The Internet has the capacity to ruin some and propel others to stardom. The file-sharing site Napster turned the band Metallica into joke fodder, launched Radiohead into the US Top 20 for the first time and uprooted an entire Industry along the way. Nowhere was this more apparent than at Digital Hollywood yesterday, where the “Music Industry Innovates and Morphs” panel, whose attendance was about 1/3 of the comparative marketing and social media panels in the same time slot, basically devolved into a pity party when moderator Ted Cohen asked the audience (including yours truly) whether or not they purchase music.

Judging by the sparse and dismal audience response and despite the outlying successes of already established brands like Trent Renzor (as well as manufactured exceptions like Susan Boyle) the outlook for the record industry as we know it seems pretty bleak, as the hydra of file sharing and downloading will not quell anytime soon, despite the anti-Pirate Bay ruling late last month. Platforms like Pandora and (which was my answer to Cohen's entreaty) continue to grow loyal audiences with no clear cut digital rights resolution in site.

BPM Brands Founder and panelist John Loken pointed out the bleak fact that 5% of the currently available music content online is monetizable, which might explain the lowered panel attendance in comparison to years past, as in “why bother if there's no business value in it?” To elaborate on this statistic, there are about 40 billion remunerated (“illegal”) downloads a year vs. 1 billion “legal” downloads on iTunes, the only real player in business. Songwriters Association of Canada and Digital Hollywood panelist Eddie Schwartz passionately explained, “This doesn't mean that music is valueless, it just means that it's not valued NOW.” Schwartz's proposed solution to the monetizing IP conundrum is a licensing fee pool, where ISP users would pay a fee for the “service” of downloading and that fee would be put towards compensating artists for their work.

“The music industry needs to find a way to monetize,” Schwartz said, “or else we're screwed.” As Cohen put it, “Why is it that music is the only thing people think should be given away for free?” It's true that many people in the digital content arena view the pratfalls of the music industry as a cautionary tale; While the difference between torrenting a song and a movie is between 2GBs and 5MBs and it takes ostensibly a lot more people to make a film, the poor mismanagement of music's foray into the online sphere obviously contributed to the current disconnect between the record labels and the Web sphere. “We spent more time trying to protect our content then to figure out how to monetize it,” Cohen regretted.

According to Independent Music Producer Joe Napolitano, online platform innovation has been “a double edged sword, while the technology on the user end has made product less saleable on the creator end it makes the actual making of the product less expensive, and the two lines have yet to converge.”'s KamranV gave this advice to those still wanting to venture out in music despite the lack of solidified revenue models in the digital realm: “Don't piss off your fans, bottom line. If you piss off the people that like you, they won't like you any more.” People like Broadway Romero and Soulja Boy get it, using social networking technologies to grow audiences of over 40,000 strong.

Napolitano emphasized this “good music will always continue to be made, just because the business model doesn't work currently and who knows if it is ever going to work doesn't mean that music is dead – not being to able to make money on this is not incentive enough to stop doing it.”

Perhaps if anything good comes out of the current state of the industry, it is this — that the Darwinism of incentive will weed out the wannabes and bolster the hopeful. Because file sharing is not going to go away, and suing students is not a viable business model.

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