You have to know where in the food chain to charge.

Traditionally, labels were the driving force in music and they charged right up front, you had to buy the album after hearing a track or two on the radio.  Only problem was…were you going to like the whole album if you only liked the single?  Would the single be representative of everything else on the album (can you say Extreme?)  Oh, in the sixties you could just buy the single.  But if there even was a single in the nineties, it was deleted when the song got traction, you had to buy the whole album.  Sometimes people fell in love with the album and the act, but oftentimes there was no loyalty, buying the album was the only way you could get what you wanted, the single.

But then came Napster.  With Napster, you could listen first.

And even the legal iTunes Music Store allowed you to cherry-pick.  Suddenly, the labels’ business model was in the toilet.  They no longer controlled exhibition and distribution, and the buy-in price was no longer fifteen bucks.  Their revenue tanked.

Now the labels are pissed about this.  You would be too if you were losing sales at a double digit clip.  The labels somehow think they can port their old business model into the new world.  But that’s not how it works.  You’ve got to play by the new rules.

Now what are the new rules?

You can hear everything before buying it.  Even the most amateur of Web-surfers can hear four songs on MySpace.  You get a feeling for an act.  So, you either only buy the single, the song you want, or the whole album if you like most of the tracks.  Assuming you pay for your acquisition at all.

This is a problem.  Not only does the consumer want control over what he buys, he has control over the price too, which is free.  Not a good business model.  You’d think those in power would address this, for this goes to the core of their revenue stream, but they’d rather try to sue their consumers back to the twentieth century, and go on about the good old days.  There is a model for monetization of Web acquisition, by licensing P2P, whether an individual service or at the ISP level.  Then again, you can’t monetize hard drive swapping and IM transfer, so the boat leaks.  Bad if you’re in the recorded music business.  Not necessarily bad if you’re in the music business.

Creators should get paid for their work.  But this is problematic today.  So, musicians must turn to other revenue streams.  Like live and merch.  This is fact.  One can rail about the injustice, how it was better when you could live off recorded music sales, but that world is in disarray.

In the heyday of MTV, the way to get people to come to the gig was to get airplay of your video.  It was cause and effect, airplay begat attendees.  Not necessarily long term fans, but if you had a hit you could book short term revenue.  But now MTV plays no videos.  And radio listenership is down.  So it’s harder to drive revenue streams, not only recorded music, but live and merch.  So, you’ve got to go another way.

Some people employ corporate endorsements and/or advertising/TV/movie synchs.  Corporate cash is short term, it runs out.  And, you can only usually get it if you’re big already.  Advertising…it hurts your cred.  TV and movie synchs, not bad, but there aren’t that many slots, and there isn’t that much repetition.

In other words, it’s hard to get your music heard without selling out.  And even if you do sell out, it’s still hard to get your music heard.

That’s why when you’re a wannabe, when you’re starting out, you give your music away for free.  Forget the fact that you want to be paid.  The problem is, nobody knows who you are to buy your music.  Your free campaign is a way to get traction.  Revenue is down the pike!

Kind of like Google.  There was no revenue at first.  Just the truly great search engine.  They got eyeballs, and then they came up with their advertising model.  There’s already a business model in music, live, merch and the recorded music sales you can garner, but it pays to look at Google.  Google is constantly releasing new products, that are free to use.  Google News.  Google Earth.  Google Video, Blogs and a whole host of other features.  You see they want you hooked, they want you to be a member of the club.  They’ll figure out how to make money off you later.  Funny, but this strategy not only decimated Yahoo, it put a huge dent in Microsoft’s online strategy.

Once again, why was Google successful?  Because its search engine worked quickly and came up with the correct result right away.  And you didn’t have to wade through ads, you weren’t bombarded by come-ons.  You got what you came for, nothing more unless you so desired.  This is why the endorsement/commercial tie-in aspect of music is so problematic.  It undermines the experience and the trust.  Sure, it gets the message out, but it muddies the cred and the belief and the bond.  Google’s bond is so good that searchers see the ads on the side as a bonus, a benefit!

And isn’t it interesting that Google doesn’t sell the ads to the highest bidder.  Oh, they do at first.  But if a subsidiary ad gets more traffic, it ascends the ladder.

Insanely great thought and execution.  If only Yahoo could duplicate it.  It can’t.

There aren’t that many good bands out there.  It doesn’t matter if you sell out or play for cred, if you suck, you’re not going to make it.  But if you are good, manage your cred, and your mailing list.  Pay attention to the bond with your fans, nurture it.  People will do anything for you as long as you don’t trick them, if they believe in you.  Have great music, create a fan base, and then collect the money.  Yes, this does mean you’ll starve or leave money on the table at first.  But if you give it away for free up front, or cheap, it’ll pay dividends later.  This is the benefit of Arcade Fire staying indie, of having cheap shows, their fans love them.  It’s more than the music.  And it has to be more than the music to have longevity today.

Remember, bond first, money second.