Many of you may have heard of OurStage by now. They have teamed up with CMJ, Bonaroo, Paste Magazine and a multitude of music related companies to promote artists that fans have voted worthy of recognition and a $5,000 cash prize.

Yes, that’s right…$5,000 is given away, once a month, to the artist that gets the most votes. The clever folks at OurStage have installed a few obstacles to prevent it becoming a popularity contest, including a .50 cent charge per vote, billed to your cell phone. A bit of a bummer, but you can expect that the talent that rises to the top is the cream. My good friends, Saturna, were close runners up in month and became featured artists at the Ourstage Bumbershoot stage.

Through The Roxy I have had the pleasure of becoming acquainted with their delightful and enthusiastic staff. EJ (Entertainment Jockey) Alyssa Jane is an engaging host and one sharp tool in their marketing shed. If she and the other staff I have encountered are anything like the rest of the team at OurStage, artists can rest assured they are in good hands.

I recently joined Advanced Operators; a blog carnival comprised of “super geeks” from my old stomping ground of Portland, OR, aka geektopia. The last few weeks I’ve had nothing to contribute, as I’ve not yet been elevated to “super geek” status and most of the topics go WAY over my head. This week, much to my surprise, the question at hand is regarding the future of the music industry. Finally! I think I’ve got a thing or two to say about that. But let’s follow the questions AO published as guidelines for the article to prevent too much hypothesizing and philosophizing:

1. Is the recording model still valid? If so, is it the bands that will be doing the recording and distribution?
2. If the money isn’t in a recording model, then what will the model of the future be?

I believe what they are referring to here is not the “recording” model but the “record industry” model. Recording music is still the only way to get music from artist to listener, until telepathy becomes a viable option. However, the record industry model is crumbling, as any Joe Public that has bought a track from iTunes or direct from the artist will tell you. The reason for this is not only because their commodity is loosing value in the marketplace, but because they have been slow to adapt to the changes happening in the music industry as a whole.

Record companies bring two vital services to the table, marketing and distribution. These are really the two points in question when talking about the record label business model, not recording. As for the future business model and what it will look like…that is anyone’s guess at this point. In a recent Rolling Stone article, “The Fall of the Record Business: What Next?” 5 prominent music professionals were interviewed and produced five totally different perspectives on how music will be profitable in the future. When the article was published I was in agreement with Ian Rodgers of Yahoo Music. He speculated that ad-supported music was the wave of the future. Today, after investigating many distribution options for an ebook I’m writing, I am starting to think that Nettwerk President, Terry McBride was onto something when he speculated that consumers will act as retailers. This is still a far off idea, but one that we might consider given the growing popularity of Long Tail filters like referrals and recommendations and the power of those filters in a social network community. If I like an artist I can post their music on my site for my friends to buy. I’ll make money and the artist will still make more off the sale than they would have through any other means than selling it themselves.

3. How will bands profit from the music they make?

Again, the specifics of how this will happen in the future are anyone’s guess. At the moment, artists with no record deal are making money by selling their CDs and tracks via iTunes, Snocap and other digital music stores. The beauty about cutting out the middleman is that it takes less sales to make more money for the artist. In a traditional record deal, an artist may be lucky to make 12%-20% on a record. This of course is after the advance, marketing, etc, has been recouped.

When the label and distribution company has been eliminated from the equation an artist can deliver a product from studio to consumer and retain a large portion of the profits. An artist by the name of Second Hand Serenade has become a poster child for this model. He registered his album with Tunecore, a digital distributor that charges artists a one time $30 fee per album to place on it on iTunes. Within less than a year Second Hand Serenade sold 200,000 copies of one track. After a 70/30 split with iTunes and the $30 he paid Tunecore, he made about $135,000.00 without a record label!

4. Is there a role for the Record Labels of yesteryear in the new world?

The labels will only have a place in the new world if they carve one out for themselves. By this I mean, they need to make themselves useful. Since the dawn of the record industry, they have dictated the terms and conditions of their relationship with the artist. The rules have changed and their job is now cheaply (often free) done digitally. Their new role will have to be based on a new profit center and that may be hard for them to do. For an artist at the level of Justin Timberlake, a label is a necessity. There will always be a need for a company that can negotiate corporate deals with Verizon and invest in an elaborate global tour. Most artists don’t fall under that category and may be served better managing their own career with a solid team of professionals and consultants rather than a corporate monster. Labels are taking more of an interest in touring, merchandise and publishing than that have in the past. This does not bode well for an smaller artist in the long run. They will get a nice chunk of change up front, but they are selling off more of their rights and assets than they may realize. Technology is making it possible for an artist to procure all of those services without selling their rights away, so that strategy may not be the long-term solution.

5. How do bands of the future promote themselves?

Promotion will be most effective modeled on the Long Tail theory of filters and community. Chris Andersen, author of The Long Tail, suggests that reputation is a new form of currency and this applies to musicians as well. It will take more one on one, personalized relationship building with their fans and that takes more time and energy. A band will have to WORK it harder than ever. Touring, blogging, texting, instant messaging, viral videos, and most important, being creative in how they communicate with their fans. Communication and community building are the two most crucial elements that any band must embrace to have a successful marketing and promotions plan.

6. Do you want to or think its “right” to pay for music?

I believe that artists should be compensated for their work. I also believe that HOW they are compensated is part of the new paradigm. Gerd Leonhard, a media futurist, illustrates this point in a video presentation on the future of the music industry. He claims that it is no longer a “pay first paradigm.” The recorded music is becoming a free promotional tool used to build a fan base, something that many bloggers may relate to. We give our most valuable commodity, our knowledge, away for free in hopes of building a reputation that will bring us the work we desire. A good song may bring another fan to a show, sell a t-shirt, get licensed in a movie, etc. The profit is coming at the end of the cycle, once a fan has been won and a relationship with them has been developed, not at the beginning or discovery phase. Consumers are now dictating what is popular, not the record labels. Our choices are no longer being shoved at us from the top down, we are pushing our choices upward.

Piracy is a serious issue of copyright violation. The defenders of copyrighted material are vehement in their crusade, but have done little to prevent rampant file sharing from Wisconsin to Beijing. The RIAA has done a pathetic job of convincing us that we are stealing if we don’t pay for music. Maybe because, for all their lawsuits and rabbel rousing, they have made us realize that corporations are greedy and that their least concern is the artists they claim to be protecting. What if, since the beginning of the record industry, records were free promotional tools that labels used to get people to a show? Would we consider it stealing if that had been the model all along? And remember, we are talking about the record industry, not the music industry as a whole. Music is thriving, despite the fact that the labels aren’t. Artists are still making money, just not from selling records. A recent documentary from our neighbors to the north is a very illuminating look at the subject of piracy in the music industry.

7. How important is rights management to the future of music?

I think the answer to this question is obvious…of course rights management is crucial, always has been and always will be. Whoever controls the master and the publishing is the one making the money.

The future of music is undeniably tied to technology, but which technology will produce the strongest business model is still up in the air. Perhaps it will consist of several models, depending on which direction the artist wants to take their career. And maybe it will be one that has not yet been conceived. Either way, it is apparent that it will unfold online and be community-based. I am very excited about the future of the music industry. But I see one great challenge ahead, the chasm that exists between technology (web developers, futurists, programmers, etc.) and the artist. I’ve sat in on many meetings with technology companies that have a great idea to capitalize on the music industry with no concept of how the artist thinks or works. In meetings with artists I find they are often clueless as to what the hell to do next. They are overwhelmed with options and can find no one to educate them. A bridge needs to be built between the artist and technology. Technology should reach out to better understand the genuine needs of an artist and how to facilitate them. Artists need to better understand what technology has to offer and how to utilize their services. Harmony between the two will bring about greater innovation and choice as well as a greater financial return for them both.

Bands on a Budget is a one-stop shop for all your merchandising needs. Founded by musicians, they understand the challenges in gathering all your merch needs in one place.

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Cruxy is a new service that provides tools for the musician and filmmaker to market, distribute and monetize their assets. It was sent to me by a friend in the tech world, where there is apparently a buzz about Cruxy. However, from a music world perspective, they are lacking a credible music community. It is worth keeping an eye on their progress. If they have a solid platform that delivers what it promises, it may catch on.

Here is a description of the company from their ABOUT page:

“Cruxy provides powerful marketing, monetization and performance tools for digital creators, whether filmmakers, musicians or artists of any kind. Cruxy’s tools give artists the power to share their work on Cruxy or across the web using the Cruxy Social Player. Cruxy also gives creators the ability to sell their work as digital downloads. The artist chooses the retail price and the file format. Cruxy registers the work with search engines, generates thumbnails and previews and handles all aspects of the financial transaction. Cruxy also provides a robust set of analytical tools so that creators can track and improve their progress.”

They also help you sell your wares in virtual worlds like Second Life. Included in their services are a real time analysis of your sales and Internet buzz. Valuable information for any band self-managing. And…you can monetize any asset that can be made into a digital file; drum beats, video clips, ringtones, and photos. The Long Tail model for bands is emerging.

Reactee is a t-shirt company that custom prints text codes and messages on shirts.

The options are limitless…

Before heading out on your next tour, consider mapping out how to market yourself on the road. It will increase attendance at your shows, increase fan loyalty and help sell stuff! It does require a small investment: a wireless broadband card for your laptop. (Most cell phone companies are now giving them away for free with a $70 per month rate.) This will enable you to be online anywhere you can get a cell phone signal. Now those countless hours in the van can be put to good marketing use; making Myspace friends, writing in your blog, contacting people that are on your lists in the towns you are headed to, and thanking the fans that signed up on your lists at the last show.

Here are a few more ideas:

1. Gather Instant Message handles from your fans and categorize them by city. A day or two before you arrive send out an IM to all your fans in the area and invite them to the show. If you get some good responses, guest list them!

2. Contests should be held in each city. Make an announcement on all of your profiles (Pure Volume, Buzznet, Myspace, your blog, etc.) Give your fans an email address to contact you and tell them to put their city in the subject line.

Contest options are endless:
-The best story of what you have done listening to one of your songs.
-Best mash-up of one of your songs.
-Tribute to the band.

Anything that will stimulate their participation in your band. Then post the winner and their submission on your blog/Myspace, etc. the day before you arrive and the winner gets a guest list spot plus 3 and a band package. (cd, t-shirt and signed poster from the gig.) The band presents the pack to the winner at the end of the show and buys them a drink. Your fans will never forget their experience with you.