There’s lots of chit-chat this morning about The Industry Standard — one of the leading lights of the tech publishing business during the first bubble — relaunching as a Web-only publication, something that was expected to happen in December, according to a report from the always reliable Rex Hammock, but didn’t wind up taking place until now. The site will be using outside contributors such as Matt Marshall of Venturebeat and Fred Wilson of A VC, and it also has an interesting “prediction market” feature that should be fun to watch as it develops.

The thing that really struck me about the new Industry Standard, however, is how much it is a metaphor for the evolution of the magazine industry itself. During the boom times, magazines like The Standard and Wired were the size of a phone book — despite the fact that most of the stuff they wrote about was on the Web. I remember bringing the magazines to my desk and painstakingly typing in Web addresses. Now, whatever I read about tech comes from Wired’s website, but also TechCrunch and Mashable and GigaOm (welcome back, Om) and Techmeme.

It may seem as though the new Industry Standard is deliberately setting their sights low, as Peter Kafka describes it at Silicon Alley Insider, with just one full-time employee and a lot of outside contributors. But in many ways, I think the new Standard (and Silicon Alley Insider itself, for that matter) is a lot closer to what “magazine” publishing should be like — and is like — now than the old one. I wish them luck.

(This is a column I wrote that appeared in the Globe today. I’m reposting it here for anyone who might have missed it).

Want a snapshot of an industry in crisis? Take a look at the music business right now. If you can see any signs of a coherent strategy, feel free to e-mail me and let me know what it is. If the word “crisis” seems a bit too apocalyptic, maybe it’s better to think of it as an evolutionary process. Even so, the industry’s current turmoil is a sign of just how brutal evolution can be.

As it stands now, some of the labels seem willing to give their music away for free in certain cases – with a newspaper, for example (the New York Daily News just did such an MP3 giveaway deal with EMI), or on a cellphone (Nokia is working with Universal Music on a plan to provide phones with free music service included) – but not in others.

Some of the four major labels seem to have abandoned DRM (digital-rights management) restrictions, at least in certain situations: EMI now sells DRM-free tracks on iTunes, and all four are selling some of their content without DRM restrictions through Amazon’s music service. But most of the music on iTunes is still locked up with DRM, despite Apple CEO Steve Jobs’ plea that DRM be removed.

Some labels are suing online media services such as YouTube – as well as SeeqPod.com, a music search engine, and MP3tunes.com – while others seem willing to cut deals with online companies. Some are exploring new models of online delivery, while others appear content to continue filing lawsuits against downloaders.

Some industry bodies have gone beyond lawsuits and are now arguing that Internet service providers should be the ones policing their content online. The International Federation of the Phonographic Industry, for one, is trying to make the case that individual users should pay a tax on their Internet accounts in order to compensate artists whose work is copied or downloaded illegally.

Artists, meanwhile, are similarly all over the map in their approaches to the online world. While some bands like Radiohead are releasing albums on a “pay what you like” download basis (as well as the actual CDs), other artists, including Prince, are forcing YouTube to remove home movies that have their songs playing in the background, even if they appear for just a few seconds and can barely be recognized.

The latest attempt at an all-in-one, “peer-to-peer” online music service, Qtrax.com, launched with much fanfare this week, thanks to what it claimed was the backing of all the major record labels (the company’s service is designed to pay for free downloads by embedding advertising in a special music browser). Barely 24 hours later, however, all the labels disavowed any agreements with Qtrax.

More than almost any other content-related business (with the possible exception of the software business), the music industry has been in almost constant upheaval ever since the MP3 file was invented. That made music easy to copy and play anywhere. Ever since, the music industry’s major players – the big four record labels: EMI, Universal, Warner and Sony BMG – have been trying desperately to stuff the Internet genie back into his bottle, without much success.

About the only success story in the online music business is Apple’s iTunes. While it brings in plenty of money for the major record companies, it is still a constant source of irritation because Apple holds most of the power in the relationship. Virtually every other official attempt at an online music business model has failed miserably.

In many ways, the music industry’s dilemma is the same as that faced by other content industries, including the movie business (and the newspaper business, I feel compelled to add). The content that the industry relies on can be freely copied and exchanged almost instantaneously with millions of people, and lawsuits – at least so far – don’t seem to be putting much of a dent in that problem. As sales of physical products such as CDs continue to drop, online sales are rising – they climbed by 122 per cent in Canada in 2007. But they aren’t producing enough of a return to justify all of the embedded costs that the industry has built up as a result of its former business model.

To some extent, any content-based – or even service-based – business is likely confronting some of the same challenges as the music industry. What happens when your content or service moves online and becomes virtually free? Demand may increase, but revenue is almost certain to plummet. How do you make up for that shortfall?

If nothing else, the digital dilemma strips industries down to their essence, and forces them to try to answer the central question that all companies have to confront: What kind of business are you actually in, and what is your compelling advantage?

There’s a nice overview of the music industry’s dilemma in the current issue of The Economist. Nothing that surprising, but some worthwhile points — including a telling anecdote to start the piece, in which one of the major record labels has an epiphany about where the CD business is going:

“At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.”

There are also some numbers, of the kind that should make many a label stop and think, if they aren’t already:

“The volume of physical albums sold dropped by 19% in 2007 from the year before… For the first half of 2007, sales of music on CD and other physical formats fell by 6% in Britain, by 9% in Japan, France and Spain, by 12% in Italy, 14% in Australia and 21% in Canada.”

And some perceptive points about the slippery slope that the major labels find themselves on at the moment:

1. “Because sales of CDs are tumbling, big retailers such as Wal-Mart are cutting the amount of shelf-space they give to music, which in turn accelerates the decline.”

2. “Artists are receiving far less marketing and promotional support than before, which could prompt them to seek alternatives.”

3. “Record companies face such hostile conditions that their backers, whether private equity or corporations, are loth to spend the sums required to move into the bits of the music industry that are thriving, such as touring and merchandising.”

But perhaps the best point in the piece is the observation that the industry could have saved itself a lot of the pain it has seen over the past several years, and likely become stronger to boot, if it had shown more flexibility when digital music first became a reality, instead of deciding to sue everything that moved and call that a strategy. Now, they could be too far down the slippery slope to irrelevance to recover.

Last week, Radiohead dropped a bomb on the music business by announcing that its entire new album In Rainbows would be available for download from the Internet, and that fans would be able to pay anywhere from zero to whatever they wanted for the music. This was quite rightly viewed by many (including yours truly) as a revolutionary move by the band to sidestep the entire traditional music industry structure and go direct to the fans.

What hasn’t gotten quite as much attention since the announcement is the news that Radiohead plans to release In Rainbows through traditional music channels as well, via a record deal with a traditional label — and possibly even EMI, the label that the band belonged to before its contract ran out after Hail to the Thief was released in 2003. Radiohead’s management told a British radio programme that they planned to arrange such a deal to get the wider distribution that major labels can provide. They said:

“The band [are] incredibly proud of this record and feel that it deserves to be brought into the mass marketplace. That’s why we need a record company who have that infrastructure to deliver the CD.”

And EMI — one of the only major labels that has started distributing music in digital form without DRM controls — sounds like it is the closest to shifting the way it thinks about the industry, and therefore probably the best suited to do a deal with the band (although the financier who now owns the company seems to think that “digitalisation” is a word, which is unfortunate).

My first reaction to the news that Radiohead was still planning to go through the regular channels was to think that the whole download announcement was just a big publicity stunt. At the same time, however, I think that it is evidence that the balance of power is shifting. Granted, Radiohead likely has plenty of pull anyway — but the realization that the band could just as easily avoid the label route has to have gotten the attention of record-industry execs.

Another developing theme this evening: the supremely awesome density of the record industry. After a record industry executive threatens a university professor for linking to a critical blog post (see my post below), we now have the spectre of a recording industry representative — Jay Rosenthal, who runs SoundExchange, the entity that collects royalties for digital performances of music, such as Internet radio — saying, and I quote:

“I sincerely am starting to hate the Internet. I know you see the Internet as some incredible invention that has opened the door to unlimited distribution of music—and your lofty goal is to bring music to as many as possible. But all I see is a tidal wave of artist abuse.”

Rosenthal goes on to say that the Internet “is not becoming a beacon of light, but a cesspool of darkness.” Wow. That’s quite the well-reasoned argument there, Jay. Nice work. The comments come during a debate with publisher Kurt Hanson of the L.A. Times. In his thoughtful response, Hanson notes that:

“Your industry’s “success” here brings to mind what would have happened if the film industry had succeeded in its efforts to block the development of the home video industry. Had those lawyers succeeded, they would have deprived their companies of a future revenue stream (VHS and DVD sales) that’s now worth billions of dollars a year.

Your lawyers did succeed in shutting down the centralized service, so by forcing P2P file sharing into an uncontrollable environment, they deprived your companies of what could have eventually become a multi-billion-dollar revenue stream of monetized file sharing.”

Again, some nice work there. And when in doubt, blame the Internet.