Chris says -

Give away the music and sell the show: "

The major labels are freaked out: CD sales are continuing their inexorable decline and iTunes sales aren't making up the difference. Meanwhile, tens of thousands of artists are giving away their music for free on MySpace, their own websites and independent MP3 blogs. This puzzles the labels. Don't these bands want to make money from their art?

Many do, but they're just smarter than most music industry execs. They understand the difference between abundance and scarcity economics. Music as a digital product enjoys near-zero costs of production and distribution--classic abundance economics. When costs are near zero, you might as well make the price zero, too, something thousands of bands have figured out.

Meanwhile, the one thing that you can't digitize and distribute with full fidelity is a live show. That's scarcity economics. No wonder the average price for a ticket was $61 last year, up 8%--in an era when digital products are commodities, there's a premium on experience. No surprise that bands are increasingly giving away their recorded music as marketing for their concerts, which offer something no MP3 can match.

Live performance is the fastest growing part of the music industry (up 16% in 2006 to a record $3.6 billion in North America) and with services such as SonicLiving (brilliantly described as a 'digital-to-analog lifestyle converter') and TourFilter that notify you when some band in your library is coming to town, that's only going to grow more.

So there's big money in live shows (92% of the Rolling Stones' revenues comes from performance, not recorded music). Sadly for the labels, they don't get any of it. No wonder they're so against free music. It only helps the bands (and consumers)!

Here, from Wired's music blog, is a list of the top grossing touring bands of 2006.

1. Rolling Stones $150.6m
2. Tim McGraw and Faith Hill $132m
3. Rascal Flatts $110.5m
4. Madonna $96.8m
5. Barbara Streisand $95.8m
6. Kenny Chesney $90.1m
7. Celine Dion $85.2m
8. Bon Jovi $77.5m
9. Nickelback $74.1m
10. Dave Matthews Band $60.4m

"

(Via The Long Tail.)

I'm not sure the Rolling Stones are giving ANYTHING away - but it's an interesting issue for smaller scale artists and indies.

What Chris doesn't acknowledge is that many indie artists playing shows make as much or even more money from the CDs they sell at shows than they do off ticket prices from the shows themselves.

Plus - having CDs for sale can make the many "free" gigs indies find themselves playing while building a fan base into shows that can at least cover travel expenses.

I think the CD as a medium is slowly on it's way out. I personally don't even like the format anymore. I prefer to have music digitally rather than carry around loads of CDs.

The one thing I do miss with digital music is liner notes - but there are ways around that too.

But nothing beats the immediacy and portability of digital music. I'm obviously in the minority here - but I find myself buying MORE music in the digital domain.

It's so set up for impulse purchases. I've purchased music from more marginal artists in the past few years than I EVER have - because it was EASY. I just Clicked and the music was on my ipod within minutes.

If I had to go to the music store I'd never have bought half the shit I ended up buying.

I personally can't wait for the day when people can walk up after a show, toss me a few bucks - hand me their keychain memory stick and load up my latest music onto it. Even a recording of THAT night's show.