Collaborative Consumption describes the rapid explosion in traditional sharing, bartering, lending, trading, renting, gifting, and swapping redefined through technology and peer communities. (collaborativeconsumption.com)

Short on time? Here’s the ultra-hip 2-min version:

Graphic: VirtualMusictv/Flickr

When it comes to music, value is in the ear of the listener.

Value is always decided by the market. It’s a fundamental economics principle that Universal Music Group and the RIAA can’t seem to grasp—at least based on their latest propaganda initiative against music piracy in the US via Facebook, called Music Rights Now.

The lawsuits may have stopped, but that doesn’t mean the music industry and its trade group the RIAA has toned down its crusade against unsanctioned peer-to-peer file-sharing. Negotiations, label and lobbying sources say, have been underway with Internet service providers for more than a year, as the U.S. music industry is pushing ISPs to follow the leads of many European countries in adopting policies that limit or curtail Web access of those who are deemed as infringing users. Today, Universal Music Group Distribution took its fight online, launching a Facebook page in conjunction with the RIAA to promote the issue. (Universal goes social with ISP campaign | LA Times)

You can’t break nature. Beauty is in the eye of the beholder. When it comes to music, value is in the ear of the listener—not any record company. Think about this: would you pay $400 for a Big Mac? Of course not. McDonalds knows this and they’ve based their prices to be competitive in the market.

Do we really want the music industry controlling our ISP’s? The group Music Rights Now would be more appropriately named Denying Reality Now. In time the laws will change because the market demands it. Instead of fighting piracy we should be finding ways to legalize/monetize its behavior.
[see An Infinite Freeway For Music Business?]

1. High-Octane Friend-Filtered Content

The voices of consumessegers are magnified by the network. Facebook’s upgraded social plugins (e.g. the epic like button integration) are putting fan-driven music into overdrive by making it easier to share your likes with your friends. Take a look at likebutton.me when you’re logged into Facebook and you’ll find an aggregation of your friends likes. Ask yourself, what is it that people share on the web? The answer is better content. Whether it’s entertainment or information, people tend to share the content that they regard as better a.k.a. worth sharing. A lot of shared content comes from mainstream sources, however—like unknown awesome bands—there is plenty of awesome less-discovered content. With the new like button integration, Facebook is changing the mentality around sharing—it’s as easy as liking now. They’ve made it extremely easy to share. The outcome of this is higher-octane friend-filtered content which should help us discover the best content out there.

2. Different Strokes For Different Folks

For some, music is a career, for others it’s recreation, and many players feel stuck in the middle of the spectrum like a pedestrian on a highway median. The overall music scene is expanding and becoming more diverse genre-wise. There’s enough lanes for a steady flow, and that stuck feeling is mostly mental. Music selection is heading towards infinity. Listeners want what listeners want—each has their own taste—but they have to be exposed to it first (unless they decide to create it instead). Is there maximum amount of creativity in the world? Hell no! The roadblocks of physical world don’t always exist on the web. They are a mirage. But everyone sees from a different perspective. When you stop squinting and open your eyes wide, do you see the open road, of a traffic jam?

3. Fans Behind The Wheel

It all starts with a few people who believe in something to the point that they are motivated to share it with their friends. These fans create ignition sparks by influencing their friends. Who’s controlling the music-industry steering wheel now? It’s the fans who dominate social media and communication.

4. Where’s The Free Petrol?

Chris Anderson in 2008: From the consumer’s perspective, though, there is a huge difference between cheap and free. Give a product away and it can go viral. Charge a single cent for it and you’re in an entirely different business, one of clawing and scratching for every customer. The psychology of “free” is powerful indeed, as any marketer will tell you. (Free! Why $0.00 Is the Future of Business)

7:30 Kevin Breuner: I find myself kind of caught in the middle of that being an artist myself who is making music and putting it out there for sale. but at the same time, someone passes me a band that I’ve never heard of, and technically it might be illegal to download the tracks. But at the same time I’m thinking I wasn’t going to buy it anyway, it didn’t cost them anything to get me this copy, and I might actually show up to a show because of it. (CDBaby Podcast #086)

8:00 Chris Anderson: Every band that puts there music on MySpace, which is to say every band, is on some level volunteering to give their music away for free in one form to drive demand for the others. (CDBaby Podcast #086)

9:10 Chris Anderson: Free music has been part of music for as long as there’s been radio. Radio is free music. No one—I don’t know of anyone—who objects to their music being played on radio, even though they may often get no money from that, because they understand the marketing value. (CDBaby Podcast #086)

Kevin Breuner in 2009: The future of music lies completely within the artist’s hands, period. If they want to focus on selling recorded music and their fan base will continue to buy it, selling music will be a big revenue stream for them. If they are fantastic live and want to give away a track to entice people to come to a show, then live shows may be their big revenue stream, but it’s all up to the artist and what their fan base will allow. The future of the music business is NOT in the hands of companies who dream up business models that artist should follow. The future is NOT free music because some guy with a degree and years working in the industry says so. The business plays by the artist’s rules now, and that scares the pants off the gatekeepers that used to make a living deciding what the artists could do. (Music will be free + Touring is where the money is = BS!)

Digital freebies are essentially a free source of advertising, but only if there’s a method behind it. For example, there’s giving away an mp3 in exchange for an email address. Why’s email important? Ian Rogers, the CEO of Topspin Media (an avant-garde service for midstream–mainstream musicians), reported that close to one-third of their artists’ revenue is driven through email alone and stressed the importance of “being where the fans are.” But here’s a question—does a single fan today account for more, or less, net revenue in the long run? What free tactics do you have packed in your trunk?

“Know what your problem is, Shapiro? It’s that you just have this really shitty way of looking at things, ya know? I don’t have that problem. I just look at the dopeness. But you, it’s like you just look at the wackness, ya know?” (The Wackness)

So you consider music as your profession? Then whether you like it or not, your band is your brand. You may think you are defined by your style and sound, but nowadays your are ultimately defined by your fans and their perception of you. When you look in the social-media mirror your public face should be a reflection of your private face [see discussion]. If you cannot handle being true to your fans by putting yourself out there genuinely then your fans will see right through you. And if you’re not providing some form of free content, then you will be invisible. Music fans have lots of choices.

Now more than ever the essential component of your business is you. Use the tools that are available to go where your fans are—social media—and deliver true customer service (the most important aspect in business) by responding to all comments and messages from your fan base. In doing these actions you’ll be building all the promotional material that you’ll need, and you’ll be forming a community around your brand. Remember to focus on the dopeness that most of your costs as a musician have evaporated and you have your fans at your fingertips. Your true fans will support your shows and purchase from you as a thank you. Gary Vaynerchuk describes the thank you economy:

[homepage thumbnail photo: Flickr/DistortedSmile]

Part 2: Musicians, Brands, Endorsements, and Partnerships