Westword Denver: "It's finally dawned on record companies that they're screwed.."

I contributed a wee bit to this feature: "Denver - Music - Major Fables: It's finally dawned on record companies that they're screwed. But is it too late?"

"Gerd Leonhard and Dave Kusek, authors of The Future of Music, suggest a "utility model": Labels will strike deals with Internet providers to recover money that's lost to file-sharing by implementing a user surcharge — sorta like the one affixed to blank-tape and recording-equipment sales.

Leonhard also proposes licensing music to huge social networks such as MySpace. "What they really have to sell is access to the music and to the artist, to the brand and to the experience that goes with the music," he says. "Companies like Sony got into music because the profits were obscene right after CDs. Now, if you want to sell CDs, you have to be a lot smarter, because you can't control the system. There are so many people involved now. It's no longer about just music."

More private equity deals could also surface in the wake of thinner profit margins and an increasingly turbulent environment. Entertainment is a volatile business that rewards risk-taking. In essence, private investors (such as Terra Firma, which recently took over EMI) are better equipped to ride out industry turmoil during the recovery process.

"It's not enough [for a public company] to just make money; you have to keep making more money," says Leonhard. "A lot of media businesses are not suited to that, because they could be having a huge profit one quarter and none the next..."