I wanted to throw in my $0.02 here.
Some quick stats: over 50% of spinART Records (my former label) album sales for the past three years occurred in iTunes US.
Digital sales are NOT some small % of the market place.
This year alone TuneCore customers - which is a VERY small % of all music creators - will sell (or stream for revenue) over 10 million songs.
between TuneCore, CD Baby and Nimbit you are looking at between 30 - 40 million songs generating DIRECT revenue for tens of thousands (if not hundreds of thousands) of ARTISTS.
This represent approximately $18,000,000 to $22,000,000 in FOUND revenue. Without companies like TuneCore, CD Baby and Nimbit this revenue would not have existed.
On a quick side not, the RIAA states in large letters on its homepage that:
" RIAA members create, manufacture and/or distribute approximately 90% of all legitimate sound recordings produced and sold in the US"
I believe this to be dead wrong. I suspect that over 99% of the users of TuneCore, CD Baby and Nimbit are NOT RIAA members.
I now believe they RIAA represents LESS than 10% of all those that create manufacture and/or distribute approximately all legitimate sound recordings produced and sold in the US.
And this is due to the disintermediation the internet has provided.
What's fascinating is the way this has all happened. For the past 100 years the music industry has been through an unique period of time; the DISTRIBUTION of music set the rules and structure around how to have a career as a musician. In particular, record labels were the single entity firmly in control of every aspect of the industry – from determining which artist were going to have access and under what deal terms, to the recording process, packaging, marketing and promotion and distribution of the music as a “product”
The majority of the music in the world was being primarily released, distributed and controlled by just 4 to 6 “major labels”
Then the perfect storm hit - MP3 compression technology, the internet, proliferation of broadband, the original Napster educating the population of the world on what it meant to download a music file, eMusic launching the first on-line music store and then Apple launching the iTunes music store in conjunction with the introduction of the iPod etc
Despite the loss of control over distribution, music creation and access to the media outlets that marketed and promoted music, the old model of still persisted – artists still needed to go through the “label” to gain access, and only a limited number were let in under deal terms set by the labels.
Then companies like TuneCore built and launched a new music industry model - a model built on “servicing” the arist as opposed to “exploiting” them that provided universal access to worldwide distribution, reporting, marketing and promotion to help all artists succeed and everything changed. A tidal wave of music and artist were unleashed. The results have been stunning.
For the first time in the history of the music industry the stranglehold created by access to distribution has been removed – EVERY artist now has access to worldwide distribution while keeping all their rights and getting all the money from the sale of their music.
There is discussion suggesting that now that music can be gotten for free, artists will not be able to make a living
Some thoughts about that: back in the "old" days, before MP3s and broadband, there were millions of bands that made music, no one knew them, no one heard them and there was no mass media vehicle with open access to all to allow them even the remotest possibility to be discovered.
These bands could not make a living or succeed as there was no easy, accessible and inexpensive way for them to get known or heard.
With P2P, "pirating" of music etc, you have a vehicle that allows mass distribution and discovery - for the bands from the "old" days, I view this not as a mechanism that is going to impede their success, but one that allows them to get known.
Does this make them better off than being unknown and no one stealing and/or listening to their music, I think so. I think it is a better problem to be known and have thousands of people stealing your music then to be unknown and have no one stealing your music.
With popularity comes the opportunity for income streams - for example, merchandise, gig income, copyright royalties, master use placement, endorsements and yes, even money from the sale of music.
Keep in mind that music is a form of entertainment - albeit a very special emotional one. It's not food, shelter or clothing but we all need it and we all want it. Before the Net we listened to music on the radio (and suffered through advertisements to hear it).
TV works the same way, we get to watch the content on TV and in return we see commercials that pay for the costs associated with bringing the "content" to the public - aside from suffering through SUV and drug commercials - for the most part a structure I am willing to partake in.
Music is also a form of media. The idea of people having access to it in the same model as TV makes some sense. How will it all shake out remains to be seen, but I fundamentally believe that music has so much power and impact that there is a model out there that will allow it to continue to generate revenue even with pirating.
The question is, how does you harness the possibilities that Net provides - unlimited inventory that replicates on demand, unlimited shelf space so everything can be in stock, and websites that NEED traffic to be of any value with music being a main traffic driver.
And keep in mind, its not just music - it's all media, books, newspapers, movies, video shorts, TV shows, comics etc that are going to have to figure it out