Greenwood's biggest complaint about MP3s was not quality or sound compression, but rather abundance. He suggests that MP3s make it far too easy for fans to hoard music without "giving it their full attention". In a recent Pitchfork article Eric Harvey suggests the opposite. Says Harvey, "The mp3 may have atomized music into millions of little pieces, but each piece, it seems, found a publicist. The average music fan now has the built-in capacity to double as promoter and distributor in an ever-expanding arena that's making and eliminating rules every minute."

Whether you see them as hoarders or promoters, one thing is certain, the iPod generation is changing how music is consumed. But if they can't depend on tiered pricing for audio quality, how can companies monetize the new music fan? While a Stanford study suggests that the iPod generation prefers the flat sound of an MP3, it doesn't mean today's listeners aren't willing to pay for their music. According to an NPD Group report purchasers of digital music downloads increased by 29% last year with iTunes controlling a quarter of all music sold. Some of the ways fans still generate revenue for bands include streaming music subscriptions, track and album purchases, concerts tickets, merchandise and paid application downloads.

Update, Ed: there can be a big difference in audio quality of MP3s promoted on the Web. For example the quality varied greatly between Radiohead's In Rainbows album and Saul Williams' album (promoted by Trent Reznor). See Kim Gaskins' post on the new Latitude Research blog Life Connected for further analysis.

Photos taken from Dead Air Space

Additionally, Bonnain went on to point out the Grooveshark artists community and quiet honestly, we were thrilled to discover it. Beyond the fantastic experience of the music discovery engine and the listener-focused features of the site, Grooveshark actually has a Bandcamp-style service for artists to promote themselves.

The Artist Dashboard allows bands to track their most popular songs, fan favorite play lists and measure play counts. Additionally, Grooveshark also allows bands to sell merchandise via Junkytees and TuniPop, license music via Creative Commons, land deals via YouLicense and crowdsource album funding via SellABand.

Within the artist's environment, Grooveshark monetizes its service by offering musicians a chance to have their music advertised and played alongside similar bands. With more than 7 million tracks in its catalogue, the company is effectively leveraging its size and existing audience to make a case as the premier destination for artist promotion. Artists can expect to see their tracks in community playlists and distributed via widgets, links and soon, through mobile playlists.

While Spotify's iPhone application has received a ton of buzz for its ability to play cached music streams, Grooveshark also has an iPhone application in the works. While the app's current iteration does not allow for offline play, Bonnain assures ReadWriteWeb that the feature is in the mobile developer pipeline and it won't cost $15 a month to try it when it arrives.

While both Grooveshark and Spotify's premium subscription programs are in their infancy, it will be interesting to see which service will find the right features and licensing partnerships to come out on top.

1. Bandcamp: RWW reviewed Bandcamp earlier and dubbed this service the "MySpace Music Killer". The company offers bands the chance to upload liner notes, album arts and links to their materials through an online DIY store. In this case, interactivity is not bundled with the album downloads, but rather found in a link on the site.

2. Songbird: Songbird is the open-source Mozilla-based music player that offers users a chance to listen to albums while also viewing information about artists through various in-browser plugins. Songbird offers the basic functionality of an "interactive album" with lyrics and album art; however, fans can also add extensions to trade mix tapes, publish their playback histories to Last.FM and publish their listening history to Twitter.

3. Songkick: Songkick is a concert recommendation engine with a music history component. The site allows users to upload concert-related photos, liner notes, poster art, videos and even ticket stubs. The community is a live music wiki updated by those die hard fans who've not only attended the concerts, but also documented the experience. For Bob Dylan alone, the community has uploaded information on 2788 past concerts in 767 cities.

Apart from their interactivity and great social components, one thing that BandCamp, Songbird and Songkick have in common is the fact that they are not Apple. While each of the services are wonderful in their own right, Apple's potential commitment to interactive albums can set an industry-wide precedent on how albums are released. By providing listeners with liner notes, videos and background information, fans may find themselves connecting with their music on a whole new level.

Band history, politics and cultural context can affect whether or not we part with our money. I'm going to take a wild guess that Hasidic Jewish reggae artist Matisyahu's highest download numbers don't come from Muslim music fans. And do you think Radiohead's name-your-own-price In Rainbows album would have made as much money if the group wasn't known for its activism?

The interactive album tells us where artists have come from and how they're using their voices outside of the music. A number of services provide the delivery framework for the information, but only Apple provides direct access to mainstream audiences. Regardless of whether or not the independent labels follow suit, these new band dossiers give us the social narrative we need to make informed choices as consumers.

While no one is arguing that MySpace has lost its grip as one of the leading music and entertainment destination traffic generators, I disagree with Van Buskirk's choice in SoundCloud as the great equalizer.

Due to the service's ease-of-use and speed, SoundCloud is indeed one of the best file collaboration and music sharing sites. Quite simply, the site does everything right except help indie artists monetize. Meanwhile sites like Mix Match Music and Bandcamp provide solutions for bands to share AND monetize their products.

In particular, Bandcamp's execution is extremely elegant. As with MySpace, musicians upload their cover art, track listings, liner notes, lyrics and audio files. But Bandcamp adds four additional key features:

1. File Conversions: The site converts a single uploaded file into eight different formats to meet device and music player requirements.

2. Monetization: Bandcamp allows musicians to price their tracks and albums as they see fit. There is even the option to let fans decide prices on a sliding scale.

3. Sharing Tools: The service provides embeddable player widgets for Facebook, MySpace and a variety of 3rd party blogs.

4. Analytics: Perhaps most importantly, site analytics measure popular songs, track links and locate where files have been embedded. This means that musicians can search out their best advocates even if they're miles (and sites) apart.

While SoundCloud is definitely a fantastic tool for collaboration and remixing, it's the storefront-style tools like Bandcamp that will either eat or be eaten by MySpace Music. We'll just have to see where the major artists choose to flock in the coming months.

CORRECTION: Earlier the writer described SoundCloud as a P2P site. SoundCloud is not structurally based on a peer-to-peer network of nodes. Instead the company considers itself a "Flickr for audio".

Perhaps the greatest challenges to companies like MySpace Music and Facebook may not be from the big players, but startups that offer artists greater control over their work and pricing flexibility.

This is fair picture. Forecasts generally call for moderate growth in online advertising through 2009. eMarketer expects the market to increase 14.5 percent in 2009.

Even with this outlook, digital music companies face challenges above and beyond what lies ahead with the economy.

MySpace Music is definitely the big player, but criticism about the service ranges from a poor UI to how they treat indie labels. Add to that a potential competitor like Facebook and the issues intensify. Brooks took repeated questions about why they gave the major labels preferential treatment. Brooks said that MySpace Music will phase in new services to provide the indies more of a presence. That reality materialized today. Digital music distributor IODA has signed on to make its catalog available on MySpace Music.

But perhaps the greatest challenges to companies like MySpace Music and Facebook may not be from the big players, but startups that offer artists greater control over their work and pricing flexibility.

Rise of the Band Blogs?

Of the startups that presented at the conference. Bandcamp received some of the highest acclaim. BandCamp is a blog platform designed for musicians. The platform is similar to Blogger or Wordpress but with limited flexibility. The service is free. Sites are designed for search engine optimization. The site has a Flash player but everything around it is HTML. BandCamp includes an analytics platform that details page views, music sales and what tracks musicians played. The service integrates with Paypal. Tracks may be offered for free.

Artists determine the price for their music. The artist uploads their tracks as .AIF or .WAV files. BandCamp converts the file and then offers the artist a selection of different formats for their play list. Artists may choose to sell the music as an mp3, for instance, at a high or low bit rate, setting the price accordingly. There even appears to be the ability to do variable pricing, something the majors have wanted to do for quite some time. BandCamp takes no cut from the sale. Musicians host their own sites.

For BandCamp Founder Ethan Diamond, the service is about giving artists control. He likes to call themselves the "very nerdy" fifth Beatle who takes care of all the geeky stuff so the band may do what they do best.

In his presentation, Diamond sharply criticized the practices of companies that do not provide artists with complete ownership of their works. Diamond has said before that Imeem and MySpace Music both fit into this camp. The companies that engage in this practice he called "online sharecroppers."

Already The Dynamics Are Changing

Steve Jang, vice president of marketing and business development at imeem, sat on the panel with Brooks and Batt. He seemed pretty quiet compared to his colleagues.

He must have had a lot on his mind, listening to his counterparts talk about the business. As we reported this week, Imeem is up for sale. They've laid off 25 percent of their staff. Warner Bros, as you may recall, sued Imeem earlier this year. They later dropped the suit in exchange for an equity stake in the company.

And so, who will purchase Imeem? Is this a play for Facebook?

Oh, these times are a changin'. :-)

His story is an inspiration and it is our pleasure to connect you with Mike Dunn on ReadWriteWeb.

What is your background?

I'm an emerging media technologist. I've spent the latter half of my career as a chief technology officer for companies in media or technology.

I've always been an early adopter. I enjoy finding ways to adapt emerging media, trends, methodologies and technologies into a company. I've been attracted to change agent roles and opportunities.

I like the complexity of environments in the midst of change, where the need to implement innovation is necessary to grow or turn around anything from an entire company to an individual product opportunity.

I tend to be responsible for the technical assessment of Venture and M&A opportunities. I'm asked to manage strategic partnerships with technology companies, service providers and academic institutions.

I'm a director for a bank and an online ecommerce site, an advisor to a media marketplace startup, a b2b operating company, a major technology trade publication and an insurance industry information portal startup.

My portal glemak.com contains pointers to my bio and online activities.

You've been CTO of Dell Online, Time Warner and now Hearst. How did you evolve through these experiences?

My roles in each have been very different. My Dell role occurred just as ecommerce was striving for adoption, Time Warner occurred right in the middle of the bubble, and Hearst is occurring while the web is dynamically changing as it moves to massive online communities and the long tail of media.

Dell Online was an internal start-up championed by Michael Dell to lead the way for the entire enterprise, not only to build the online capability, but also to spread its adoption and utilization. We pointed the way for transitioning a company via ecommerce.

I was part of an excellent team tasked with designing and building a high availability transactional environment, and one which did it all with nascent ecommerce development tools.

I spent a great deal of time briefing customers and partners on the value of our approach to building the infrastructure and platform that represented the revolutionary change to selling securely via the web. This was early days of ecommerce and prior to the 'all-in, spare no expense' bubble. Employees and customers needed to be convinced Dell's online efforts were safe and provided value.

When Time Warner approached me to become the CTO, I accepted since the reason I was hired at Dell had been satisfied. The site and team were built and stable, and the ecommerce transition had started to happen.

At Dell I learned how to plan and build for scale, how to partner with diverse technology units driven by multiple motivating factors, how to lead via influence, and how to educate and socialize the value of a complex paradigm shifting technological change for a company.

Time Warner was a huge role and opportunity. I'd spent time earlier working in technology management for Hanna-Barbera and Turner. Both became Time Warner properties after I'd left Turner in the early '90s.

My role involved overseeing corporate technology assets and services such as the global WAN connecting diverse businesses, our messaging environment and corporate applications. I managed an IT team responsible for these functions, but that was only 20% of my job. The other 80% was strategic, seeking opportunities to leverage traditional and emerging technology initiatives across over 660 businesses.

I relied on virtual teams, groups of diverse experts loaned part-time from individual units so that Time Warner could leverage internal resources and expertise. We used consultants of course, but our SMEs were the leaders and guides.

Mid tenure the AOL acquisition occurred, causing us to realign our initiatives to deal with this massive merger event.

I learned a lot about strategic guidance via influence. It is better to spend time convincing folks about something you'd like to see change so that they adopt the idea as their own.

A valuable lesson I learned at Time Warner was never to get overwhelmed with the scope of responsibility an initiative or role entails.

My current role with Hearst is also about leading via influence. As emerging media technologist, I advise and work directly with the various divisions. I also oversee relationships with technology partners and academic institutes.

I provide technical due diligence for our enterprise level investments and acquisitions, and I provide guidance and oversight for our portfolio companies, and am responsible for the technology aspects of wholly owned entities.

At Hearst I've had to evolve my methods to align with a larger entity changing to meet a rapidly shifting media landscape.

How has the media landscape changed in the past 5 years?

Dramatically. I started at Hearst 5 years ago, so I've seen the changes inside my company and from the media landscape at large.

Five years ago blogging, social media / networking, user-generated content and ubiquitous online consumption of rich media were not pervasive, and were not leveraged in any substantial way by the traditional media industry.

Yes there were those of us blogging, utilizing RSS and generating media online who were both inside and outside the traditional media industry. These will continue to grow dramatically.

Today most media entities are exploring or immersed in emerging media capabilities, especially publishing online and direct community engagement. The connected aspect of the communities has been a constant evolution. Instead of talking 'at' their audience, they need to become an active peer participant in the conversation.

The desire to access media has changed dramatically. Traditional methods of producing and distributing media have been extended in dramatic ways via technologies such as flash video, mobile access and Podcasting.

What are the economics of the print v. online world for media companies?

Traditional and online media production and distribution are of equal importance in today's rapidly changing media landscape. It's all about transitional focus.

I'd broaden the question to: What are the economics of all forms of traditional media v. online?

Today the same product that is produced for traditional distribution needs also to be leveraged in as many other media as possible, and as many times as possible. For example, the concept for an article is published traditionally, yet there are numerous ways to extend the reach and life of that content online: by publishing an extended version to the web, syndicating it to other sites, maybe posting a Podcast of the original interviews. The original article can now be leveraged for a longer time and in many more venues.

What tangible revenue models do you see for online media today and on the horizon?

The revenue models for online are much the same as those available via traditional means: (e)commerce, affiliation, subscription, advertising, sponsorship (donation), pay to play, and product placement.

The biggest difference is in scale. Traditional media is larger yet narrower and today provides a greater percentage of revenue than the smaller yet much broader online revenue landscape. The barriers to entry into traditional media are costly and complex, while online they are much less expensive and simpler for new entrants.

Tangible revenue models being focused on today are advertising via CPM and PPC, with some seeing success via PPL and PPS.

What strategic changes are you implementing at Hearst to prepare for the future?

We're pursuing strategic investments and acquisitions in emerging and innovative media, and we're aggressively scaling or creating integrated digital media groups inside our business units.

On the enterprise technology side my group has been implementing program management and enterprise governance processes. Both are important structural changes.

On the strategic relationship side, I'm coordinating our relationship with the MIT Media Lab. The MIT sponsorship is a key research and development mechanism, from a 'what will media look like 3 to 10 years out' perspective.

You've been writing about technical due diligence on your blog. What are the top 5 things that must be in place?

1) The primary things I look for are a thorough understanding of a company's current technology state and a roadmap of their future. I then fill in the building blocks to paint a picture of the company and its structure via the next 4 areas.

2) Staffing: The company should have a proper ratio of dedicated to outsourced staff. The focus for in-house staff should be on owning and extending the company's value-add. The focus of the outsourced staff / service should be on areas where technology is available at a reasonable price.

3) Infrastructure and Architectural: I look for alignment between the infrastructure in place and their roadmap. I try to understand their architecture, i.e., have they designed something that will be stable, yet scale and grow as their business requires? Have they over or under built, are their investments proper for current state and extensible as their growth requires?

4) Workflow and Processes: This is usually the hardest part of my interviews with startups because while most have ways they do things, they often aren't comfortable expressing them. They also aren't normally done in a way that's repeatable to the point where they could be called a workflow. This is OK. As they mature, standardized workflows and processes will be established, normally out of a necessity to ensure they're providing a stable environment that doesn't get negatively affected as they introduce change.

5) Costs: This is the spreadsheet part of the conversations. What has been spent to get them to the point they're at, what do they need to spend near term, possibly with funding from my company, and what do they envision they'll need to spend? I look for a grounded approach to spending.

What is your secret for balancing personal and business life?

You work to live, not live to work. I've always had a passion for my career, but I've also made sure I spend priority time with my family. We spend time together snowboarding each winter in Vermont, and mountain biking the other months, along with our dogs.

Both my boys are athletes, so I make as many of their games as possible. I work hard and travel a lot, but I'm home for important family events.

What is one insight, business or technical that you want to share with our readers?

Try and develop the art of listening. Too often folks spend so much time trying to think about and express their own opinions that they miss the details of the conversation occurring around them.

Most of the successful folks I've been around in my career are excellent listeners.

What is the meaning of life according to Mike Dunn?

My geek answer is the same as Brad Feld's meaning of life = 42. But the serious one is that life is all about learning.

If you can learn something useful at every stage of your life and use that knowledge to improve your life as well as to teach it to others, whether its your kids or someone you mentor, then your life should be rewarding.