What is becoming a common theme amongst every traditional business that is affected by the internet. Middlemen are replaced by the open and accessible framework of the internet. The press and the business of journalism are being transformed (just watch CNN anchors read tweets on-air).
A recent paper by economist Joel Waldfogel shows the results of his study around the music industry. The claims made by the industry around the internet is that piracy is destroying culture and music itself. Loss of sales by major record companies have always been greatly exaggerated but other claims are suspect as well.
The growing trend is that mega music vendors are down, but the true question is whether there is less music available. Independant music labels using the power of the internet can make good music flourish much easier. Youtube and yes torrent sites make it easier to get music into the hands of more people. In the end getting good music to the masses is a key measure.Artists can then capitalize on concert revenue and merchandise and smaller labels can function on smaller revenues.
The main question when i speak to artists is about the concept of an album and whether that concept is even relevant in the current climate for the music industry. An artist used to release a few singles to draw people in to experience the album as a whole. Now it's all about singles. An artist is better off releasing just 4 hit singles versus 1 or 2 hits and producing an album with 12-15 tracks.
The large machinery of a mega label is no longer necessary to get music out to people, nor for an artist to scale and be successful. The internet replaces much of the massive logistics of printing and distributing media, advertising to get recognition through the open framework of file sharing and social media.
Despite Piracy music is still alive