In the golden age of popular music, the labels offered four things to the performer:
1: They had equipment: a $1,000,000 tracking room was both useful and important.
2: They had expertise. Engineers, Songwriters, Session Players, Producers, were all part of the label's portion of the deal.
3: The had distribution. They could get your record to the stores nationwide and you couldn't.
4: They had marketing. They could get you record played on the radio, and you on tour and on TV.

This broke down. The expertise went first. Because of how they paid for it, it became more advantageous to the band to write their own songs. (aside: That's a fascinating case. In Rock and Pop, there's a certain respect and deference given an artist who is both singer and songwriter. In other genres of music, not so much. It stems from a mutual decision by the labels to pay artists less if they didn't write their own songs and by artists to write songs to get paid for both writing and performing.) The engineer became a contractor when the recording studios started being rented to the artists on a per-hour basis.

So then the equipment became a non-consideration. You went from $1,000,000 tracking rooms to $100,000 tracking rooms pretty quickly. Maybe it was only 90% as good as the big room, but that turned out to be close enough, and the amount of money you could save could go into more hours in the studio getting it right. Now sub-$10,000 home studio setups as running the $100,000 studios out of business.

Then distribution became less important. Bands can sell music via iTunes or their own web sites or CDBaby and not be in the Virgin Megastore and still make a pretty good living.

What we don't know is how, given the dizzying fall of the barriers to entry of technology, expertise, and distribution, is how the marketing is going to play out. Is it necessary? I definitely knew bands that made a modest living touring and burning small runs of CDs in the 1990s. Can they do better now? Maybe. Certainly larger, better known bands are trying it.

I think the biggest unknown now is how people will find new music in the future. It used to be radio DJs, but that's fragmented. MS had a pretty good idea with the zune-to-zune file sharing, but it was badly implemented. Viral marketing can definitely work. Apple gives away a "single of the week", presumably so that people will come back and buy the rest of the album. Music podcasts may be the new way of influencing music buyers. Facebook/MySpace are both working on the music model.I'm not sure about Satellite Radio, since it encourages you to listen to what you already know (and presumably own). That's the up-for-grabs part of the equation that, when it gets solved, will put enough pieces in place to start really killing the labels.

You are seriously thinking about voluntarily purchasing a textbook four months after graduation while not enrolled in classes?

Dork.

darcy - it is true. i am a dork. and this surprises you? but hey, i wasn't the law school nerd that did law review and mock trial... i'm too lazy for that stuff.

michael - good points. as for marketing, i'm convinced the internet and "viral" marketing will take the place of paying radio stations to play songs. the (sad) truth to the matter is that fewer bands will probably be able to "make it." when the barriers to enter a market fall, the supply in that market will increase. more bands will take a stab at "making it," and even fewer that make it now will make it in the future. that's my bet at least. you're going to have be really, really good to push your band from obscurity to doing well enough to make a profit.

p-man:

Yes, but the standard of "making it" may go down, as well. I knew people who were feeding 4 musicians on touring + 1 CD/year, selling them at concerts and over the web. It's a grueling life on the road, but it works for some people.

If you're saying that fewer people will become Madonna or Britney, I can live with that.

There was great article in NY Metro a few years ago about the future of music being like the present of literature, based on the idea of Hemingway and F. Scott Fitzgerald as the rock stars of their day. Not sure I believe it's gotta be that way, but it was worth thinking about.

"Making it," to me, would mean exactly how you define it. Paying the bills, feeding the family, paying rent, staying above water. And hopefully saving some for the future. Making it does not have to mean being the next big thing. But even this more basic definition of "making it" could be harder to achieve under this new system. Only time will tell. I'm pretty excited to see how the music industry will change over the next 3-5 years.

Finally got around to downloading it. Curious to know how the pay what you can method works for them - if it all goes to them, they're probably making more than they would otherwise! Factor in stupid Americans not doing the pounds to dollars conversion correctly, and they probably make even more.

I'm with Darcy on you being a giant dork for wanting to buy a law textbook, not because you're not enrolled in any classes, but because law casebooks are absolutely pointless. Did you really ever learn anything from the books? No. You probably read an outline from some highly stressed overachiever with no social life who made better grades than you the previous year and/or looked at a supplement, right? Don't lie. ;-)