With the weakened world economy, content in general faces plenty of gloom and doom. Advertising models are severely weakened. But, oddly, in the world of music, there are some positive signs that the shift to decentralized, online distribution might actually be going well — and maybe economic pressures are simply ensuring the parties involved find some way to make the adjustment.

And music distribution is becoming wonderfully weird and diverse – maybe far more so than in recording’s so-called golden age, an era in the past dominated by racial division, predatory labels, and a few dominant big businesses. (Money is tough as always, but it does make you wonder why we complain so.)

One sign of the shifting landscape: online streaming site Pandora is now actually calling for more performance fees — for terrestrial (AM/FM) radio, anyway. Ars Technica has been doing a great job of following the issue:

Pandora now pushing radio to pay for music, too

It seems Pandora – along with other webcasters – was able to cut a deal on webcasting rates, in a battle that put music listeners and makers at the center of a legislative struggle. Legislators had been the ones to intervene and save webcasting, under pressure from listener constituents and even musicians. Pandora founder Tim Westergren told CDM how dire a failure on these rates could be.

What the deal means is that we can return to the rosier vision of how online streaming could help promote indie musicians, something Westergren put eloquently in a 2007 interview with CDM. But looking back at Tim’s arguments from two years ago, a central tenant was fairness — meaning big, corporate radio broadcasters really ought to face a level playing field and start paying musical rights owners. (Public radio in the US, by contrast, is likely to benefit from the online deal, as public stations increasingly rely upon wider online distribution and even pledges from loyal online listeners. Moved from Omaha to Montreal? You can still listen to your favorite station.)

There are signs that not only have online music pirates moved to download stores like iTunes, eMusic, and Amazon, but to streaming solutions, as well. In one of a number of recent studies, for instance, the UK is showing online file sharing down markedly as legal streaming grows. To me, the most interesting thing about this is that it disproves a long-held industry assumption that habits, once set, wouldn’t change. For better or worse, the online world doesn’t seem to work that way.

Meanwhile, the lines between “indie” and “major” are blurring quickly. Again, Ars Technica:

Universal/TuneCore deal opens major doors for indie artists

The surprise there is that it’s not so much about distributing Universal artists exclusively – online artist services firm TuneCore is now opening its membership base to Universal and visa versa, so that Universal can discover new artists and artists get licensing and mastering services from UMG without the need for exclusive contracts with the major label. In fact, if there’s one word that sums up the future of music deals, “non-exclusivity” seems to be it.

(clarification) As kj notes in comments, I think saying this opens “major doors” is a bit of a stretch. It opens a small door at a major. But on the other hand, the idea of a label becoming an open service shop for artists – for offering, say, mastering for a fee as part of their revenue – is new and, provided it actually works, interesting. And it’s clearly part of a larger trend.

But I think the best news is the spread of unusual means of musical distribution. Eliot Van Buskirk writes a round-up of favorites for Wired Magazine. (And yes, while top ten lists are overused, they’re brilliantly appropriate when you actually have ten really awesome things.)

10 Weird Ways to Distribute Music

From soup cans to music boxes to iPhone apps, there are a few underlying trends in there. One is experimentation in the delivery mechanism itself (including 8-tracks and cassettes, really). The other is in what you can do with the media, as with the interactive remixable iTunes album, or even art books that extend what an album actually is.

As these spread, though, I have to optimistically think that this is more than desperation or brief novelty. Distribution media haven’t just shifted from one popular form to another; they’ve imploded. We’re rapidly approaching a “minority majority” situation in which no one format dominates the others. We haven’t gone from the compact cassette to the CD to the MP3. We’ve gone from the CD to MP3s, MP4s, lossless files for aficionados and lossy streams for kids who love on-demand, vintage formats, physical media and art books and software. Instead of being strange anomalies, these other formats may actually be the new normal. I think in a way the business model doesn’t matter, because, let’s face it, a lot of art making is about losing money. What drives artists is loving sharing the thing they’re making, and finding someone who wants to love it, too. Some people will make a great business model around that, while others won’t.

But if you’re a music lover, we could be facing a new golden age. And if you missed compact cassettes, good news – they’re back.

slotMusic.org | Press Release

See also GearLog, which notes that SanDisk previously did a free promotional SD of music

Wired News asks, “but why?”, to which I’d answer – it might well be easier to load music onto a phone in parts of the world other than the US, you might more easily distribute videos, and artists looking to increase the value of their CDs could innovate on revitalizing album art.

First, let’s start with the players, as that’s basically the big news here.

Hardware: SanDisk, the folks who invented flash storage and make more of it than anyone else

Labels: A huge set of the majors – EMI Music (which includes the likes of Angel, Capitol, Blue Note, and Astrelwerks), Sony BMG, Warner Music (including Atlantic, Nonesuch, Rhino), and the world’s biggest music company, Universal Music Group

Retailers: Best Buy, Wal-Mart, and other US retailers, with Europe to follow – keeping in mind, Wal-Mart remains the biggest brick-and-mortar seller in the US

When it’s happening: Exact date TBA, but officially by the holidays

Which artists: Most likely, lots of them. An EMI representative who spoke with CDM confirmed two chart-topping examples: Coldplay’s Viva la Vida and Kate Perry’s One of the Boys.

Now, you’d be right to be skeptical of how this format will be received, but it’s certainly a big distribution play with that arrangement of labels and retailers.

The hardware in question is basically SanDisk’s tiny removable flash memory format microSD, rebranded and repackaged as slotMusic. (A representative of SanDisk tells us there are some other subtle technological differences; more on that soon.) The important thing about this is that the hardware you buy has no DRM on it at all; it’s just standard flash memory you can plug into phones and mobile devices, or, via a tiny included USB sleeve, a computer.

SanDisk’s format specifies DRM-free, 320 kpbs MP3s as the music format. Gruvi, SanDisk’s previous attempt at turning their lucrative flash memory business into a music format was a miserable failure, but by contrast, it was locked with DRM features and, excepting a big release by the Rolling Stones, lacked support from labels and retailers. (I see Gruvi has even been largely erased from SanDisk’s website.)

What’s the Business Angle?

My colleague Eoin Rossney sent me this story under a headline on Ireland’s SiliconRepublic.com that screams “SanDisk and big labels in tech deal that could save the music business.” That’s obviously hyperbolic, but it’s also wrong. To me, it seems to be about three things:

1. It’s an experiment. Music labels want their music everywhere they can get it – as, frankly, they should; that’s their job.

2. It’s a massive end run around iTunes. Remember, part of what helped prompt some of the more stubborn labels to remove DRM was the realization that their DRM deal with Apple had placed Apple in the position of dominating download sales for the device most people owned.

3. Most phones aren’t iPhones. Labels will continue to do business with iTunes because iTunes is selling their music – but they’d be nuts to turn their back on the rest of the mobile phone market, which is far bigger. The press release notes 1.2 billion phones are due to ship this year, a number Apple can’t approach even with all their iPods and iPhones put together. In fact, it’s hard to wonder if, on a global scale, iPod won’t slip into the shadows with the number of increasingly multimedia-savvy phones out there.

Despite the hip factor of the iPhone, Apple has a tiny slice of an exploding global market for mobile devices. Instead of using a cable and a fancy vendor-specific store, you can just give people music they can pop directly into their phone, which – from vendors other than Apple – typically has a microSD slot. And as I noted last week, Apple’s alternative is a store/software sync arrangement that they control exclusively.

Music Everywhere, and Back on Objects

I’m not sure slotSD will be the “new CD,” or that it even needs to be. I think it’s better to see this as one of a variety of options you’ll see for music distribution. And, of course, even slotSD is best understood in the context of a growing amount of music showing up on flash memory, because it combines the flexibility of digital formats with physical objects.

“This is one of many initiatives to make our music available in as many different forms as possible,” Jeanne Meyer of EMI Music tells CDM. “Our big MO is to experiment with as many as possible.”

EMI, for one, has a record of trying just this sort of thing. There was a re-release of Radiohead’s studio albums on memory stick, though that seemed to cause some controversy. EMI has even toyed with big retail, with a release of UK superstar Robbie Williams at England’s own big box, The Carphone Warehouse. (It’d be interesting to know what sales were like.)

Of course, you can easily download files. Physical media is all about the object. A SanDisk representative confirms that labels are planning physical liner notes and album art in the package. You can also expect the memory to be loaded with digital extras, in the form of artwork, videos, and the like. Given the middling quality of online video, and the fact that bandwidth costs aren’t going down at the rate many had hoped, I think that could mean higher quality and more access to video via physical formats than online.

Indie Artists and Digital Contents

So, I imagine for many of you not on Sony BMG, and listening to many artists who aren’t, this won’t be terribly earth-shaking news. But I do know SanDisk reassures CDM that they have worked with indies in the past on various promotional projects.

What can artists do with a format like this? Well, they can load it up with goodies that might actually be otherwise rack up bandwidth costs. One excellent example of an artist experimenting with this format is Sound Tribe Sector 9. They sent their latest release, Peaceblaster, to me. It’s loaded up not only with the files for the album, but extra images, podcasts, a screensaver, and videos. We saw these kinds of extras squeezed onto CDs at one point via formats like Enhanced CD, but there’s no question it’s more convenient on USB stick.

I think the big challenge will be how to make these contents interesting and unique, and even with bandwidth costs comparing unfavorably against increasingly high-definition media, how to compete with online alternatives.

Somehow, I imagine the slotMusic format winding up being a plain-vanilla blister pack that, stuck in a dull music department in Best Buy, just confuses consumers. I’m happy to be proven wrong there. But there is, in the meantime, plenty of room for independent artists and labels to innovate with short-run releases and ideas for what to pack inside the digital media that no one has thought of yet. And while majors have earned the skepticism of consumers and artists alike, I wouldn’t be surprised to see majors being more adventurous – especially once they discover that, in addition to the perils digital media pose, there could be a significant profit payoff for those experiments.

Actually, forget everything I’ve said in this entire article, and let me sum it up in one line:

If physical distribution brings art back to album releases, it’s a good thing, and it’ll work.

The generation of music lovers staring into album art wasn’t wrong.