It becomes an ideological question?
Arnold: Right. You're talking passionately instead of factually. But I think that in any case, any indie label that's not participating in digital music is leaving money on the table. Even your girlfriend's brother's band has some money to be made out there. And like I said, any good, decent operating indie that's able to successfully put out records for more than a few years is probably missing out on thousands of dollars a month, if not more.
I think it ultimately tracks to what the industry does as a whole. People are saying now that digital might be 2 percent to 5 percent of your physical business, and that by 2009, you're looking at about a quarter of your business.
What about subscription services? That's an unfamiliar model, where returns tend to come as a percentage of subscription revenues, instead of a set amount per download. Does that economically make sense for small indies at this point?
Arnold: The sales are going to be certainly incrementally less than download stores are right now. But they're probably proportionate to the amount of people who are using them. Certainly, I believe that revenue pools should be larger, and that there should be more beneficial terms for indies within subscription services, too. But there are a lot of great advantages to participating in them.
That's the "long tail" argument, that there's less risk, or cost, to the consumer in experimenting with new music.
Arnold: Absolutely. To date, I think you see a little bit better browsing and discovery features in the subscription services. The main point is that the barrier to experimentation is pretty much nonexistent. There's none of this thinking that, "I've only got 30 seconds of this clip, so do I really want to spend a dollar -- or $10 -- on this album?" It's just go for it, play it, try everything you want, just roll around in the field of the flowers to your heart's content, which is great.
One part of me certainly likes the dollar coming out of everybody's pocket for music. There's absolutely value to that with regards to portability and ownership, and that just meets some people's needs. But there are a whole lot of other people for whom subscriptions make sense. I do think subscription services are a good disincentive to going out to peer-to-peer networks and getting music illegitimately -- and a good way to put some of that money back into the artists' pockets.
But it's still not the same thing as packaged CD sales. A lot of people are interested in supporting the artist in the independent world, and realise there are ways to support these guys so they can keep creating their art, whether it's going to shows or buying T-shirts or buying physical CDs. The indie world has a much better history of making a more attractive, valuable, collectible product than the majors do. Usually, you get something more than just a jewel case with a single insert. People think about the artwork and make it worth owning.
