When iTunes opened for business in 2003, many assumed that the crisis of freeloading (downloading unlicensed digital content for free) was waning. A burgeoning array of legal, digital music services would finally compete to provide low-cost, high-quality music to an expanded consumer market, making unlicensed services like Napster unnecessary in order to obtain digital content. The reconfigured music industry—composed of artists, labels, and the fans who subsidize them—would become less dependent upon corporate labels and radio while turning into something more democratic and prosperous.
It hasn’t exactly turned out that way. Seven years farther into the digital frontier, the music industry would be blissed-out just to break even. Digital music sold briskly after 2003, sure, but nowhere near enough to overcome the free fall of CD sales. From 2000 to 2009, global sales of recorded music (including digital) plummeted from $26.5 billion to $17 billion. Hope remains that digital sales will eventually fill in the gaps, but in 2009 the growth rate for digital track sales in the United States ominously flattened . While the recovery of sales appears about as likely as the state of California achieving solvency, prospects have dulled for other digital-delivery models as well.
Radiohead’s exciting pay-what-you-want experiment now looks like a one-off marketing novelty. Music subscription sites have yet to make a significant impact and Rhapsody, once a presumed industry savior, is losing money. “Freemium” streaming services like Spotify are lifted up as hopes for the future but have struggled to reach significant profitability while doing an abysmal job of compensating artists. The Guardian recently reported that last year 1 million Spotify streams of Lady Gaga’s “Poker Face” yielded her a mere $167 .
There does, however, seem to be a sustainable and profitable (though not terribly new) model emerging in the tumultuous wake of freeloading and digitization. In the U.K., music industry revenues grew a full 4.7 percent in 2008 despite the persistence of freeloading. The biggest chunk of that growth came from business-to-business (B2B) revenues, such as corporate sponsorship and the licensing of songs for advertisements and television shows. B2B revenues jumped 10 percent and grew from comprising 20 percent of total industry revenues in 2007 to 25 percent in 2008. In a separate study on North American companies by IEG, corporate sponsorship of continental music venues, festivals and tours was set to exceed $1 billion in 2010, an increase of 4.2 percent over the previous year.
Sean Adams, editor of the U.K. music blog Drowned in Sound, articulated last year  what this trend represents for the future of musician support, in the face of freeloading. “I think corporate patronage is the only viable model,” Adams said. “Something that mashes up Levi’s ads in the ‘90s and the Starbucks label.”
Non-music-industry corporations have long provided essential support for music and other creative industries. But this historic corporate patronage operated in balance with consumer support for record labels. Labels are corporations, sure, but ones subsidized by fans and the one-purchase-one-vote features of the commodity system. The sale of cultural commodities puts the consumer in control of a musician’s future, whereas non-music-industry corporate-patronage places increasing influence over an artist’s career in the hands of the car company, bank, soda manufacturer, or whomever else wants to make the licensing/branding deal.
As freeloading erodes labels’ sales receipts, favorable conditions have been built for artists and labels to aggressively seek funding from non-music-industry corporations. Joined in spirit with Web 2.0 activists like the Copyleft, who advocate for the ideal of an open, free, and “shared” Internet culture,  the most extreme freeloading advocates like the Pirate Bay have claimed to be agents of justice, actively destroying exploitative corporate-media models to lay the foundation for more democratic ones. However, the refusal to pay for music may end up being mostly an act of consumer self-disenfranchisement.
Granted, no one, not even the Government Accountability Office , can prove that sales are indeed down because of freeloading or if they have sunk for other reasons. Similarly, we can’t certifiably prove that corporate patronage is gaining steam due to freeloading alone, or if it’s because of some other phenomenon. Perhaps artists aren’t compensating for a lack of record sales, and instead, reaching a mass audience is the main goal.
Either way, though, the reach of corporate patronage is striking. There’s no surprise in seeing mass-culture figures like Lady Gaga inject their videos with a Wal-Mart  (WMT) aisle’s worth of product placement, but it’s stunning to observe the sudden mood shift toward commercial shilling in a subculture like “indie rock.” As freeloading became more pervasive and label revenues dried up, the once disgruntled children of DIY and punk hollering “Sellout!” have calmly drifted toward an acceptance of corporate branding.
The prickly torchbearers for anti-corporate punk, Sonic Youth, signed on to release an album through Starbucks ’ (SBUX) record label, Hear Music, in 2008. Chicago’s independent post-rock stalwarts the Sea and Cake sold one of their songs to appear in a Citigroup ad in 2009. Neon Indian, the Web’s most-hyped new band of 2009, followed up its critically acclaimed debut album, Psychic Chasms , with a highly anticipated single in 2010. But instead of signing up with a vaunted indie label like Matador or Merge, they released the song through Green Label Sounds, a branding apparatus for Mountain Dew. Grizzly Bear, a critically adored, avant-rock band from Brooklyn, had the indie rock equivalent of a blockbuster with its 2009 album, Veckatimist . Its lead single, the irresistibly bouncy “Two Weeks,” was licensed for a Volkswagen Super Bowl ad. Grizzly Bear revealed a new song this past April, featured in a commercial for, of all things, the Washington State Lottery.
“In principle I’m against bands lending their music to adverts,” says Andy Falkous, frontman for the Welsh punk band Future of the Left. “But if somebody offered us 100,000 dollars tomorrow—and even a slightly objectionable company—I’d be an absolute f*cking fool not to take that money. Ten years ago I would have been in a much stronger position to say no.”
While higher concert revenues from an expanded market are held up as a way for bands to capitalize on the era of freeloading, a British music industry report  noted that an increasing percentage of live revenues were going to heritage acts, who had already made their name via the commodity-based record label model.
A ‘digital Britain’ faces a problem with the investment in creative industries. Sure, recorded is down and live is up – but it’s recorded music which makes the primary investment in new talent, and given the damage already done to investment calculations by [freeloading], therein lies a ‘conveyer belt’ style question: who’s going to invest in the career development of artists to create the heritage acts of tomorrow?
Be it corporate patronage or something else, no one has a proven answer to the question above. Assuming that corporate patronage continues to expand its influence, at least one other writer has articulated a relationship.
Cory Doctorow makes a living writing books and editing Boing Boing. A steady voice in the freeloading debate for years, he argues from the Web 2.0 perspective that technology is making content free, there’s nothing we can do about it, and authors and musicians should accept this.
“More people will get accustomed to reading off screens in the future,” he correctly predicted of books at a reading in 2005. “When that happens, we (writers) are going to have to figure out new ways to make a living.”
An audience member asked Doctorow if he would hypothetically plug Pepsi in one of his books to make a living, to which he defensively hoisted his shoulders. “I probably wouldn’t plug Pepsi,” he said. “I would plug someone else, though.”
“I don’t mind being a whore,” Doctorow said. “I just don’t want to be a cheap whore.”