Creating a Merit-Based Music Economy: Compulsory or Blanket Licensing for Interactive Subscription Services
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C. How Mass Customization Could Empower Both Artists and Fans

Right now, both business alternatives for musical artists are flawed. In the star system, the Power Pillars of mass promotion and distribution create a market lock with high, risky barriers to entry. In the grass-roots market, the special (often arbitrary) constraints of small-venue gigging distort and limit productivity.

In both cases, a great deal of market friction stands in the way of accurately matching artists and their audiences. The marketplace heavily skews the distribution and volume of apparent demand, so the actual audience demand is not well reflected by measured "market demand."

In order to allow musical culture to more accurately reflect audience demand, we need a much more fluid marketplace. Artists that appeal to moderate-sized audiences need to reach them inexpensively over a wide geographic range, and collect reasonable revenue from them.

The Internet presents an unprecedented opportunity for this to happen, if properly designed. However, there is no guarantee that it will happen. The Internet has many capabilities, including systems like Free P2P, not all of which contribute to the particular kind of system that can empower grass roots artists in this way.

There is a way to design an online system that I think provides the best potential for this empowerment. It contains a full catalog of all recorded music in a fully interactive flat-fee subscription service, it ensures fair payments to artists on the basis of use, and it provides methods of personally targeted recommendations in a radio-like experience without the narrow bottlenecks of mass media.

In short, it applies a "mass customization" model to a music service, fulfilling the roles of both broadcast radio and CDs in a single, integrated service that provides added value that is not removed from the system as it is used. It is one particular variety of what many people have called the "Celestial Jukebox" model. Here is how this version works, and how it uniquely empowers grass roots artists.

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