In 1993, the band Cracker released a terrific album called Kerosene Hat - the opening track, "Low," was an alternative radio staple - and I became a fan. I remember checking out the group's message board on America Online at the time and being pleasantly surprised to find the two founding members - David Lowery and Johnny Hickman - making frequent postings. Lowery, who had earlier been in Camper Van Beethoven, turned out to be one of the more tech-savvy rock musicians. He'd been trained as a mathematician and was as adept with computers as he was with guitars. When the Web came along, he and his bands soon had a fairly sophisticated network of sites, hosting fan conversations, selling music, promoting gigs. In addition to playing, Lowery runs an indie label, operates a recording studio, produces records for other bands, teaches music finance at the University of Georgia, and is married to a concert promoter. He knows the business, and much of his career has been spent fighting with traditional record companies.

That's all by way of background to a remarkable talk that Lowery gave in February at the SF MusicTech Summit, a transcript of which has been posted at The Trichordist (thanks to Slashdot for the pointer). Lowery offers a heartfelt and incisive critique of the effects of the internet and, in particular, the big tech companies that now act as aggregators and mediators of music, a critique that dismantles the starry-eyed assumption that the net has liberated musicians from servitude to record companies. The net, he argues, has merely replaced the Old Boss with a New Boss, and, as it turns out, the New Boss is happy to skim money from the music business without investing any capital or sharing any risk with musicians. The starving artist is hungrier than ever.

When Napster came along, Lowery says, he immediately understood that bands would "lose sales to large-scale sharing" but he was nevertheless optimistic that "through more efficient distribution systems and disintermediation we artists would net more":

So like many other artists I embraced the new paradigm and waited for the flow of revenue to the artists to increase. It never did. In fact everywhere I look the trend seemed to be negative. Less money for touring. Less money for recording. Less money for promotion and publicity. The old days of the evil record labels started to seem less bad. It started to seem downright rosy ...

Was the old record label system better? Sadly I think the answer turns out to be yes. Things are worse. This was not really what I was expecting. I’d be very happy to be proved wrong. I mean it’s hard for me to sing the praises of the major labels. I’ve been in legal disputes with two of the three remaining major labels. But sadly I think I’m right. And the reason is quite unexpected. It’s seems the Bad Old Major Record Labels “accidentally” shared too much revenue and capital through their system of advances. Also the labels ”accidentally” assumed most of the risk. This is contrasted with the new digital distribution system where some of the biggest players assume almost no risk and share zero capital.

Lowery also points out how the centralization of traffic at massive sites like Facebook and YouTube has in recent years made it even harder for musicians to make a living. The big sites have actually been a force for re-intermediation, stealing visitors (and sales) away from band sites:

Facebook, YouTube and Twitter ate our web traffic. It started with Myspace and got worse when Facebook added band pages. Somewhere around 2008 every artist I know experienced a dramatic collapse in traffic to their websites. The Internet seems to have a tendency towards monopoly. All those social interactions that were happening on artists' websites aggregated on Facebook. Facebook pages made many bands' community pages irrelevant. ...

Most artists I know now mostly use their websites to manage their Facebook and Twitter presence. There are band-oriented [content management] services that automatically integrate with Facebook and Twitter. They turn your website news, tour dates and blog posts into Facebook events, Facebook posts and Tweets. Most websites function more as a backend control panel for your web presence. Yes, some of us sell swag and downloads on our websites but unless you are a really really popular band, or you have a major record label that can help you promote your website, it’s generally a few hundred of the most ardent fans that ever spend anytime on a band's website ...

A similar situation occurs with the process of selling music online. Our fans already have an iTunes account. They already have a credit card on file with Amazon. That small hassle of getting your credit card out of your wallet to buy music directly from the artist website is a giant hurdle that most people will not jump over.

It's a long piece, and if you're interested in the unexpected economic effects of the net on creative professions, you owe it to yourself to read it in full, whatever your views are. I'll just share a little bit more from the end:

I think I’ve demonstrated how important it was to the old system that record labels shared risk and invested capital in the creation of music. And that by doing this the record labels “accidentally” shared more revenue with the artists. But I’ve yet to explain why it is that The New Boss refuses to share risk and invest in content creation. I mean the old record labels eventually saw that it was in their long-term interest to do so.

My only explanation is that there is just something fundamentally wrong with how many in the tech industry look at the world. They are deluded somehow. Freaks. Taking no risk and paying nothing to the content creators is built into the collective psyche of the Tech industry. They do not value content. They only see THEIR services as valuable. They are the Masters of the Universe. They bring all that is good. Content magically appears on their blessed networks. ...

Not only is the New Boss worse than the Old Boss. The New Boss creeps me out.

http://www.roughtype.com/2012/05/screenage_wasteland.html