Posted 9:28 AM by Dave Allen

From the perspective of one who has spent the last 25 years working as a
professional in the indie music and radio business, Dan Krimm's comments are
right on target here. But there is a very important aspect to the story that
neither he nor Brian Cullinan have mentioned.

Consolidation of the retail sector of the music industry over the last 10
years has radically changed 40 year old power relationships, and is now well
advanced in marginalizing and driving most niche, catalog, and even medium
selling 'product' out of the commercial retail channel.

Changes in the cost of marketing programs (i.e. paid shelf space at up to
$3.50 PER UNIT) and aggressive inventory management (60-90 day shelf life)
are inexorably pushing all but well-financed and widely promoted mainstream
releases out of stores. There is very little difference between record
retail and the supermarket industry at this point, which explains grocery
giant Yucaipa's purchase of Alliance Entertainment two years ago.

More than ever it is a mass market/commodity business, and the "middle
ground" that Dan refers to --

"The in-between. Not the tippy top and not the shower singers. The diverse
ocean of personal, passion-inducing, *meaningful*, moderate-audience quality
music."

-- whether represented by artists, indie labels, or worthwhile imports --
which formerly colonized the margins of the mainstream system, is now
scrambling to find new ways to exist in a dramatically changed ecology. All
this has been well documented over the last two years in Billboard's Indie
and Retail Track columns.


The problem is exacerbated by the fact that CDs are now so easy and cheap to
record and manufacture, leading to an irrational glut of releases at every
level of the market. This is one of the underreported sources of buyer
fatigue and disenchantment with the music industry. It's just too time
consuming to deal with, and huge numbers of listeners simply don't bother.
It represents the other enormous market that digital distribution is
currently blowing.

Brian C. is right in saying that the integrated services that major labels
provide will remain valuable for those heat-seeking artists willing to trade
their freedom and their copyrights for what increasingly amounts to a paid
upgrade to their public relations profile, rather than a rational long-term
business deal. The dangers of this Faustian bargain with fame and fortune
are well known, and one can only hope that those who chose this path are
willing to accept the consequences along with the advance.

What interests me is what these and other established artists do after they
fall or get pushed off the major label tailgate. They now have new options
for distribution and promotion and -- one of these days -- internet
broadcasting, including, as John Parres says, the services of independent,
non-label based service professionals, most of whom are veterans of the
legacy system.

Ani DiFranco has become a hero to indie musicians because of her stalwart
insistence on maintaining control of her own career and releasing her
recordings on her own label through independent distribution. She has done
just fine without the help of a major label -- maybe better. She works in a
mainstream genre, so her challenges are less difficult than what confronts
those working in non-mainstream genres, who are currently stuck between A.C.
and B.D -- After Consolidation, but Before Digital.

For most artists, the "alternative market" that Dan is asking for
(I'm not talking about "non-traditional retail" which includes dozens of
alternative non-record industry retail channels large and small) faces
enormous difficulties getting going, but also very encouraging possibilities
in the future. Indie and moderate market artists and companies have always
been willing to work with these challenges and use all the tools and
services at their disposal to reach their audiences.

These now include artist and label web sites, easy access to worldwide
fulfillment of CD purchases, streaming samples, promotional downloads,
electronic mailing lists, chat rooms, fan and online review sites, up to
full blown genre portals like andante.com and rootsworld.com -- AND what's
left of internet radio.

As soon as the smoke clears from the current battle over internet
broadcasting, there should be an explosion of niche and syndicated
programming available online, signalling the real start of a new era in
smaller audience broadcasting.



Three things we have learned from direct experience over the last 15 months
with our own subscription streaming service, the Hearts of Space Archive:


-niche audiences are far more engaged and loyal than average consumers

-they have been_chronically_starved_for content in the legacy system of
broadcasting and music retail

-these people are not jaded (on the contrary, they are tremendously
appreciative) and they are willing to pay for a well conceived service


Therein lies the opportunity for the middle ground, and it will not take
anything approaching a total redesign of the music business to get to a far
better place for this level of the market than the legacy system has
afforded since the 1960s.

All this can happen now, without wireless and with only normal growth of
broadband. The hardware people are starting to deliver the necessary
portable devices, but we are finding that there is a sizable market of
people who are happy to be served at their PCs. And as Andrew Odylzko (who
inadvertently started this thread...) says with admirable clarity, it takes
about 10 years for any substantial change in user behavior in
telecommunications.

All we really need for this to take off are sensible statutory royalty rates
for digital transmission, and integrated service providers who can offer
artists, labels and internet broadcasters the tools they need to build
businesses around serving these audiences.

We've done it with off the shelf software, industry standard formats and a
few commercial service providers. We have happy subscribers, we're paying
our bills and building our user base. We were lucky to be able to leverage
our archive of public radio programming, but others can do it their own way
as long as they can target an audience and serve it well.


Stephen Hill


HEARTS OF SPACE timeless music for a changing world
P.O. Box 5916, Sausalito, CA 94965

stephen.hill@hos.com
www.hos.com