Illustration: Wired
Let’s get this out of the way immediately: Record labels having been using free “downloads” to promote and sell music for ages.
Here’s a quick list of how they have used free “downloads” in the past:
1. Radio
Record labels have been supplying exclusive/pre-release/promotional cuts to radio stations big and small since the dawn of time. With the sole purpose of the free “download” being to sell higher-quality formats later (i.e. records, 4-tracks, 8-tracks, cassettes, CDs, mp3s etc) plus whatever else they can sell.
2. Print (i.e. Rolling Stone magazine etc)
Record labels have been giving music critics exclusive listening sessions and pre-release cuts forever. With the rationale being that providing alpha music tastemakers with free “downloads” will lead to more sales of higher-quality formats plus whatever else they can sell.
3. Television
Record labels have been trying to get their acts booked on television shows like SNL, Jay Leno and Conan O’Brien for years and years. These free “download” TV performances allow the artists to reach new audiences, refresh old fans and, hopefully, increase their sales of higher-quality formats, concerts etc.
Why have the big record labels embraced these free “download” models but not free downloads online?
Simply because radio, print and television is much easier to figure out than the Internet.
They have been around for decades and centuries giving the music industry plenty of time to figure them out and see that free “downloads” lead to new fans, wider audiences and more sales.
Also, each of those mediums (radio, print and television) lend more to music industry’s amazing gatekeeper power. The Internet has been seen as a threat to the music industry since the days of Napster because it ruins their gatekeeper power and opens the music world up to the democratizing powers of the Internet. They just don’t want to give up their gatekeeper style and embrace the true Internet economy of free.
The Internet gives actual music fans the power to make music artist’s music ubiqitious and massively popular almost over night without the gatekeeper influence from record labels. This is why music labels and the RIAA have fought so hard against the Internet’s free economy.
How do music artist’s harness the power of the Internet and make money from free online downloads?
Here is a list of new business models built around the free music downloads:
Note: Each of these will obviously take some entrepreneurial effort from the music artist, which I think they should be able to handle since they are so hearty from driving around in crappy vans all day. :)
Double note: These are not new business models, but rather fresh perspectives on old ones. Plenty of smart people like Chris Anderson, Fred Wilson and Umair Haque have been talking about this stuff for years. This post is is greatly influenced by their thoughts and writings.
Model #1 – For DIY Artists: Offer free music downloads directly from your site, blog or widget with a bit rate of your choice (just don’t offend your fans with low quality downloads).
Users should be able to download the music in only a few clicks without having to sign-up or fill out anything (friction-filled sign-ups is probably why so many people used bit torrents to download Radiohead’s newest release In Rainbows instead of directly from their site).
How to make money: A) Give your music fans the choice to buy higher quality bit rates downloads, B) Tickets sales at live shows and concerts, and C) Let your fans buy art, t-shirts, posters, buttons etc for you online or at your live shows.
Model #2 – For Still-in-the-Garage Artists: Offer free music downloads plus free live shows.
You are trying to build an audience, so you should try to spread your music as far as it can go with zero friction (i.e. charging money). You need to actively spread it across every platform including social networks, blogs, coffee shops, local venues etc.
How to make money: A) Keep your day job and B) Sell those cool handmade t-shirts and hand-painted limited edition EPs like hot cakes.
Model #3 – For Hybrid Artists: Offer free downloads from own site, blog or widget like in the DIY model above and let professional services you use or have contracts with also promote your free downloads.
Hybrid artists embrace the DIY model and use professional services (i.e. record labels, concert promoters, agents for TV/movie/ad gigs).
How to make money: Through your own site or through the professional service you use or have a contract with A) Give your music fans the choice to buy higher quality bit rates downloads, B) Tickets sales at live shows and concerts, C) Let your fans buy art, t-shirts, posters, buttons etc, and D) make money from TV and movie gigs, product promotion (i.e. Beyonce and Pepsi) and other ventures like clothing lines (the next step after selling handmade shirts at barbecue gigs) etc.
Wired has a great how-to wiki on making money around free content. You should check it out.
