Make Music, Get Paid

Being an unsigned artist just got a little more lucrative.

Last.fm, the popular music streaming site that was acquired by CBS (NYSE: CBS  ) last year, is opening up its pocketbook for independent musicians. Its new Artist Royalty Program will pay unsigned music makers who upload their music to the site, generally between 10% and 30% of the related ad revenue.

It's a great move, since it has the viral splendor of getting artists recommending the Last.fm site to their fans.

"Revolutionary Program Marks the First Time Artists Not Affiliated With a Label or Collecting Agency Can Collect Revenue Direct from a Free Streaming Music Site," reads yesterday's press release.

Technically, that's not entirely true. Sites like MP3.com, Ampcast, and IUMA were streaming tunes and compensating the indie artists that populated those websites with fresh tracks. That died along with the dot-com bubble, as sites like MP3.com weren't turning a profit. They were using venture capital seed money or IPO proceeds as monetary incentives to make their sites popular. Now that Web monetization strategies have caught up with the costs of delivering chunky music files, Last.fm is ready to dust off a dot-com blast from the past.

It's fitting that CBS just finished acquiring CNET Networks. It was CNET that bought the MP3.com domain, after the original MP3.com buckled under legal pressure. CBS also used to be a major music label, before selling its Columbia and Epic labels to Sony (NYSE: SNE  ) .

As you can imagine, Last.fm's move won't sit well with major record labels like EMI and Warner Music Group (NYSE: WMG  ) . They need artists to believe that success isn't possible unless they sign a record deal with a major label. Now you have Last.fm offering fiscal encouragement to go it alone.

It's not the only way for unsigned bands to fill their tip jars for free in cyberspace. They can upload music videos to Google's (Nasdaq: GOOG  ) YouTube, and apply to join the video-sharing site's Partners revenue-sharing program. They can set up a page on News Corp.'s (NYSE: NWS  ) MySpace, and then sell digital downloads directly on their profile page.

The world is changing, one virtual music fan at a time. It's about time.

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Longtime Fool contributor Rick Munarriz had his band once signed to a major label. Columbia, actually, just as CBS was handing it over to Sony. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On July 12, 2008, at 12:06 PM, zendotavern wrote:

    Regarding your article "Make Music, Get Paid":

    Perhaps I do not understand the "revolutionary" aspect of business model offered by Last.fm. As an indie singer/songwriter/ producer, and private investor I have been associated with CDBaby.com since 2005 - not only do they handle a physical distribution of ones music, they also distribute if desired to iTunes and, to date forty five other digital sites : each month I am sent a check to my bank account for CDs and downloads or even listens purchased. Last count I was told CD Baby has some 150,000 independent musicians and they supplied almost 50% of the independent music available on iTunes.

    What CD Baby does not do is promote and I am most interested in how Last.fm can help get my music to more ears either through their RoyaltyProgram or by linking listeners to my website.

    best regards,

    Biff Cuthbert

    www.zendotavern.com

    Tisa,LLC/BluleTongueMusic

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