A coworker at a recent job has an interesting hobby that is slowly turning into a full-time business. It may be the future of the music industry.

He is really into new, experimental music, and knows a lot about the Web. So what he does is create web sites for local bands that play this music. He accepts recordings from them, converts them to MP3 if necessary, and puts them up on the band's site for anyone to download. He also supports email, mailing lists and chat groups for the bands. He charges the bands just enough, I think it was $10 or $20 per month, to cover his costs. He has dozens of bands on his site, and has had to upgrade his equipment to a seriously big and fast server with a good business-class net connection. And he gets into any of the bands gigs for free, of course. Sometimes he brings along recording equipment.

What makes this interesting is that he has also had to start producing CDs for the bands. The fans ask for them. This tends to confound those not familiar with Web economics, but in fact it's common. A CD is a very convenient way to carry around music. After a band gets a small following and has a set of tunes online that people like, requests for CDs start coming in.

But these CDs don't get produced quite like the recording industry makes them. A common problem with commercial albums is that you typically get one or two cuts that you like, and the rest are just filler (from your point of view). The musicians are as frustrated by this as the listeners, but there's little that anyone can do about it. The real problem is that there's no way to get any listener feedback until the CD is out there for sale.

Things are different in this case. What happens is that a band is at first surprised by the requests for CDs. "They're willing to pay for music that's free?" Well, yeah; CDs are convenient.

Slowly the fans convince them to take it seriously. The band discusses the CD with their online fans, and together a set of tunes is worked out. By this time most of their tunes have gone through a number of versions. The fans have criticised them, often ruthlessly. The band doesn't always agree, but listens and makes more versions.

Finally they decide they've worked it all out, and a CD is made. Most of the fans order a copy, because nearly all the cuts are good (by their standards). The price is lower than commercial recordings, all the cuts are keepers, and the band gets around half the money.

He suggests that the end result of this will be fewer albums than the commercial recording industry churns out, but those that are produced will be very high quality. Because of the feedback with fans, nearly everything on an album will be something that most of the fans like.

The fellow who runs all this has started to mumble about quitting his day job after the next layoff and devoting full time to his hobby. Despite his reasonable prices, he has built up a significant retirement fund. He also really likes the idea that he is doing an end run around the commercial recording industry, which mostly acts as a barrier between musicians and their audience. Instead, he creates good communication between his bands and any fans who are online, which includes most of the young people in this part of the world.

He also helps friends in several other cities set up their own local-band web sites. Anyone interested should do a bit of looking around, and see who is doing the same in your area. Maybe you can start up a similar web site yourself. With a bit of work, we can kill the recording industry and replace it with a direct musician-to-audience system, complete with good feedback.