The age of digital production and file sharing may turn out to be a paradise for bootstrap entrepreneurs seeking to enter what was previously a prohibitively expensive music industry.

Danish blogger and entrepreneur Thomas Madsen-Mygdal sites this post on the Lessig Blog about a study showing that decline in Danish record sales due to file sharing is highest among best selling recording artists.

At the same time, Madsen-Mygdal points to a Billboard report suggesting that gross earnings in the music touring industry in 2006 are up 24.6 percent over last year owing largely to some of the same top artists: the Rolling Stones and U2 are examples.

In his own blog, Madsen-Mygdal asks:

Could it be that big name hit artists can make a fine living in the copy age?

But commentator and Finnish blogger Niko Nyman worries that file sharing will kill small labels too, who can least afford to loose cash sales of their releases. He says:

If Madonna sells 10 million albums or 7 million albums, the difference is being filthy rich or rich and disappointed. If my friend the label manager sells 500 EPs or 200 EPs, the difference is having a potential chance of making a living or getting another job to pay for the losses of the label.

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I don't know how much to rely on data drawn only from the Danish music industry, but it seems to me that some of the same basic principles apply here as in other areas where new technology has leveled the playing field between start-ups and corporate giants.

At least that's what we're banking on at IndieTune.

For my own part in the discussion, I commented:

On the other hand, the digital revolution has made it cheaper to release music than ever before... Many options are open to the innovative entrepreneur. Yes, purchase of physical recordings is down, but so is the overhead.

Our greatest challenge in this new industry may be in determining how to monetize this new super inexpensive music we've produced, perhaps by moving from per unit sales to a fee for service model.

More on this in a future post...