Make Money on the Internet
A musical career in cyberspace is no longer just a dream.

by Micheal Gelfand
 

If you're like most musicians, you've dreamed of "making it big," but by now you've probably realized that such lofty goals are awfully hard to achieve without the muscle of a major record company behind you. That's because up until very recently only large labels could muster the publicity, promotion, marketing, and distribution-the juice-needed to influence radio stations to play records and to encourage retail operations to sell them. But what if you didn't need a record label to do these things for you? What if you could attract worldwide attention to your band and deliver your music directly to the fans who want it?

Well, you can-sort of-on the Internet.

Thanks to the convergence of various evolving technologies, you can put your band on the Internet and make your music available to thousands of people around the world. Using current computer technology, you can design and create what amounts to a dynamic press kit-consisting of textual, pictorial, and video information along with CD-quality audio content (either clips or full songs)-on a website that can be accessed by anyone who's interested in your band. Whether your goal is to gain greater notoriety outside your local music scene or to offer recordings of your songs to all comers-for free or for sale-is up to you. Just know that you no longer have to rely on gaining entrance into the traditional tangle of record labels, radio stations, and retail establishments to be a success; you can subvert the record industry's current business model and do it all on your own. Global domination might just be a click away.

Everybody's Doin' It

While there are no major record labels using the Internet as a means of distribution, that doesn't mean they're not excited about the possibilities. "I believe that digital downloading is going to be the primary form of distribution in the future-I absolutely believe that," says Al Cafaro, chairman of A&M Records. "I just think it makes total and complete sense. With record companies being what they are, there are certain legalities [that] need to be resolved-and I don't think we can minimize that-but once that happens, I say let's roll, and let's roll big."

But while the major labels wait to get up to speed, there's already a list of established recording artists who are currently using the Internet-either on their own or with the help of Internet-based record labels-to independently supplement and even further their own careers. Musicians like David Bowie and Prince have gone online as an ancillary means of reaching more of their fans, Bowie by way of a highly publicized website, and Prince in order to sell records through the mail.

Such artists as Frank Black and Creed have gone one step further, using the Internet to actually distribute digital downloads; Black put a song from his most recent album, Frank Black and the Catholics (SpinArt), online via GoodNoise Record's website (goodnoise.com), while Creed put a free, acoustic version of "My Own Prison" exclusively online as payback to their fans via WindUp Records' site (windup.com).

Dave Stewart is another artist who recently began experimenting with the resources available on the Internet. This past September he not only offered his newest album, Sly Fi (Digital Artists/N2K) for sale as a digital download prior to its in-store release, but he jammed online in real time with fans and broadcast an in-studio performance with his new band all over the world via the Internet from London.

"The fact that I've made music and put it out into cyberspace and it goes into somebody's computer in Ohio and down into their CD burner . . . I lie in bed and think about that," he says. "The Internet gives me a way to have a gallery for all the different things that I do up there-it's like a mind map that people can download-and the possibilities are trippy. It's very exciting for me to think that someone will burn my CD and play it in their car, and I want to see if it works."

While big-name acts can use what notoriety they already have to generate further interest in what they're doing, lesser-known acts can use the Internet to dramatically increase their exposure and create genuine opportunities for themselves. Back in 1994, Paul Buckley and Jeff Robbins used their knowledge of hyper-text markup language (HTML) to create a website capable of promoting records and gigs by their own band, Orbit, as well as those of bands on their own fledgling record label, Lunch Records. By registering Orbit's name with online search engines like Yahoo! or Altavista, they were able to direct traffic to their website, and with the simple addition of a rented post office box, Buckley and Robbins soon began using their website to sell records.

"It's definitely given people another medium for finding out about us and our records, rather than the old medium of us trying to put out a record and get it into stores and going through distribution companies-which can be virtually impossible at times," says Buckley. "It's one more easy way for people to get in touch with your music. Rather than 'I heard them on the radio and went down to their show but they didn't have CDs at the show,' or 'I didn't have enough money at the show,' it's 'boom, they're on the Internet.' It's just one more way to get it out there and fill in the holes when people can't get your music."

Buckley says that the Lunch Records site is an effective tool, but it's rather "old school" when compared to others that are out there when you consider some of the options that are available. For one, Buckley and Robbins choose to do all monetary transactions via check as opposed to secured credit card transactions online because performing secured transactions requires a merchant account with a credit card company (which costs money). More importantly, while Buckley and Robbins offer less-than-CD-quality audio clips on their web page, their success as a signed act with A&M has kept them from having to decide if they should begin offering CD-quality songs-for free or for sale-from their site.

The Bottom Line

Deciding whether or not to sell songs online is a terrible paradox for most musicians. On one side of the argument is the concept of disintermediation, which is a rather hopeful business model that strives to eliminate everyone standing between the producer of a product and the consumer. (This means significantly greater profits for bands along with the end of record companies as we know them.) While that sounds rosy in theory, thorny issues arise when you stop to consider who'd be responsible for ensuring that your copyright was being legally honored once you started offering your music online.

But that's getting ahead of ourselves. The fact is that while established acts may already have people interested in their music, unknown bands with little or no fan base can use the Internet to distribute their music to anyone who'll listen. The problem is getting someone to pay for a song they've never heard before.

Based on this unfortunate reality, it would seem that making your music available for free would be the way to go, but by distributing your music at no cost to the consumer-and without copy-protecting it-you're basically giving up your ability to ever make money from the sale of that same music in the future.

(Considering the size of the potential audience you can reach this way, you might initially think that the copyrights for a few songs are worth sacrificing for the possible short-term payoff, but giving away your music sets a precedent for you and your band, as well as all other musicians who are using the Internet to distribute their own music. To look at it another way, governmental bodies and the entire recording industry have yet to hash out all the legislation needed to deal with fundamental copyright issues such as how to pay artists for Internet commerce and how to prevent Internet piracy, so if they haven't figured it all out yet, you probably owe it to yourself to give this issue more than just a moment's thought.)

In any case, once you've decided if you want to give people access to your music online, you have to determine the format you'll use to make it available. (For music to be transmitted online, it must be digitally compressed and attached as a file to your website. Someone looking to play your song will need the "audio player"-i.e., the software-necessary to decode the digitally-compressed music.)

There are various compression formats to choose from, with MP3 being the most commonly used downloadable format (perhaps because its software is freely available at sites like mp3.com) and proprietary formats-either downloadable (a2b, liquid audio) or "streaming" types (real audio), with their specific costs and benefits. (Streaming audio isn't stored in your computer. Instead, it plays as it "streams" through your modem like a radio broadcast.)

"The difference between MP3 and the others is the latter ones are designed around a business concept, which means that there is value in the copyright that you have to protect. You can't just haphazardly distribute it," says Anthony Stonefield, co-developer of the a2b compression format and CEO of Global Music Outlet (GMO), a firm specializing in technology innovation and electronic music marketing. "MP3 serves the anarchistic nature of the Internet.

"With MP3, there's no accountability," he explains. "With [the other formats] you have to guarantee a certain level of copyright protection and accountability. With MP3, there's only one thing you can guarantee, and that is that chances are a lot of people are going to download your song. It doesn't mean shit beyond that. It's redistributed. You can give it to all your buddies, and that is a scary thing for the legitimate industry.

"Unsigned artists are desperate and will do things like that," he says, "but we don't think that's a very mature thing to be proffering because it's a dead end. You could have fifty thousand copies of your song downloaded, but what is that going to do for you? The chances are that when you're new in the field, your big step up into being a professional musician is when one or two of your songs capture the attention of the market or the industry. That's your sales tag, and if you've given it away for free, well, then how are you going to convince people to invest in you so that the public will buy it? It's a 'catch-22' there."

Adventures in Distribution

There's an online service for just about every conceivable distribution philosophy out there, and it's up to you to choose the one that best suits your needs (or to ignore them all and do it on your own). Stonefield's GMO (globalmusic.com) amasses independent songs and provides the a2b platform for independent musicians. "We leverage our web marketing smarts to bring more attention to the bands so that we can help them get mail-order sales of CDs and merchandise," he says.

"All musicians really need to do is send us their CD and tell us what they want encoded and where they want their song posted," says Stonefield. "We will encode the music and put it onto the Internet for sale, but we advise them that they're not going to see any revenues from this for a while." GMO distributes music via one of three options: a free MP3 track, a free a2b track, or an audio postcard, which can be sent as an email to anyone, with the audio player embedded in the email.

Sites like IUMA (iuma.com), sponsored by the International Underground Music Archive, offer a similar collective band environment. Your website-one that you submit or IUMA creates for you-is put among hundreds of other websites from bands around the world. For an annual fee, IUMA puts each band's web page in the proper genre and directs Internet traffic to that site. Other IUMA services include helping each band develop email lists and databases for fan surveys, fulfillment programs for selling CDs (they take orders, ship the CDs, and send you the money), and creating MP3 downloads of your music.

"What you're doing [on IUMA] is creating a centralized focus for your act, so you're building it as it goes," says David Kessel, founder of IUMA and owner of IUMA Offline Records. "For example, if you're popular in Michigan, and you're drawing three to five hundred people to a club, and those people go to your website, they can tell their friends about it, they can sign up for your database to be on your regular email list, they may buy products, and they can interact with the band. They can say to the band, 'We really like it when you guys play this song,' or 'Gee, that song really sucks.' It gives you a chance to get some interaction that you wouldn't normally have.

"Let's say that a band sells twenty thousand digitally downloaded singles," says Kessel. "Well, that tells a major label that there's a fan base out there. And there are two levels here: One is breaking ground, taking the shovel to the dirt and creating an awareness out there for your act. The other side of it is, how can a band prove to a record label that they're worthy enough for that label to sign them? [It's] not just on the merits of some A&R guy thinking they sound good; they have to support it with data that says, 'Look, we sold twenty thousand digitally downloaded singles. We sold four thousand CDs. Our fan base says they would buy a new release if we had one available. Here's what the songs will be on that CD as they were voted on by the people out there. We want to do an album. Would you please sign us?'

"That's a lot more to go on, and of course, as the corporate dollars tighten in the record industry and the competition gets really stiff, it's going to take some convincing to get the corporate dollars into the band's recording, marketing, and promotion budget," he adds. "Also, if you're not far enough along to have enough data for a major label, at least you won't rot in a basement somewhere with nobody knowing about you. Think about it. This is the first time in history that you can be in a basement in Kansas and reach the world. That's an amazing transmission of information."

Audio Diner (audiodiner.com) is a different service in that its business model is built around offering free music downloads and deriving revenue (for Audio Diner and the artists who use it) by negotiating impression rates with advertisers. "My experiment is to see what happens if you let the consumer have the music instead of convincing them that they have to buy it," says MR2V, CEO of Audio Diner.

"We pay partial mechanicals to the artists for the download: We're at 1/3 mechanical and we're aiming at 1/2 or better. On a major label deal, artists are only looking at seeing a few pennies per song, but if labels are paying artists a penny a song and we're paying a similar amount and the consumer doesn't have to buy it, who's going to distribute more, me or an online superstore?" he asks. "I could be totally wrong, but I don't think I am-I mean, how much easier is it to convince people that they can have something for free rather than having to buy it?

"To build a business model where the artist only gets paid when they sell something goes against what is happening on the net," says MR2V. "I pay artists. Revenue can be made in providing content on the net, and I think it's feasible for music. Labels are pausing. They don't know what to do with this, and their outstanding artist contracts aren't written to make mention of digital delivery, piracy, mechanicals, or any of that stuff. So people like me can walk in and deal with a whole new core of artists, and we're basically redesigning an entire industry around digital delivery rather than trying to plug it into the old system.

"Look at it this way," he adds. "I have global distribution from an iMac and a notebook, and if I'm paying artists as well as they'll get paid before promotional expenses on a major label deal and delivering music to the consumer as a free product, who's gonna be selling $15 CDs anymore?"

So what does this all mean to you? According to Syd Schwartz, vice president of Internet operations for WindUp Records, the Internet has already changed the role of the record label, and greater changes are afoot. "The record label was predominantly a product pipeline and a marketing thing, but artists can now really take control of their own destiny by utilizing the Internet both as a commerce source and as a safe and comfortable way to break down what formerly was a really tough area between the audience and the artist. Digital download distribution certainly represents a future toward which everyone is rushing at lightning speed, like it or not," he says.

"The Web [offers] the capacity for artists to not worry about creating an album-they can create a song, offer it, then sell it. It's going to completely change the nature of how music is created and then perceived," says Schwartz. "The Internet is going to make things like [Pink Floyd's] Dark Side of the Moon become an anomaly. Bands won't suffer from Steely Dan syndrome, where at the height of their popularity you don't hear a new piece of music from a band for three years. The question is, who is the audience? Is the audience technologically savvy enough now to start making those inroads?"

Now that's a whole other story.