It’s been an exciting couple of days for the NoiseTrade team. We celebrated our first birthday Saturday by dropping our $250 artist signup fee and giving artists the ability to give away music for free. The site is not quite ready for the change, with some important code modifications not going live for a few more weeks. But we didn’t want our first birthday to pass without making this change, so we just created a 100% discount code and did a low key launch.

The response has been fascinating and has kept our team glued to email, IM and Twitter. We definitely generated some good fan interest and saw a lot of music downloaded. And our artist roster will have doubled by the time I get this posted. Not bad for a holiday weekend launch with only a few emails announcing the change. It’s pretty clear that we are going to see a lot of growth in the weeks to come as we complete the site changes and do some marketing and PR.

We’ve had a few complaints from some of the charter artists who paid to use the service during our first year. We tried to honor this group by locking them in at 90% of profits rather than the 80% that new artists get. And we are proactively refunding the signup fee for artists who signed up after April 1st. Policies like this are never perfect and a few artists are not happy that they paid for what others now get for free. We’re dealing with them on a case by case basis and we’ll do our best to deal fairly with both the artists who signed up five months ago AND the artists who signed up five minutes ago.

We’ve also had some emails from artists who are honestly confused by why we made the change and who just want to understand where NoiseTrade is headed. As you might imagine, this is a conversation we have a lot among our team. We don’t claim to have all the answers, but we’ve thought about and debated the future of the music business over coffee or beer many times and we have some definite opinions that are driving our direction.

I thought I’d pull back the veil a bit and give you some insight into how this decision came about. Feel free to join in the discussion with us by commenting on this blog, sending email to our info account, or, if you happen to be in Nashville, asking to meet one of us for coffee or beer. The way artists make a living is changing rapidly and we are happy to be part of the dialog with you.

For us the most obvious reason we had to make this change was because we need to practice what we preach. We tell artists to give away music to build relationships with their fans and to find new fans. We tell them that there are many ways to make a living if you have a solid list of fans and you know who they are, where they live and how to contact them. Then we ask those artists to pay us upfront for our help. Get the disconnect? We haven’t been living by the principles we espouse. We affectionately refer to it as “eating our own dog food.”

So we’re now taking the same risk as our artists. We have all the costs of paying for development, hosting and bandwidth and we give it away for free. We make a percentage only if someone chooses to pay something for the download. We hope to get large enough to develop other income streams. But there are no guarantees. Just as there are no guarantees that our artists will make money from giving their art away. We like being in the same boat as our artists and think we can serve them better when we are sitting alongside them.

The industry is changing rapidly and our tools are going to have to change with it. A couple of years ago, Derek got fans to give him five emails for a free album download. A few years later, we have a generation that hardly uses email, preferring to Twitter and send Facebook messages. Many of our artists only want to give away a few songs. Five email addresses might be too much to ask from a fan for a few songs. Perhaps we shouldn’t require anything from fans and just have lots of optional ways to tell their friends. We wrestle with this stuff every day.

Our widget has to evolve as fan expectations change. We recently added Twitter support, but we have much more that needs to be done. We are positive that we need scale to make our model work. We need a lot of artists from a wide variety of genres. We need big artists and bands that are just starting out. We need artists who surprise us with how they use our widget. Heck, we probably need more than one widget. We have no doubt that our new pricing model will bring in the artists we need to continue to evolve.

In the long run, we’re convinced this is going to be a better model for all of us. As more artists use NoiseTrade, fans will be more comfortable recommending the music they find there to their friends. More fans mean more opportunities to help them find new artists. And more artists and fans gives the NoiseTrade team more insight into the next tools that artists need to connect with fans.

We’re excited about our new model and we look forward to continuing to evolve and develop new tools that help artists and fans connect. Let us know how you think we’re doing.

Joe