Not long ago, Wired Magazine published an article proclaiming that “Free Is the Future of Business.” And perhaps no industry has been affected more by the proliferation of “free” than the music business. So what should you do?

Give It All Away?
It’s clear that DRM (Digital Rights Management, otherwise known as “Copy Protection”) didn’t work.┬áSome experts would suggest that you should simply stop trying to sell your albums/MP3s. Instead, you should focus on using your recorded music as a tool to promote your live shows and merchandise. It’s an interesting concept, but I don’t think it works. The sale of recorded music remains an important component to your success, and taking away that potential revenue stream would only make it harder for you to succeed.

Pay What You Like?
This is an interesting concept, one that essentially allows your fans to pay what they can afford to for your recordings. You have to accept that some fans (perhaps many of them) will choose the “free” option, but it allows you (at the minimum) to collect an email address (and perhaps some other info) from each fan who downloads your music. Obviously, this model works best for artists like Radiohead, who have the reach and loyal following needed to turn a “pay what you like” release like In Rainbows into a huge success. But for smaller artists whose fans number in the hundreds, this model might not make it possible to recoup the cost of producing the album (much less make any money from its sales).

Stay The Course?
The existing model (presumably) exists for a reason, and if you can manage to collect $5-$10 from every fan who downloads your album (either directly from your website or one of the many digital online stores), you can carve out a living if you can build up a large enough fan base that’s willing to support you by paying the retail price for your music. This means, of course, that you’ll need to accept that many fans will instead choose the “free” route (downloading for free via a third-party file-sharing option) and that you won’t get the opportunity to connect with those fans and reach out to them on an ongoing basis (via an email newsletter, for example).

Band Letter Recommends…
I actually like a modified version of the “pay what you like” solution, where you offer the music for different prices depending upon the quality of the audio files. Here’s an example of how this would work:

  • CD-Quality Audio (FLAC/lossless): $9.99
  • High-Quality MP3 (320 kbps): $6.99
  • Medium-Quality MP3 (192 kbps): $3.99
  • Low-Quality MP3 (128 kbps): Free–>$1.99

For those super-loyal fans who care about quality (and want to support you), they’ll take the $9.99 or $6.99 option. And for the rest, offering lower-quality options at a lower price makes your music affordable to fans who are truly price/cost-sensitive. Is it a perfect solution? No, certainly not. But this option will enable you to achieve a favorable “average price” for all of the music that you sell. And realistically, the opportunity to grow you list – particularly if you give away the low-quality MP3 option for free – will enable you to gather the momentum needed to achieve far greater success with your next release.