Rocking the Jolly Roger

"Downloading on the Internet is good for the artists, though not necessarily the record companies," McGuinn said in a recent telephone interview. "But record companies aren't always good for artists, either. The record companies say, well, we'll lend you some money to make a record, but we get to keep all the profit. It's like Tom Petty's song, "The Last DJ": "You get to be famous, and I get to be rich."

Although McGuinn says he doesn't have the data to determine a direct correlation between FolkDen.com downloads and Limited Edition sales, he says he picked some of the songs for the record based on their popularity as downloads. Encouraged by robust sales as well as glowing reviews, McGuinn, who recorded most of Limited Edition using a Dell laptop in his own home studio, is now planning to market a CD-quality boxed set of the more than 100 songs otherwise available for free on FolkDen.com.

McGuinn says his only surprise has been how easy it is to be his own record company, commenting: "You record, mix and master it, send it off to the pressing plant, and it comes back with a real bar code on the package. It gets reviewed in Rolling Stone magazine and sells on Amazon.com. I mean, you're in business, and it makes it feel like, wow, why did I do it any other way?"

Sales and marketing innovation based on an enlightened view of piracy is not the exclusive domain of the artists, of course. Wilco's financial success was based on a subsequent record deal with Nonesuch, and Prince's strategic subversion was premised on distribution via Columbia Records. A new record label called Team Love, meanwhile, gives its customers a chance to download -- for free -- every track it sells on CD. Explains Nate Krenkel, Team Love's founder, in BusinessWeek: "There's something exponential going on. The more music that's downloaded, the more it sells."

A record label called ArtistShare takes the concept of downloading a step further by offering its customers access to accoutrements of the creative process itself -- including rehearsal sessions, musical scores, and artist interviews. In some cases, customers are spending three times the cost of a CD alone on such extras. The approach has attracted artists such as jazz great Jim Hall and Trey Anastasio of Phish fame.

Yet another new label, called Magnatune, is connecting the dots between eBay and the record business with a model in which it's up to the consumer to decide whether to listen to a record without downloading it or buying it (kind of like radio). If the consumer decides to buy, the suggested price per album is $8, but consumers can pay less (but no less than $5) -- or more -- if they want. Incredibly, consumers, on average, pay more than the suggested price.

Why? "Consumers want to support the artists," John Buckman, Magnatune's ceo explained to Kevin Maney in USA Today. For some strange reason, it does seem that consumers don't necessarily feel the same love for the record companies that would just as soon have them arrested.

Remember what David Ogilvy said? He said a lot of very smart things, but this is one of my favorites: "The consumer is not an idiot. She is your wife." Were David Ogilvy alive to witness the present-day collision of piracy and consumerism, he might have added: "The consumer is not a criminal, he is your consumer."

Aye, we are all napsters now.

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