No one’s arguing that the changes in the music industry haven’t tipped the scales in favor of the independents. Not only can you forge a path to success without the help of a label, you can choose from a variety of means to achieve it. But that leaves a number of questions on the table, including whether or not you ought to give your music away for free.

As an indie, CD and download sales can be a huge part of the equation in regard to your income. But building a rapport with new and existing fans and widening your reach by means of song giveaways is an easy and obvious way to get people to listen – and isn’t that ultimately what you’re trying to do?

For the indie artist, the scales seem to be tipping toward “yes!” on the question of free tracks. But before you go headlong into a giveaway frenzy, it’s worth listening to voices from both sides of the fence. And it’s always best to have a larger plan in mind. What follows are excerpts from a couple of books and blog posts that address some aspects of this debate. And we’re eager to see what comments come in from you, our intrepid readers. (I couldn’t help but insert a few of my own comments below).

(Do it!) Your Music Is Your Marketing
Excerpted from Music 3.0, Making Music in the Internet Age, by Bobby Owsinski.

The major marketing tool for an artist today is your music. It’s no longer the major product that the artist has to sell (although it still is a product), so it has to be used differently and thought of differently as a result.

Perhaps recorded music was never the product we were led to believe it was. With a vinyl record or CD, the container that holds the music is the product. While the songwriter always made money when a song was played on the radio, the artist never did, and the artist made only a small percentage of CD and vinyl sales (10-15% of wholesale, on average). [Keep in mind, he’s talking about the major/indie-label model here, not the indie/CD Baby model where you’re keeping all the proceeds from your gig sales and 60% or more of your retail sales.]

In fact, the artist made the most money on concert tickets and merchandise while touring. There was a cost involved in the manufacturing of the container that transported the music (physical material costs, artwork, and so on) that had to be recouped, as well as the production costs of the music. But if you look at music in terms of the advertising world, you see music in a different light.

If you’re selling a soap product, for instance, the production cost for a commercial to broadcast on television or the radio is trivial. It’s the total ad buy (the agency purchasing the radio or television time for the sponsor) where most of the money is spent. Even then, it’s considered part of the marketing budget of the product, which might be about 3% of total sales.

If you consider the music-production costs as part of the marketing budget in the same way as a national product, it takes on a whole new meaning. [That’s a mighty big leap, IMO.]. Since the music is considered the major marketing tool for an artist, it should be considered a free product, a giveaway, an enticement. Give it away on your website, place it on the Torrents for P2P, let your fans freely distribute it. It’s all okay. Since most millennials already feel that music should be free and have lived in a culture where that’s mostly so, don’t fight it. Go with the flow! Just as it was during the past 60 years, the real money in the music business is made elsewhere anyway. [Again, not necessarily for the indie artist.]

Further, just because you’re giving it away doesn’t mean that you can’t charge for it, either at the same time or at sometime in the future. There are numerous cases in which sales have actually decreased for an artist’s iTunes tracks when the free tracks have been eliminated.

One such musician is Corey Smith. After six years, Corey has built his gross revenue to about $4.2 million, and free music has been the basic building block of his tribe. You can buy his tracks on iTunes (he’s sold more than 400,000 so far), but when his management experimented by taking the free tracks down from his website, his iTunes sales went down as well! The free music Corey offers allows potential fans to try him out. If they email and ask for a song that’s not available for free, he just emails it back to them. He’s tending his tribe!

Another example of reaping the rewards for giving it away for free is the techno and electronica artist Moby, whose “Shot in the Back of the Head” became the best-selling iTunes track after he gave it away for free on his website for two months! Of course, you can charge for your music with enhanced products like box sets, compilations, special editions, and other value-added offerings. But the initial releases for an artist on any level (except for the already-established star) must be free to build a buzz.

(Don’t Do It!) The Value of Music
Excerpted from The Plain and Simple Guide to Music Publishing by Randall D. Wixen.

Music is a unique commodity with the ability to touch the soul or evoke an emotion or feeling. In a film, it might take minutes of dialogue or visual exposition to create a mood or tell a story, while music can instantly convey a mood and give cues to the director’s vision. Likewise, some sports – figure skating, for instance – would not be possible without music. Restaurants and stores set the ambiance for you by playing background music.

Yet in the music publishing industry, no day goes by without someone who recognizes the value of music nonetheless belittling its value, complaining about its cost, and trying to pay less than a fair fee. It is important that writers and publishers stand tall and recognize and respect the value of their own property. If they themselves fail to recognize the worth of their product, how can others be expected to see its worth and pay a reasonable price for it? [Mr. Wixen is speaking mostly about publishing with a focus on recognizable content in this section, but there are a lot of relevant points as they relate to you as artist devaluing your music.]

The media is full of articles about “file sharing” and how it hurts the music industry. What a nice euphemism, file sharing! Sharing is good, right? We are taught to share from the time we are little. But why does the media not do stories about the theft of intellectual property or copyright infringement? “File sharing” sounds so much more innocuous than “willful copyright infringement,” which, by the way, is a felony. If I steal your car, is that “ride sharing?” By spinning articles and headlines in this manner, the media contributes to the devaluation of songs and artists.

This is not a simple problem, with only one cause and one solution. While piracy and copyright theft each play an important role in this phenomenon, and while overpricing makes theft feel more justifiable, writers and publishers who lack enough self-respect to value their songs appropriately contribute to the problem.

“This Is a Low-Budget Production.” Almost every license request a music publisher receives includes somewhere in it, “This is a low-budget film, TV show, ad campaign, etc.” No one ever sends license requests that start off with, “This is a big-budget film, with two stars who are each getting $20 million and a director who won the Academy Award last year. We would like to use the ‘cherry’ of your catalog and pay you a really nice fee for doing so.” Budgets are low because people set them low. If there is no money in the music budget of a TV show, it is because the money they put into catering and hairdressing and makeup artists dwarfs the money allocated for music. Don’t stand for it! [Except of course, that if you turn down the opportunity, another act will step up and take it in a heartbeat.]

If you tried the same tactics in real life that are used in licensing music, you’d be laughed at. If you went into a Bentley dealership and said, “Gee, I sure like that $375,000 Azure, but I only have $30,000 to spend on a car, so do you think you could accept that?” you’d be shown the door along with some shoe leather. The idea that music has no intrinsic value leads to the proposal that “you should price your product according to our budget.” Don’t do it – especially if the song being inquired after is a standard, was a major hit, or has a lyrical or other connotation that is truly special. The situation may be different, though, if someone is inquiring about a generic punk song and the artist and song could be easily interchanged with many others. [Aha! That warrants a lot more consideration. Not to mention that none of your songs are generic, right?]

“It Will Be Good Exposure.” Once they get done telling you how low they’ve set their budget and how you have to conform to what they’ve predetermined, they will pull out the old “good exposure” argument. While the licensers themselves are only working for real dollars and maybe profit participation, they would like you to please take your compensation in the form of good exposure.

Vaudeville entertainer Sophie Tucker, so the story goes, was once offered a gig at far less than her normal fee. The reason she should do it, the argument went, was that it would be good exposure. “Exposure?” she is said to have replied. “Isn’t that what you die from?”

The worst cases of “licensing by exposure” lately seem to be in the realm of video-game music licensing. With games selling for $30 a pop and shipping 4-5 million units, you’d think they’d be able to spare more than $5,000 as a flat fee to license a song. Let’s do some made-up math.

Let’s see, that’s around $150 million in gross over-the-counter revenue, and maybe half filters back to the game developer. And paying $5,000 for each of 50 songs would be $250,000. And double that fee to clear the master recordings, so we’re up to $500,000 out of the $75 million. It doesn’t seem fair, does it, when music is so integral to the game? Why not at least pay a royalty instead of a flat fee? We’re just now starting to see meaningful royalties on video games in lieu of flat one-time buyouts.

Unfortunately, some potential users will not be willing or able to pay a fair fee. But for the long-term health of the music, it is important not to devalue the song by licensing it for whatever a user offers. Bentley would go out of business if its dealers negotiated car sales that way, and so will you.

(Do IT!) Free Music = Free Advertising = Smart Business
Excepted from blog posts by Dexter Bryant, Jr

Free music is free advertising. Think of free songs as product samples: the music-buying public samples your product at no cost. For those who don’t care for your music (no matter what the reason) they can easily sever their relationship with you and your product right then and there.

For the people who like your product, they can easily dig deeper and sample some more of your music to get a better feel for your identity and what your brand represents. From there they can decide whether their values align with yours and if they would like to continue their relationship with you. If you and a potential fan are birds of a feather (so to speak) then chances are they will be ready to forge a deeper bond with you and take your relationship to the next level.

Free music increases the potential for engagement with audiences because anyone can participate. Free eliminates risk and lowers the barrier to entry for consumers. If I may use a food-related metaphor, your songs are the appetizers that will lure audiences to dine with you for a full meal – free mixtapes/EPs/CDs/whatever. [Sounds good, but restaurants charge for appetizers, too!]

A full meal provides your audience with a clearer picture of your overall vision and your artistic identity. If people really enjoy your meal(s) then they will seek yet another option (or options) for consuming the deliciousness that you offer. These additional options for engagement with you include live music, merchandise, premium products, and any unique experiences that you can offer your hungry, eager fan base.

In short, free songs lure consumers to sample your free mixtapes, and free mixtapes are the bait to lure fans to spend money on live music, merchandise, deluxe edition mixtapes, and premium-priced music products and experiences. At every stage in this chain your product must gratify whatever desires your audience is seeking to fulfill, otherwise they may be inclined to discontinue their relationship with you. [This all speaks to having a larger plan in mind.]

Give the Customers What They Want. When a song or artist has captured someone’s interest enough that he or she seriously considers a purchase from that artist, many of us will download the music for free before we buy it. This allows us to become intimately familiar with that piece of music so we can be absolutely sure that buying it will be worthwhile. However, as you all know, downloading one simple song can sometimes be a more frustrating process than need be –navigating through treacherous, spam-infested illegal download sites and P2P software for just a few minutes of free music to put on your iPod.

Eliminate this pain point for your customers and you will endear yourself to them. Let your fans have the option of downloading for free or purchasing downloads from you and make it easy for people to download your music for free right from the same online destination they can buy it from: your website.

Free Is Not An Aberration; It's Basic Economics

March 02, 2010 - by Mike Masnick

A few folks have sent over Andrew Zolli's short opinion piece over at Newsweek, suggesting that free content can't possibly last. Normally, I wouldn't even bother with such an opinion piece, since similar ones (nearly identical ones) have been debunked a hundred times over already. But Zolli runs PopTech, which is considered one of the better conferences out there, and if he's spouting such nonsense, it deserves a response. Let's start with the basics:

Unfortunately, as we've seen since, for companies whose core product is content--like every newspaper and magazine you read, including this one--the idea that we Internet visionaries sold is a total load of crap. We persuaded executives to compete with themselves online by setting up Web sites that offered for free the same content their staffs labored so strenuously to produce and sell in their print publications. The theory was that companies were supposed to make back the money by, uh, "monetizing the attention economy," or some other similarly vaporous concept, that meant either charging customers later on, or selling advertisements, or both.

Compete with themselves, huh? First, this is hogwash. Most newspapers and magazines make the majority of their money from advertisements anyway, so putting their content out there for free is hardly taking away serious revenue. Newspaper subscription fees don't even cover the printing and delivery costs. Magazine subscriptions are just as cheap. You know all those "deals" that give you magazine subscriptions for next to nothing? That's because subscription revenue is meaningless. Ad revenue is what matters.

Second, being online doesn't mean they compete with themselves. If these magazines and newspapers didn't go online, then people would gradually come to ignore them, and favor the smarter publications that did go online, or which simply started online. Keeping yourself away from where people are is not a smart media strategy, but it seems to be the one Zolli is suggesting. So it was never "competing with themselves." It was always about understanding fundamental economics.

Supply and demand. If the supply is abundant, prices go down. That's not some techno-utopian "load of crap." It's what you learn if you pay attention in econ 101. If supply is effectively infinite, prices go to zero.

When I buy the dead-tree version of my local newspaper, I have no expectation that it should be free. If I pick it up and walk out of the coffee shop without paying, that's stealing. But when I walk upstairs to my office and log on to the Web site for the same paper, I feel a divine right to access the entirety of that paper--and 10 years of its archives--for free. Yet when I use another little computer invented more recently (Amazon's Kindle, say) to access that very same newspaper, I do pay. And I expect to pay. When the market floods this year with the iPad and its inevitable clones, I'll expect to pay on those as well.

You may expect to pay, but it won't be long until others recognize that it's more valuable to give away that content for free, and then those who still put up a paywall will find it quite difficult to compete.

In the long run, the first decade of the Web could come to be seen as a momentary aberration--an echo of '60s free culture when we all took the bad, digital acid.

Here, I'll let Jeff Sonderman respond to this one clearly and concisely:

The assertion is that free was clearly a mistake, an aberration, is usually not explained or backed up with any facts, it's just out there.

But any fair assessment of the facts shows that forcing payments for news is barely possible, and certainly not inevitable.

Begin with the fact that for the past two decades people largely have not paid for online news content. That's not an accident, as Zolli suggests. That's the status quo of a functioning online economic system. If someone says it's going to change, it's their burden to explain why. And so far, I don't hear any good reasons. The most common is that because the news industry is in financial trouble, consumers must bail them out by paying -- an insular, backwards view of the consumer relationship.

Along with the lack of evidence for "inevitability," there is significant evidence against it.

The spark of the whole paid-content discussion was the realization that display ads online aren't nearly as profitable as in print. The theory arose, if ads don't work we have to charge the user directly. Here's the problem: The same reason that the display ad model is failing is the reason paid content doesn't work -- there's no scarcity online. There are infinite other places to buy ads, consume content or even watch kitten videos, for free.