Trent Reznor is showing show business how it's done digitally

Trent Reznor is busy demonstrating how a bankable artist can go independent, give away music for free, and still make a mint. Though he initially expressed concern over an album he produced for hip-hopper Saul Williams that was released as a "pay what you will" download, he's changed his mind and now considers it a success — mostly because Williams made more money even with only twenty percent of fans paying for the album than he ever did at a label. And maybe more importantly, far more people heard the music. As for Reznor? His own giveaway of his latest album did pretty well in the marketplace as well, with a limited-edition box set garnering $750,000 and half a million CDs sold. So what, exactly, is the problem with the music business? As usual, greedy labels.

With Douglas Merrill's hiring of Second Life cofounder Cory Ondrejka at EMI, at least one label is wising up to the fact that making music more difficult to buy and find is no way to compete with online file sharing. Say what you will about Second Life, but within the context of the virtual world it was very easy to participate in the economy (maybe even a little too easy) and buy and sell ephemeral, digital goods.

Now that labels have realized that their core business will no longer be moving units through outlets like the now-defunct Tower Records, they're moving towards "360 degree" deals that ask for a piece of event income, licensing and merchandising. Which in the old model used to be the artist's bread and butter, as musicians didn't actually see much of a cut from album sales. The album was, as they say in Hollywood, a "tent pole" upon which other business opportunities were supported — and now the labels want the whole tent.

Reznor had the foresight to go independent as the old circus collapses around him. Owning his own production studio and promoting and distributing his content digitally means his costs are minimal. And production, promotion and distribution was exactly what labels used to lured artists into contractual cages. Reaching beyond the concept of moving units in mass volume and instead servicing hardcore fans with what they want, when and where they want it while making it easy for people to find and listen to his music, Reznor's got an opportunity to make a lot more money for himself than he ever would have with a label — and more creative flexibility as well.