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Alternative Business Models in the Music Industry

Read an interesting blog post titled "The Future of Music Business Models (and Those Who Are Already There)" by Mike Masnick. I don't know much about the music industry, so thought it was interesting.

The main take-away of the new way to approach music business models is:
Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model
The business models he used as examples ranged from giving away music for free online (but charging for "packages"), to getting your fan-base to fund your next record, to

Here were the examples:
  • Trent Reznor of Nine Inch Nails - They give away their music for free online, but ask that you sign-up for their email list. You then get emails about their upcoming tour dates, can find ways to connect with other fans (like forums, mobile apps, and user submitted videos), to purchasing higher-end packages. He's made a lot of money this way ... despite giving the music away for free.
  • Drummer Josh Freese - He priced his album similarly (near free), but then sold off personal services like a personal 5-min phone call, dinner at PF Changs, private drum lesson, and even a day at Disneyland.
  • Jill Sobule ("I Kissed a Girl") - Many of her labels either went out of business or dropped her, so when she was creating her new album she funded it via her fanbase. Fans could get rights to visit any show for the next season, could have a private concert at their home, or could even appear on the album itself.
  • Others -
I think my personal favorite out of all of those was Jill Sobule and how she had her fanbase fund her new album. Can you imagine a crowd-sourced label where fans themselves fund the production of new music directly? Heck, they could even share in the proceeds. I can just imagine someone like ReverbNation adding that to their services pretty easily.

Here's an excerpt from the blog post that touches on making the connection between fans and artists closer:
Adding in new licensing schemes only serves to distort this kind of market. Fans and artists are connecting directly and doing so in a way that works and makes money. Putting in place middlemen only takes a cut away from the musicians and serves to make the markets less efficient. They need to deal with overhead and bureaucracy. They need to deal with collections and allocation. They make it less likely for fans to support bands directly, because the money is going elsewhere. Even when licensing fees are officially paid further up the line, those costs are passed on to the end users, and the money might not actually go to supporting the music they really like.
Doubtful the music industry will entirely head in this direction, but interesting to see how folks are working with alternative business models.
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