Harvard Business Publishing

There are lots of Internet companies who have plans that rely on recorded music surviving. There are others that have figured out how to get money to record companies, but not musicians.

But I think they're all going the wrong way.

In the several thousand years of human history before Mr. Edison invented record music, if a harpsichord player wanted to make money, he either performed, sold sheet music, or found a prince to support him. Royalties came from royalty, and that was that.

All that has come since -- the wax cylinder, the LP, the 45, the reel-to-reel, the 8-Track, the cassette tape, CD, the MP1, 2 and 3, the iPod, the Zune, the ringtone, the DMCA, entertainment lawyers, David Geffen and Menudo -- have happened in the last 141 years. And most of that in the past 40.

But it's the last decade that's seen the erosion of all. The lawyers were able to knock out digital copying's first appearance in Napster, but BitTorrent and the simple fact that a digital file is impossible to stop from being copied (without preventing its use) has meant that songs are turning into a commodity -- at best. At worst, it may be the end of selling recorded music as a standalone product.

Yes, some people will always be willing to pay rather than copy music.

They're the same folks who donate money for shareware applications.

But the trend is going against that. David Pogue, the technology columnist for the New York Times, checked the pulse of college students and their feelings about "stealing" versus "copying," polling them on a number of scenarios and getting nothing but blank stares in return:

Finally, with mock exasperation, I said, "O.K., let's try one that's a little less complicated: You want a movie or an album. You don't want to pay for it. So you download it."

There it was: the bald-faced, worst-case example, without any nuance or mitigating factors whatsoever.

"Who thinks that might be wrong?"

Two hands out of 500.

This means uncertainty for my tiny startup, Jamseed, major companies like Time Warner, Sony and Universal, and it's hanging over the head of every musician who hasn't yet made enough money to retire.

Yet, there's no denying that people still love music and musicians and are willing to pay for something. The question is, what?

The answer for some is live performance. Take the Eagles as an example. Irving Azoff, their manager:

"I recently looked to see how much The Eagles have been paid in royalties from all their downloads at iTunes. The Eagles are one of the two or three best selling [recorded music] catalogs in the business. And we figured out that [total iTunes royalties] equaled about 45 minutes of one concert at any city in the world."

The same is likely true of sold-out Hannah Montana or Jonas Brothers shows. But the overall revenue in live performance is down 10%.

This is still better than the 25% decline in CD sales, but mega- shows clearly aren't the solution to get musicians, especially those just starting out, enough money to pursue their art.

Perhaps new and small bands can make a living from touring and doing live performances in backyards, clambakes and bar mitzvahs, with recorded music serving only as the marketing to get those gigs.

That certainly seems to be the trend, but it also appears to be a giant opportunity for a new business model that uses the Internet to find value from musicians, deliver it to fans, and get money back in the hands of the artist to start the virtuous cycle all over again.

We think we have the idea of how to use technology to let musicians do the equivalent of live performance on the Internet and grow their careers and their bank accounts through both live and virtual means.

But I'm already over my word limit for this week, so more on our idea and how it came about next time.

What do you think? Is recorded music's time over? Or are rumors of the demise of iTunes and CDs premature?