Making money while giving the music itself away for free

As an IP attorney, I've been trying to counsel my musician clients that they need to give their music away for free -- their copyright be damned, because it's simply unenforceable at this point -- and make money off of value-added merch instead. Today, I came across another arrow for my quiver of arguments:

Best Buy (BBY) said it will cut back on shelf space for DVDs and CDs this holiday season.

The entertainment software market has been in decline for years, and so has the space Best Buy has allocated for compact discs and digital video discs. The space for CDs and DVDs is going to get even smaller this fall.

"We’ll have another store reset before the holidays, which will include an increase in the space for higher-growth and, in the aggregate, higher-margin categories, like Best Buy Mobile, e-readers and gaming, with a heavy emphasis on new gaming platforms and pre-owned game titles," Best Buy Chief Executive Brian Dunn said in a conference call with analysts Tuesday. "This will be enabled by our reorganization of the DVD and CD sections. The CD section in particular will shrink in space allotment."

Musicians: burn your CDs and try to sell them, but just accept into your heart that your music will be ripped and exchanged without your license and played on iPods around the world. There's nothing that you can do to prevent it. Lawsuits are expensive to prosecute, and the offenders are, as we lawyers like to say, judgment-proof. So use illegal downloads and sharing to your advantage: allow it to happen, with your blessing even, and see it as cutting out the label's middleman. You weren't going to make money until your fourth record (if then), and the big-box stores that aren't closing are staying open by doing things like very specifically not selling music CDs any more.

It's hard for musicians -- perhaps especially the geezers and the ones closer to my age -- to give up the dream of seeing dozens of their cellophane-wrapped jewel-cased CDs, set out in sharp rows in a record store. Employee pick of the week! Billboard Hot 100! And when was the last time they gave a Grammy to an album that wasn't distributed by a major label? (How about "never.")

Well, too bad, so sad. The world moves on. What, as a musician, do you want? Now, of course you want millions of dollars, or at least you'd like to be able to quit your day job. (Note that the only two musicians I've ever known to quit their day jobs and make music full-time ended up with scurvy. No lie. Scurvy.) But a good second-best is to simply have your music heard by the largest number of people possible, and to have them pay you what they can, when they can.

Option 1: Value-added merch, Nina Paley-style. Signed CDs, limited-edition posters, special-event t-shirts. Or think outside the box, and offer things like "The band will make you dinner for 8 for $400!" or "Attend 5 hours of our next recording session for $300!"

Option 2: tongodeon, a long-time Internet acquaintance of mine, pointed out the other day that there's a relatively new scheme going on nowadays: the idea of "pledging" for new music. That is, pay your favorite artist some small amount of money so that you will be the first on your block to get their newest recording or the final mastering of their new record:

PledgeMusic offers you the opportunity to fund your favourite band or solo artist's new album. In effect, you as the fan become the record label the band or solo artist is recording for. You help fund their record and if they don't reach their pledge target you won't get charged a cent.

In exchange for your early involvement, you will get the music the moment the recording and mastering is finished. Additionally, if you wish to contribute a little bit more, PledgeMusic artists also offer you a range of incentives, ranging from signed merchandise to special events with the band members and in some cases personal involvement in the release process. These are specified by the artist and vary for each project.

PledgeMusic takes an administration fee, and some percentage goes to charity. I like this idea, because, if the consumer's goal is to be the first to get a new record, it incentivizes paying for music rather than getting it for free, which presumably one has to wait for. And it also includes options for value-added merch, which I think is a solid, proven way for bands to quickly and cheaply raise some cash.

And both options cut out the predatory middleman labels by funneling money directly from consumers to producers. I mean, what are labels for? Or rather, were? Pressing vinyl records, the industrial equipment for which an artist wouldn't have, and shipping records to stores, the logistics of which an artist would not be in the business of. And payola. With digital recording, the Internet, and bulk CD repro services that cost about a buck per CD, labels aren't needed. Right now artists can almost literally seize the means of production -- if one can't seize electrons, one can at least seize a sharpie for autographing CDs -- and kick the record company pig-dogs to the curb.