Last week, Jay-Z, The Beatles, technology, an unknown DJ, and a little-understood media form called “blogs” collided. The explosion destroyed the music industry as we know it.

Hip Hop artist Jay-Z may be the smartest, savviest business person to hit the entertainment industry in years. Let’s face it: the man knows how to take a product to the market and sell the hell out of it. Independent of his business acumen, Jay Z has transformed into a lightning rod and atom bomb of catalytic force, the importance of which cannot be overstated. Combine Jay-Z with the power of the web, and we may have the first real proof that the future of music is not only online, but free of traditional media distribution and production companies.

Jay-Z, as anyone who even peripherally follows hip hop knows, has been around for a while now and has steadily built his empire. He began as a somewhat underground artist with catchy tunes like “Dead Presidents” and “Ain’t No Nigga.” A mainstay of stations like Hot97 (Hot Ninety Seven Fizah, Hot Nine Seven Nickel) in Atlanta, he quickly built a platform of mega hits and platinum-selling records. As any smart hip hop artist tends to do these days, he diversified into clothing, record labels, and even his own branded mobile phone. Jay-Z has become an industry. The markets, and marketing, seem endless for Jay-Z, despite his recent announcement that he’s retiring from hip hop to focus on other endeavors. The last line on his new album is something like “I’m going somewhere nice where there ain’t no mosquitoes at, nigga!”

As Jay-Z prepared to kick it to wherever he was talking about, putting his album in the can and absconding with Beyonce to the beach, he did something else miraculous; he released a vocal-only version of his album. This is sometimes standard practice for hip hop artists. In fact, many release both instrumental and vocal-only versions, as well as the regular album simultaneously in order to facilitate what is the hip hop version of XHTML/CSS: the separation of content and presentation.

Hip hop culture, being fueled as it is by two turntables and a microphone at its roots, makes good use of these types of releases, and has been doing so since the early days of the form. A DJ in a club might take the hot drum and bass beats of one artist, and rock a Tribe Called Quest vocal over it. An artist on tour might take the instrumental version of his album out to emcee on top of while the DJ mixes and cuts it up with other records or samples. The possibilities are really unlimited. Even in rather fallow eras of popular hip hop, such as the aughties, the creative potential in such simple combinations never ceases to amaze me. And so it was when the Grey Album dropped.

For those not yet in the know, the Grey Album is a remix of Jay-Z’s Black Album done entirely with musical instrumentation samples lifted off of the Beatles’ White Album . I was tipped nearly simultaneously by the websites of Matt Haughey and Robert Occhialini , so I went out and grabbed a copy, figuring that it would be cool, but quickly annihilated from distribution by legal actions on the part of Jay-Z and/or the copyright holders of The White Album (I heard somewhere that Michael Jackson bought a lot of the rights to Beatles songs, so I was imagining him, although I don’t know that to be the case, but I digress into the freaky Michael Jackson world and have frightened myself, so I return now to the topic at hand). I retreived my copy, gave it a listen, and then quickly forgot about it. It’s good, but it’s not the greatest record you’ve ever heard.

Meanwhile, the online world of weblogs ignited. I began to see mentions on other sites. This may have been happening simultaneously and the chronology was simply a result of my reading pattern, but many more of the big hitters in the weblog word, such as Jason Kottke and Megan Hourihan linked to various aspects of the culture surrounding the Grey Album—most importantly: Downhill Battle’s Grey Tuesday protest and distribution movement.

Grey Tuesday was a protest effort, in that website owners were asked to “turn grey” their websites on a certain Tuesday in protest of legal actions taken by EMI, while any other sites or individuals with the resources were asked to host digital copies of the Grey Album for download by the general public.

More than one million copies of the album were distributed in one day. That’s platinum, kids, a fact acknowledged by Billboard Magazine. Combined with all the copies of the Grey Album blasting forth from computer speakers and iPods around the globe, we heard something else:the sound of a paradigm shifting.

Subsequent to this, another site, The Jay-Z Construction Set compiled a massive archive of loops, samples and vocal-only tracks so that anyone with even a modest computer setup and minimal software can create their own remix of The Black Album.

Before that day, it was completely unrealistic to think that an independent music release could be distributed to one million listeners so quickly and easily, if at all. In fact, I’m very hard-pressed to think of one truly independently-released album or single that sold (or even pressed) one million copies. Can you? The technology of broadband, MP3 file encoding and even Peer to Peer networks have made this sort of scenario possible for years, but what was missing was the market and the marketing.

But before we dig into the business, let’s just be clear that creativity is a big winner here. With all of that raw material being produced by a group with immense talent propagating to others who, in turn, do their personal takes on it, is the essence of the new game. That’s a big win for everybody. But what seems to be even more exciting about the platinum status for The Grey Album is that the marketing and distribution was handled completely outside of the music industry.

It is worth noting that the raw material in this particular instance was created by a man with immense talent and vast resources. The Black Album wasn’t produced on the cheap. Jay-Z has a vast listening audience and Total Media Awareness, so we can’t just say that DJ Dangermouse’s work was (()) by the Internet and, specifically, weblogs. The White Album is a standalone work of genius from one of the greatest groups of modern music. So Danger Mouse is cooking, as my man Mario Batalli would insist, with the best possible ingredients.

The legal aspect of the Grey Album, and the resulting activist movement, along with the clout and talent of Jay-Z are mostly responsible for its success. And given the slippery legal standing, it’s not a good model for extrapolating a future music business.

But imagine for a minute that Outkast’s “Hey Ya” were the raw material in question, and the blog world lit up like a Christmas Tree, and everybody downloaded it from iTunes . Say that Outkast even decided to sport money for the video and aired it on MTV with a banner at the bottom saying iTunes.com (or whatever other pay-per-song download service). Every human on Earth that has heard “Hey Ya” loves that song and wants it, and would almost certainly be willing to pay $0.99 for it. In our new hypothetical-but-here world, in which the artist produces the music themselves, with the help of skilled professionals or even in the fanciest, most expensive studios, they have in their mind a new revenue and operating model. They won’t lose a huge chunk of their profits to manufacturing, distribution cartels, and margins that cover rent and employees for traditional music retailers. With increased efficiencies on the production side, and a total elimination of middle man markup of the traditional distribution models, it would seem that Outkast could have made millions just off of that song, some web publicity and iTunes.

Outkast makes millions just for sneezing and has a bazillion fans, but in our new model, they could be somebody who had never made $3.00 from music in their entire careers who happened to hit with a song that the online world devoured. Even a check for, say, $30,000 is more than respectable for that � with all future rights retained by the artist. If one million people could download the whole DJ Dangermouse album, I am certain that a million people would download a single great song.

The market for music production—actual recording, editing and other creative support services will likely remain somewhat constant despite the technology available to the average home user with a computer. Bedroom recordings still often sound like bedroom recordings, even when lubed up and massaged with Pro Tools. For certain music types, the “right sound” is still crucial and achieved physically in an environment, with experts who can capture that sound and translate it into recorded media. But the production stops there, in our new model. We don’t ship to the pressing plant. We don’t pay for packaging, distribution to retail, promotional copies. What do we do with a finished song?

Maybe we add our finished song in a DRM (Digital Rights Management) format to our label’s syndication feed of what’s new � the pay-subscription service we run to which only college radio stations can subscribe. Why do they subscribe and why do we need a “label?” Maybe “tastemaker” weblogs or other types of sites will appear. Maybe a label is simply somebody who recommends songs and forms a reputation or even “a brand” for their services. Really, the distribution and marketing is wide open. On “Grey Tuesday” it was a volunteer effort; not everyone is going to want to host files and increase their bandwidth bills for the benefit of “the music.” Will labels pay for weblog distribution? Can Google Ads serve as effective advertising for new music, or will something else take their place? iTunes, while a pleasure to use, is very difficult to browse. Perhaps Apple could be convinced to open their framework to allow something beyond iTunes links and operate more on the Amazon referral and API model. The direction this will take is completely up in the air.

One thing is for sure. If the record companies drop out of site, and exposure and distribution for artists is open, we, as music appreciators (not consumers anymore) get a lot more access to a lot better music.

Will the role of the DJ return to its rightful spot in commercial music? Instead of DJs who are simply clowns pushing buttons, could we end up with incredibly interesting, music-loving taste makers who actually search out and expose new music? Even beyond radio, would other avenues of music broadcast open? What would make this possible? Creative Commons licensing of music will help a lot. In fact, Creative Commons has a page for musicians. In the not-to-distant future, such licenses will be recognized automatically by the technology used to encode and play the media files, as will the methods of finding and distributing such files (such as search engines).

The Creative Commons explicitly allows for the non-commercial or commercial distribution of works. But the control in many instances would be that the artist, not the publisher. Traditional publishing may ensure that artists are paid “royalties” for their songs, but I’m not certain how much longer that scam is going to last either. Couldn’t technology handle all of that automatically in the very near future? I know artists, broadcasters and club owners who deal with the publishing companies, and few of them find any merit in the business. In fact, it can operate a bit like a shakedown. Did you know that clubs in which a band might play covers are required to pay a set fee to cover “lost revenue” for artists whose songs are being “ripped off?” Certainly the scenario could arise in which broadcasters are making advertising and other revenue dollars off of artists’ works, so something needs to be built in to either explicitly allow that on behalf of the artist, or some form of payment would be arranged or inherent in the format of the distribution file. But that’s a little ways off, and right now, we have MP3 and other nascent DRM formats.

And that brings us back to the world’s first Internet Platinum artist, DJ Danger Mouse, whose real name is Brian Burton. When asked by “Billboard”:http://www.billboard.com what surprised him about the media attention, he responded:

“Every day is unbelievable. I’m surprised that this many people like the CD. What I made was a fucked-up recording.It confirms that people want that which they cannot have.”

The added emphasis in the above quote is mine, but I think it’s important to note. The music industry has force-fed the public “the album” and, more insipidly, “the CD” (at double the price) in order to pump up its margins. It was a rigged system. The consumer had no choice, the artists had no choice. I don’t think “the album” as a concept will go away, but the CD is a dead dinosaur walking. Despite the huge sales of CDs in the past, people don’t really want them and, if they do, they certainly don’t want to pay the exorbitant prices charged by most record companies. No, CDs are going away. Quickly. Don’t kid yourself thinking that they will be cool and retro just as vinyl records are now, because CDs sucked from the get-go.

People may say I’m late to the party: that the music industry was already dead. I agree to a certain extent, but the enormity of distributing a million copies of something is not only more than just a marginal, incremental step in all this, it is the nail in the coffin. The Internet has just broken its first platinum artist. Did he get rich? No, but that wasn’t in his plan. What he accomplished was an amplification of his original intent: to let people hear his album. I’m not hippy-dippy or acid-casualty enough to believe that “music should be free” BS, but we’ve just shifted into a whole new world. iTunes may be the first big player in the pay-to-download system, but it’s still a front for vast corporate interests. This isn’t a bad thing, but it’s a mostly closed system. I think that the real revolution is yet to come. Just as many are going ga-ga over the “citizens media” of weblogs and the threat it poses to traditional media, so should we now be playing the theme that announces the slayer of the next dragon. That theme music isn’t from the soundtrack to illegal file sharing. As Brian Burton says, “Stealing music is wrong. [Illegal] downloading is wrong.” No, this is a legal execution of a business that ran itself into the ground by tapping into people’s desire to hear music and then failing to provide them what they really wanted.

The people will revolt now that the methods are at hand.

With record companies dead, it will be up to the artists to figure out the ways to make a living in the next phase, but at least they will have that opportunity.

What’s Next?