Fan Power

If you're a music executive of the old school, you're certainly anxious to say "good riddance" to 2005... yet you're also dreading 2006. Sales of CDs and digital albums fell 8% this year, echoing a long-term trend. Digital downloads -- while very strong and growing in popularity -- have not been enough to offset those losses.

However, if you're with an independent label or indie band, you're likely rejoicing in a very good year. The Internet and the iPod have combined to help expose music listeners to bands that they would never have heard of otherwise. A recent New York Times article notes:

In a world of broadband connections, 60-gigabyte MP3 players and custom playlists, consumers have perhaps more power than ever to indulge their curiosities beyond the music that is presented through the industry's established outlets, primarily radio stations and MTV.

"Fans are dictating," said John Janick, co-founder of Fueled by Ramen, the independent label in Tampa, Fla., whose roster includes underground acts like Panic! At the Disco and Cute Is What We Aim For. "It's not as easy to shove something down people's throats anymore and make them buy it. It's not even that they are smarter; they just have everything at their fingertips. They can go find something that's cool and different. They go tell people about it and it just starts spreading."

The article also states that the 100 most popular artists on the Rhapsody online music subscription service account for only 24% of the music listeners select, versus nearly half in more traditional music media. This clearly suggests that online music customers are more freely exploring new acts.

Of course, none of this is news to those who have been following the music industry over the past few years. Napster was simply a shot across the bow; the Internet's impact on music runs much deeper, from blogs where fans can write about their favorite groups, to chat rooms where buzz about a band can spread within minutes. Indie labels and bands take advantage of technology to release free MP3 files, and with lower overhead, can afford to take on untested artists and nurture them while the find their audience. Or, as is increasingly the case, while the audience finds them.

Fans are becoming an integral part of the music scene not only by spreading the word about new, exciting acts, but by using their digital devices to create their own sounds. The Numark iDJ Mixing Console allows anyone with two iPods to create their own mixes, and "open source radio station" KYOU in San Francisco plays podcasts submitted by listeners.

UPDATE: According to the web traffic metrics firm Hitwise, traffic to music download sites increased by 50% between this past December 24 and December 25, with the most amount of traffic going to iTunes. Hmmm, what could possibly have led to that?? Overall, traffic to online music sites was up 15% over Christmas 2004.

Source: BuzzMachine, Ubercool