Let me take you back a dozen years, to a time when I thought my music would change the world. See, I had beaten the odds. Having outgrown garage-band success, my band landed a record deal with Sony's(NYSE: SNE) Columbia label.

We released a pair of singles, each charting nicely on Billboard's dance chart. We gigged. We networked. Old girlfriends called to apologize. We sold 35,000 singles, and Sony rewarded us with a healthy advance toward our full-length CD debut.

By now your eyes have crept up to the byline to realize you've never heard of me. You scan your record collection, only to find that Paris By Air just isn't there. I took you back a dozen years, but if you work the math, you might remember the recession of 1990. With money tight and our music unproven, Sony showed us the door.

We didn't give up. We were songwriting studio junkies, building up a musical library far removed from the music revolution we figured we would've started by now. We were also bookworms, amassing six college degrees between the three of us. Despite some radio airplay of a self-released single and a decent release in Europe a few years later, we were smart enough to see the writing on the wall. The dream was over. It was time to wake up and face the real world.

I want my MP3
In 1998, a guitarist friend, who had lent his handiwork to our second single, emailed me guitar solo outtakes from those sessions. The file was in the MP3 format. Having no idea how to play the file, it sat dormant in my hard drive for months.

The magnitude of the MP3 didn't hit me at first. MP3, short for Motion Picture Experts Group-1, Audio Layer 3, is a compression technology that stores near-CD-quality audio tracks into a file a fraction of its original size. With the compact files, streaming and exchanging songs was a breeze. That breeze became a hurricane.

The hit parade
For the longest time, I sat on dozens of recordings, figuring that making copies for family and friends was about as far as the Paris By Air legacy would go. But then online MP3 sites such as BeSonic and Ampcast offered the independent artist the ultimate in free exposure. Bands, singers, and songwriters flocked to the sites to upload their encoded MP3 tunes. In return, they created the ultimate demo tape, accessible to anyone, anywhere an Internet connection and soundcard could be found.

With venture capitalists cupping their hands before the Kool-Aid ladle, online music sites were generously financed. It was the indie artist who scored the ultimate hit parade, when sites such as IUMA and MP3.com made the free exposure even more lucrative by paying the unsigned artists based on the downloads generated.

Paris By Air was born again. We set up a free artist page on MP3.com and redirected our dormant ParisByAir.com domain to our MP3.com homestead. With the ability to painlessly create CDs based on our uploads, we became both the performers and the record label in about the time it takes to click "Submit."

Our music lives on. We have generated more than 360,000 plays on the site, along with selling nearly 150 CDs. Opportunities have come with the visibility, as our music has been licensed for everything from independent films to television shows. We're not alone. MP3.com now features 1.2 million songs from more than 200,000 artists. While economic realities have shut down many sites and forced others to temper recruiting efforts, the indie spirit is alive and well -- even if it's now often in the body of the majors.

Pharaoh. Faucet. Majors.
The dot-com craze subsidized the early losses of online music distributors. The burst of the dot-com bubble created the mother of all fire sales. Media companies picked out the best for pennies on the frenzied dollar, as Yahoo!(Nasdaq: YHOO) acquired Launch, while Videndi Universal(NYSE: V) bought MP3.com and Emusic. Smaller sites such as ArtistLaunch, JavaMusic, and Ampcast were forced to strip down artist royalties and charge annual dues. The indie music revolution sobered up, but the majors better take notes.

Recently, Vivendi announced it would slash its record promoter fees by half. With sluggish sales in the realm of pre-recorded music forcing all five major labels to rethink their lavish budgets and recording contracts, are the platinum-coated days over?

The one-Mann band
Unsigned artists can take heart in the story of Aimee Mann. The crafty singer and songwriter who found major label success in the 1980s with her band 'Til Tuesday, only to tangle with record executives during the solo career that followed, is doing just fine on her own. She relishes the fact that, for each CD she sells independently, she can earn as much as $8 over the spare change she would make with a major label. The unshackled will also be quick to sing the praises of having complete creative control.

If the music industry takes a closer look at Aimee, it might see its own future. Staring at a new playing field in which homers will be harder to come by, it's time to discover the long-lost art of the bunt single. Taking smaller risks on smaller artists, aiming for grassroots pay dirt with localized promotion, the labels would profit from the concentrated efforts of the nationally obscure without losing the mother lode to peer-to-peer trading networks. Radio stations and CD retailers will take on a more local flavor. You don't believe me? Just wait, watch, and listen.         

The success of Fox's American Idol notwithstanding, there's a good argument to be made that the days of musicians as monster celebrities have passed. One can draw parallels to EMI's $28 million buyout of Mariah Carey's contract from the bubble-related goodwill write-downs taking place in the corporate space today.

Like clipped vinyl in the cutout bin, the musical markdowns will be permanent. The record industry will have little choice but to take a weed whacker to its overhead by trimming artist development, promotion, and distribution costs. The Internet will play a major role in all three solutions. The legions of indie artists with an established online presence, who mope about the state of commercial radio "not getting" their music, probably have no idea they're sitting right on the "X" that marks the majors' ultimate destination.

A few months ago, I was offered the opportunity to be a member of the indie-geared 1Sound.com founding group. At a time when online music-distributor sites were either scaling back or closing their doors, it was an easy proposition to accept. As a free site that will begin vetting for quality indie music later this year, it's just another step toward the trend I see emerging in the industry.

Both Sirius Satellite Radio(Nasdaq: SIRI) and XM Satellite Radio(Nasdaq: XMSR) have channels devoted to unsigned artists. The major labels are reluctant to take on the Whitney Houston-sized contracts of the past, coming to grips with the fact that winning the small battles is the new way to win the war. Independent artists are moving their music online. They're learning how to sharpen the tools of Web-based promotion and delivery.

If you put it all together, it might sound more like a medley than a melody. But give all the instruments time to sync, and you'll know the score. The sound of music is changing. Turn it up. And while you're at it, don't write off Paris By Air just yet.

Other articles in this series:

Rick Aristotle Munarriz really has recorded nearly 100 songs, free for the taking at ParisByAir.com. He's also a member of the founding group of 1Sound.com. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.