Digital Recording: Sex, Drugs, Rock ‘n’ Roll And a Good, Fast Modem

Kathy Fisher and her husband Ron Wasserman, a pop duo that calls itself Fisher, were just another band on the verge. Their once promising talks with record labels had petered out. An appearance at the Lilith Fair came to nothing. The truth is, they were reduced to supporting themselves playing L.A. club gigs and writing jingles for Hyundai.

But last spring a friend told Wasserman to “check out this MP3 thing”–referring to the digital-music format that allows people to swap their favorite tunes online. Wasserman went to the website MP3.com converted three songs he had written and recorded with Fisher into the format and uploaded them. Now, people could come to the site and download the songs for free. Fisher was about to become the biggest Internet-based band ever.

Their timing was perfect. The popularity of MP3s was just starting to surge across college campuses, and Fisher rode the wave. In late May a Fisher ballad called I Will Love You became the most frequently downloaded pop/rock song on MP3.com At one point late last year, the five most popular songs on the site were Fisher’s. In fewer than 10 months their songs were downloaded 1 million times.

Fans started linking from MP3.com to e-commerce sites selling Fisher’s CD–copies of which Wasserman and Fisher packed and shipped themselves–and flocking to their shows. In February, they sold out the House of Blues in Los Angeles. Distributing the CD themselves, the couple pocketed about $3,500 a month, more than many unsigned bands make in a year.

So was this, finally, the moment every independent band in the world has waited for–heartening proof that in the age of digital music and the Internet, tyrannical major record labels have become as last year as Ricky Martin? Not quite. “There isn’t an artist anywhere who, if they could get a good contract, wouldn’t take it,” Wasserman says. Indeed, last month they inked a deal with Jimmy and Doug’s Farm Club, a new subsidiary of Universal Music named after Interscope co-chairman Jimmy Iovine and Universal head Doug Morris. Wasserman hasn’t made an album on the label yet, but he’s already worked out the promo campaign: “Our shtick is that we’re going to be the first band to break out of the Internet and actually make it.”

But they might also be one of the last. The Fisher deal is a vindication of the Internet’s starmaking power, but it is also a sign that the recording industry is getting hip to the techie start-ups it once feared. So far the labels have been slow to respond to the challenges presented by companies like MP3.com which have flourished because of their immense selection of songs and tech expertise that old-media record labels can’t match. Now even bigger threats are coming from the second generation of MP3 sites, like the 10-month-old Napster.com founded by Shawn Fanning, a 19-year-old college dropout. (See following story.) “You’re going to see 1 million artists and 500,000 music labels on the Internet by 2002,” says rapper Chuck D, who has also founded two music websites, Slamjams.com and Rapstation.com

Some established artists are raising their Web profiles to escape the shackles of record contracts; others do it to pander to fans. Last year the artist currently known as The Artist negotiated a record deal that allows him to sell his CD from his own website. Aimee Mann bought back her master tapes from Geffen and is selling her new disc through the e-commerce site artistdirect.com Grateful Dead successors Phish put up free MP3s of some live performances, causing dramatic drop-offs in worker productivity in the San Francisco Bay Area.

But even in a digital world in which music is given away and traded free, record companies won’t go away. Dick Wingate, senior vice president of Liquid Audio, a digital-music company that works with the major labels to distribute music in a copy-protected digital format, says that “there’s too much noise out there. You have to find a way to let people know it’s there, and that costs money. Record companies have the money.”

Indeed, far from killing record companies, the Internet is spawning even more of them. “I don’t believe that having 30,000 songs by any number of unknown artists is what the average consumer is excited about,” says Al Teller, the former head of CBS Records and MCA Music Entertainment Group. Last year Teller founded an Internet record label based in Santa Monica, Calif., called Atomic Pop, which has released albums by Chuck D and Ice-T; they can be purchased from Atomic Pop’s website in the form of a CD or a downloaded file. The musicians keep half the revenue, compared with the 10% they get in traditional major-label deals. Start-up Web labels pose threats to the majors, but they also may siphon the audience that frequents all-comers sites like MP3.com by going after high-profile artists and acting as a filter for all the noise on the Web.

And that’s bad news for indie musicians. Even more ominous is the reality that the major labels are finally making their move online. In January Warner Music agreed to buy rival EMI, which has already announced plans to begin releasing digital singles and albums from its stable of artists. Jimmy and Doug’s Farm Club reflects the changed environment: it’s a hybrid of a traditional record label and a freewheeling, indie-friendly MP3 site. While the music of artists officially signed by the Farm Club will be promoted and marketed by Interscope or another Universal imprint (and given face time on the label’s USA Network television show), the website will allow undiscovered bands to upload their songs too.

But for indie acts trying to make themselves heard, life won’t get any easier. Someday, the labels hope, consumers will walk up to Web-enabled kiosks in convenience stores and airport terminals, punch in a credit-card number and instantly download two new Mariah Carey songs onto a cassette the size of a pencil tip. When that happens, who’s going to bother trawling through thousands of MP3s for the next Fisher? That’s why, sitting at a Melrose Avenue cafe early this year, Fisher and Wasserman seemed more relieved than elated. There are now at least 1 million songs available for download on MP3.com “It’s already too saturated,” Wasserman said. “This is going to become a single-driven business. I mean, as soon as every big-name artist has a presence online, who’s going to look for an unknown band like us?”

–By Romesh Ratnesar/Los Angeles. With reporting by David E. Thigpen/New York