Many emerging artists see less value in signing to a label and instead choose to steer clear of entangling contractual obligations. Finally, established artists are choosing not to renew their label contracts at a record pace, realizing that the brand they have developed can be leveraged without a label. All of these situations benefit greatly from direct-to-fan initiatives.

Illegal Downloads are here to Stay, but that Doesn’t Mean we Won’t Pay
In 2008, the Guardian [UK] reported that illegal downloading is here to stay and it was suggested, in response to an industry sanctioned study in the UK, that the music industry “should embrace illegal websites”. A year later another report stated: Piracy Has Become Mainstream, Studies Show.

Yet the continued response was their ongoing lawsuits targeting users of P2P services and torrent sites. The industry has sued students, children, single mothers, grandparents and even dead people [interestingly, there have been no lawsuits against the children of major label executives who have stated they make use of the same services].

I wonder if children of label execs ever spend money on music? If they were the typical music pirate they would be one of the music industry`s best customers as study after study over time has shown:

• Online file sharers ‘buy more music’ (UK, 2005)
• Study: P2P users buy more music (Canada, 2006)
• Illegal downloaders ‘spend the most on music’, says poll (2009, UK)
• Study finds pirates 10 times more likely to buy music (Norway, 2009)
• Pirates Are The Music Industry’s Most Valuable Customers (2010, UK)
• Further, in 2008 Wired ran a story on a study noting: 80 Percent of P2P Users Would Pay For It.

Yet the industry continues to attack its best customers at their own expense and that of artists they supposedly represent. It is no wonder that artists are going direct-to-fans in this light, as labels continue to screw them as well:

Kid Rock Boycotts iTunes, Champions P2P
The digital music revolution has been compromised, according to Kid Rock, because digital music stores and record labels still manage to hoard the lion’s share of music revenue.

Fans are becoming more aligned with the artists and as Glenn Peoples, a music industry analyst at Billboard, noted: They [music fans] view the label-artist system as unfair, and fairness is a big part of consumer spending.

In light of a willingness to pay, pirates already being big spenders for the industry, and new connections with artists thanks to the internet and social media – crowdfunding is a perfect opportunity to tie it all together with additional benefits for the fan.

For fans, IOUmusic allows them to embrace perfect price discrimination: where everyone pays exactly what the good is worth to them – no more $10 for a digital copy of an album. We also believe it is more efficient to tap into the way such fans acquire music now and seek payment, than to try and get them to change their habits in how they acquire music and also seek payment.

As Thom Hartmann wrote in “Cracking the Code”:

People will always be receptive to new options, new tools, and new behaviors. It’s always more effective to say “Start this”, than to say, “Stop that”.

Crowdfunding Works
Not only is the time right, but it works. Below are just a few examples of artists reaching out directly to their fans and being rewarded for doing so. [NOTE: none of these artists used, knows of or otherwise endorses IOUmusic! They are simply examples of artists successfully crowdfunding, or releasing pay-what-you-want albums, with their fans]: