen of the ‘free-culture’ movement.” Even the US Pirate Party endorsed him.

Then Obama dashed their hopes by appointed a top RIAA lawyer to be third in command at the US Department of Justice. Not good news for the Pirate Party, or any of the above mentioned supporters. Heck, even picking Joe Biden as VP was a snub to the those who hoped for a more progressive stance on copyright law.

Now Obama’s transformation from free-culture savior to copyright lobbyist bulldog appears to be complete. A few months ago the Spanish government ruled that personal use file-sharing is legal and that the sites that host file sharing are protected as long as they don’t directly profit from copyright infringement. The Obama White house has made it clear that they are not happy about this.

According to TorrentFreak, the Whitehouse has charged that Spain has not done enough ”to change the widespread misperception in Spain that peer-to-peer file sharing is legal.” Which is funny, because the Spanish government has said that file-sharing is legal. It’s not a misperception – it’s the law. The US can suggest that it change it’s laws, we can even bully them into submission (not that we would ever do that…) but the fact is, Spain has looked at the issue and decided to allow file sharing within it’s borders.

We’ll have to wait and see how this turns out. It is interesting to see a Western country taking such an accepting view of file-sharing, but it doesn’t look like it’s going to last too long.

For a much more entertaining look at the issue, click here.