http://www.nytimes.com/2009/07/22/technology/internet/22music.html?_r=1&scp=6&sq=%20brad%20stone&st=cse

For those indie artists committed to bypassing a major label deal and doing their recording and marketing, Polyphonic is worth looking into. Formed by  music industry trio Adam Driscoll (Mama Group co-CEO), Terry McBride (Nettwerk CEO) and Brian Message (ATC & Courtyard), City Fund is the $20 million angel behind Polyphonic to help artists fund and further their careers.

The cool thing is, for a 50%-50% share in the profits (none have been consummated yet), indie artists can retain ownership of their master recording copyrights while Polyphonic gets the right to revenues from use of those copyrights during the contract term plus 10-years as well as a percentage of merch, touring rev, licensing and branding sponsorships. Polyphonic’s venture capital formula enables them to cover the bigger costs of recording and marketing an album with the currently favorable revenue stream from “live” sales channels. The ownership trio is leaning towards artists who have gone down the major label route, decided to go indie and have the potential to produce an ROI.

For me, the trend away from the major music labels (Sony Music, Warner Music, EMI, Universal Music) to indie-pendent music entrepreneurship is part of the growing recognition of SMB’s (small-to-medium-size businesses of all types) ability not only to restore confidence in an ethical capitalist model but to rejuvenate an economy from the grass roots up. As indie artists become more and more recognized as investment-worthy business enterprises, we’ll see more venture capitalists emerge like Marc Geiger’s not-yet-formally-announced Self Serve. On another level, the majors are bending their backs to attract indie artists by replacing  their “360 (we get a piece of everything) deals” with compromises around things like control and ownership of the masters in exchange for artists assuming more of the risk. The least common denominator is that indie artists are calling more and more of their own shots as businesspersons and being respected for it…and I’m digging it.

If you’re an active “free” listener on Pandora be prepared to be hit with a $.99 fee to go beyond 40-hours which will give you access through the remainder of the month.

Here’s a simplified look at how the per song/listener rates shake out:

Proposed CRB per song/listener rate: $0.19 by 2010

Under new deal:

Large webcasters ($1.25 M/year):  $0.14  by 2015

Subscriber services: capped at $0.25 by 2015

If you’re used to listening to music online, it’s safe to say your service will be there for you for a while. Maybe this period of relief will enable Pandora to focus on alternatives to its required Amazon Advantage Program fee to artists for getting their music heard.

But, it’s the $29.95 payment to join the Amazon Advantage Program now required by Pandora from artists to give their music exposure that has many fearing a new wave of MySpace-like back turning. If you can swim through the maelstrom of expressed discontent there is actually a rationale for Pandora’s decision as well as an alternate approach that could resolve the issue for both indies and Pandora.

I am far from excusing Pandora’s suddenly baiting-and switching from free access to the required $29.95 plus CD and zebra stripe. But, I believe the decision is based on issues a lot of social sites are currently faced with, namely, coming to terms with how to monetize their vision. In Pandora’s case, it’s “free” model cannot financially support dependable buy-links, accurate meta-data and a well-orchestrated submission process. But, even the Pandora gray matters have to see that the $29.95 solution is drastic and limiting. Why not create a pay-to-Pandora fee to help remunerate its costs instead of having to join the Amazon Advantage Program. Offer free limited tracks exposure through an MP3 gateway (the Amazon MP3 store includes art, zebra stripe, buy-link and meta-data) as the first step in a tiered approach of graduated service fees for selling album-equivalent MP3 tracks up to a full CD.

And,a final word to all those non-artist critics asserting that indie artists should stop looking for a free ride: there are many indie bands struggling financially to get their music careers off the ground who would gladly accept your checks to underwrite their CD replication costs so they can stop frying dog food to eat. Instead of listening to royalty-avoided ripped-off music in the car your parents bought you, get your ass on a tour bus for a month living gig to gig pooling your door take to pay for the tranny repair. It’s all about the music. Bands will and have always found ways to pay for their music to be heard. Just don’t tell ‘em its free one day and “not” the next.

At a time when indie artists are looking for design improvements, a better music player, the ability to embed tour information and more, MySpace has been caught up in shmoozing the Big 4 to solidify its “we’re the biggest” bragging rights. It relegated the very people who grew the site, the indie artists and labels,  to being widgets in a stats-for-sale corporate come-on. The economy is not responsible for MySpace’s reprehensible back-turning.

That said, I’ll be the first to acknowledge MySpace’s role in helping indie artists and labels increase their online visibility.  It will remain an historic icon for doing so. But, to let non-music “buddy bandwidth” sites get the edge they’re getting, not just in terms of visitors  (Facebook surpassed MySpace in total unique visitors last month) but  in their exploration of the latest entertainment-related technological advances and marketing strategies to diversify their offerings and grab more music-based market share, underscores how MySpace has not only been asleep at the wheel but it’s been driving under the influence of self-intoxication.

Indie artists tallying up their recording, mixing, mastering, graphic design, replication, distribution and promotional expenses for a CD release, especially a first one, need to take a hard look at the over-the-cliff ‘08 numbers and explore alternate revenue streams for supporting their music “business.” Opportunities from merch, mobile and media like TV need to become part of a bigger profitability strategy.  A solid business plan sets the stage for good business decisions.