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Barrier-bustin' Internet may lead to a music industry "middle class"

In one of the final sessions of the Future of Music Policy Summit, panelists discussed how the music industry is going through a process of “disintermediation,” where fewer steps stand between artist and audience, thanks to social networking and Internet distribution. “Someone spoke earlier about a ‘musician’s middle class,'” said Tim Westergren, founder of Pandora.com. “In this world, you don’t need to be a full-time professional musician.” Instead, the speakers noted that it’s possible for amateur musicians or independent bands to reach new and unexpected audiences over the Web.

Speaking for promotional service echomusic, Pinky Gonzales pointed to Todd Rundgren as a precedent for a possible patronage system to support music. Through the PatroNet system in the ’90s, Rundgren had funded production of at least one CD through the financial contributions of more than 2,000 fans. Gonzales noted that this kind of model can especially work well for older bands on a “long tail” business model and can be combined with demographic tracking to help a band focus their appeal. “Everyone should be using SurveyMonkey,” he said. (SurveyMonkey is a well-known poll-taking service.) Rumblefish’s Paul Anthony agreed, adding that the music industry is moving from a “real estate” plan (in which property is bought by labels and appreciates in value) to a service industry. The notion is that artists interacting directly with their audience will ultimately lead to the most profitable relationship between the two.

That service industry viewpoint was echoed by Brian Dear, founder of Eventful, which tracks special events and concerts online. Dear emphasized the Demand function of his service, which allows fans to directly request an artist appearance in a previously unscheduled location. He’s even seen audiences arrange the venue for the performer, he said, which really changes the existing dynamic between fans, musicians, and promoters. Most of the innovation in music online has been in distribution but not in live shows, said Dear, even though many performers now practically give their music away and rely on their live performances as a primary revenue stream.

Is it possible that music could acquire a middle class, instead of being split between a few superstars and a vast working-poor population of bar bands and small independent acts? Westergren emphasized that Pandora accepts even home-burned CD submissions “with the track list written in Sharpie.” The service creates a UPC for any songs that don’t already include one, and if the sound quality is high enough, they’re placed on an equal footing in Pandora’s database with major label submissions.

And remember, said David Harrell of the Layaways and Digital Audio Insider, musicians should start balancing the loss of revenue from free music with the promotional value of direct communication with fans online. Small bands may have nothing to lose by giving their music away, he said, but can channel that exposure toward live shows and licensing for television or other media.

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