It's official. Digital music sales are slowing worldwide, not just in the U.S., as recent SoundScan data suggests.

Global digital sales grew 6% last year to $4.6 billion, a considerably cooler pace than 12% in 2009 and 25% in 2008, according to an annual report by the London-based International Federation for the Phonographic Industry.

With digital music sales slowing worldwide, music companies are looking everywhere they can for a little extra juice. Two sources come up prominently in the report: cellphone carriers and Internet service providers.

The music industry dangled a tasty carrot. Carriers and ISPs in the U.K., for example, stand to reap as much as $103 million annually within three years of offering digital music streaming services to their subscribers, IFPI said, citing a report from European technology consulting firm Ovum. In short, labels are wooing ISPs and carriers by saying, "Together, we can make beautiful music -- and lots of money."

Why do music companies need fuddy-duddy cable and phone companies? Two words: direct billing.

Jim Rondinelli, vice president of Slacker, a San Diego-based digital music service, summarized it by saying, "That means highly visible distribution on the handset and direct billing that puts the consumer no more than two clicks away from the transaction. There is simply no substitute for that."

Another bonus of doing business with carriers is that once the service charge is tacked on to a monthly phone or cable bill, many subscribers forget that it's even there and don't cancel.

With ISPs in particular, there's an implied quid pro quo: Help us police piracy by shutting down illegal sites and cutting off infringing users, and we'll help you make money by selling our music services.

Will the music industry's love song work? Chances are, this is a good year to find out.

-- Alex Pham

Twitter.com/AlexPham

Photo: Ke$ha, whose hit single "Tik Tok," was the No. 1 digital track in 2010, according to IFPI. Credit: RCA Music Group

SoundExchange has been writing checks like it's going out of style. Luckily for musicians, money never gets old.

Charged with collecting royalities from digital music streams on Internet, satellite radio and cable television, the Wash., D.C., based non-profit group distributed $155 million to artists in 2009, up 55% from 2008 when it handed out $100 million.

Each time a song is played on Pandora, KCRW's website or XM Satellite Radio, the virtual sound of fractions of pennies are heard dropping into SoundExchange's pocket. Multiply that by billions of songs heard over the Internet each year and, voila, a new income stream for musicians is born.

This year, SoundExchange is expected disburse $252 million, according to unaudited estimates from SoundExchange.

You can't make a whole lot of money being an independent musician. Or can you?

Not every unsigned band fits the stereotype of the starving artist who crashes on friends' couches and survives on ramen. 

Take those who release their music using TuneCore, a company that distributes thousands of digital songs on iTunes, Amazon.com and other online music stores each week. Some of them rake in serious cash. How serious? In July, the latest full month reported, the top 10 TuneCore artists collected a combined $519,825 from music sales, according to Jeff Price, TuneCore's chief executive. At least 8 of those artists did not have major record label contracts. You can read more about TuneCore here.

One artist, Los Angeles-based song-writer and comedian Liam Sullivan, sold 12,885 albums and 668,571 song tracks in total through TuneCore. With digital stores like iTunes taking a 30% cut of each sale, let's say Sullivan nets $7 for each $10 album, and roughly 70 cents for each 99-cent track. That would work out to about $558,195 for Sullivan, not including the royalties he would receive from digital music streaming services, such as Rhapsody or Pandora. (That income also does not include any sponsorships, endorsements, live performances or merchandise sales, which have also become critical components of the business.)

Christian hip hop artist Lecrae is another top TuneCore earner, with an estimated lifetime sales of $592,272 from selling 53,052 albums 315,583 tracks.

How does that compare to selling physical discs through traditional record labels? In the old days, a newly minted band would release a physical album that would retail for $16.98 on average, Price said. Of that, the bands themselves would net $1.40 to $1.70 per disc sold.

If the artist releases the album on iTunes, they net 70% of the sale once Apple Inc. takes its 30% cut. For a $10 album, that yields $7. (Musicians pay TuneCore about $9.99 to distrubute each single or $49.99 an album of two or more songs.)

"If you go directly to iTunes and sell two songs, you'll net $1.40," Price said. "You will have made the equivalent of selling a full album at Tower Records."

Those digital pennies can add up. Just ask Dave Days (pictured on the right), who collects "six figures" from TuneCore each year.

"It definitely surprises people," Days said when he tells them how much money he can make as an independent musician.

In June, when he released a new pop song, the 19-year-old musician sold 28,845 song tracks. At 70 cents apiece, that's, um, a lot of ramen.

-- Alex Pham

 Photo: Pop musician Dave Days at the Vidcon 2010 conference in Los Angeles. Credit: Dave Days.

In the digital wild west that has become the music industry, indie bands are trying all kinds of things to make money.

One Los Angeles alternative rock band, Killola, has come up with the concept of the "living album," which it is selling while on tour for its latest album, "Let's Get Associated." 

Here's how it works. The album comes in the form of a dog tag that looks like the ones soldiers wear around their necks. This one comes with a slide-out USB stick that has all the usual bits: music, photos and videos. So far, not that unusual from the USB wristbands that artists have been selling for years at their merch table.

What sets Killola's tags apart is that fans can use it to get access to the bands' future concerts and music releases. Each time fans plug in the USB drive, it checks to see if there are new songs or messages from the band. If there's a concert, fans plug in the USB tag into their computer during the event to tap into a live stream.

The band's bassist, Johnny Dunn, worked with Aderra Inc. in Los Angeles to create the product. Aderra, which records live concerts on to USB drives and sells them to fans after the event, did a trial run of the product in June and have since streamed two live shows, said Edward Donnelly, Aderra's chief executive.

Dunn said his band has sold about 400 of the tags so far at $40 a pop. He said his band will continue to feed the USB with fresh content while they're on tour for their current album for the next four months. Sadly, Killola's concert Saturday night at the Roxy in L.A. won't be live-streamed due to restrictions on recording set by the venue, but Dunn said fan-recorded videos may become available sometime after the show.

Why give away so much? Dunn says the world is different now than when he was a teenager listening to the Beastie Boys and Guns 'N Roses.

"I remember having their posters in my bedroom, but that was it," Dunn said. "With the Internet, we feel we have a personal relationship with our fans. You can’t just put a CD out every year now. You have step out of that poster on the wall and become a real person. With technology, it’s remarkably simple to do that."

-- Alex Pham

Top photo: A Killola USB dog tag, which costs $40 and comes with three albums, music videos and access to live streaming concerts. Credit: Alex Pham / Los Angeles Times.

Bottom photo: Killola band members Johnny Dunn, bassist (top, back); Dan Grody, drummer; Lisa Rieffel, lead singer; and Mike Ball, lead guitarist. Credit: Thaddeus Bridwell.

Ever wanted to play your music collection from anytime, anywhere you wanted? Up until recently, that was pie-in-the-sky talk. Now, that notion is at least coming down to the clouds.

MP3tunes on Monday launched a service that promises to let its subscribers do just that from their mobile devices, using "cloud computing" where the music files are stored on server computers that can be summoned on virtually any device with an Internet connection.

The San Diego-based company, in launching its new "Buy Anywhere, Listen Everywhere" service, made a dig at Apple Inc.'s iTunes music store, which requires buyers of digital songs to take the extra step of converting their purchased songs to a different file format to make them playable on non-Apple devices.

"Apple wants to lock you into their store and devices," said Michael Robertson, chief executive of MP3tunes who also founded the original MP3.com site in 1997. "But what's best for consumers is to be able to shop at any store and use it with any device."

It's not a new idea. But it's taken some time for both the technology and the legal hurdles to catch up (to read more on the legal drama, just read past the break below). David Pakman, a digital music pioneer and now a venture capitalist at Venrock in New York, started the first such service in 1999 with MyPlay.com.

"The concept makes even more sense now than it did back then," Pakman said. "Everyone consumes music digitally, and there is a need for a universal storage space in the cloud that works with all devices."

Robertson's career has followed the many ups and downs of the music industry's tumultous attempt to cope with the migration of music from CDs to online digital files, and the torrent of piracy that ensued. His first company, MP3.com, ...

AT&T, the exclusive U.S. wireless carrier for the iPhone, is doing away with its unlimited Internet offering for new customers next week. Is it the end as we know it for streaming music services like Pandora?

Not likely, but AT&T customers might want to think twice about watching a ton of music videos on YouTube.

Current AT&T smartphone customers can hang on to their current $30-per-month plans or switch to a new option -- $15 for 200 megabytes or $25 for 2 gigabytes.

If you're hoping to treat yourself to an extra Arby's combo meal next month, the 2-gig plan should cover general usage. AT&T says it will cover 98% of its customers.

With an imminent update to Apple's mobile operating system, iPhone users will finally be able to listen to streaming music while they surf the Web, check e-mail and use other applications. So usage of Pandora is expected to skyrocket.

Music industry influencer Bob Lefsetz wrote in his newsletter on Wednesday that Pandora could become an unintended causality of the AT&T caps.

A Pandora spokeswoman said half a percent of listeners, based on current patterns, will be affected. If anything, Pandora presumes the cheaper plans could make smartphones, and in turn Internet-dependent music services, more accessible to the casual consumer.

Four months after buying Lala Media's popular online music service for a reported $80 million, Apple is pulling the plug on the site, which had been operating for five years.

Lala notifed its users in an e-mail Friday morning of the shutdown. Apple spokesman Jason Roth confirmed the plans, but declined to say whether the Cupertino, Calif., company will resurrect the service under Apple's iTunes brand.

Lala lets users listen to any song in its catalog in its entirety once for free. After which, listeners can sample the song again for 30 seconds or buy a digital download of the song for 89 cents. What separated Lala from other music services, however, was its concept of a "Web song." Listeners could play a song an unlimited number of times for 10 cents, as long as they are connected to the site. 

The difference: Downloaded songs are stored on a user's computer and can be copied to other computers and devices. Web song files sit on Lala's computers and can only be played while the listener is connected to the Lala site. This is sometimes called "cloud" access.

There has been much speculation about whether Apple would use Lala's technology to create its own music streaming subscription service to compete with Rhapsody or MOG, which charge monthly fees for on-demand access to their extensive song catalogs. Another possibility is that Apple could use Lala's cloud approach to let customers who purchase a song from iTunes also have online access to that song in a sort of pay-once-play-anywhere idea.

While cloud computing offers convenience, the downside is clear in the case of Lala. Many users who have spent years diligently building their "digital lockers" on Lala woke up to find that those collections will evaporate on May 31.

Lala said it will compensate users, telling them "you will receive a credit in the amount of your Lala web song purchases for use on Apple's iTunes Store. If you purchased and downloaded mp3 songs from Lala, those songs will continue to play as part of your local music library. Remaining wallet balances and unredeemed gift cards will be converted to iTunes Store credit (or can be refunded upon request)."

Cue the swan song.

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

The short answer to the headline is probably not. In an earnings call this week, Warner Music Group Chief Executive Edgar Bronfman Jr. seemed to put free, ad-supported streaming services on notice. In now much-quoted comments, Bronfman stated that the major would not be licensing content to such services.

"Free streaming services are clearly not net positive for the industry," Bronfman said during the earnings call (read a full transcript here). "And as far as Warner Music's concerned, will not be licensed. So, this sort of get all the music you want for free and then maybe we can -- with a few bells and whistles -- move you to a premium price strategy is not the kind of approach to business that we will be supporting in the future."

The comments have generated speculation that Warner Music Group may not play nice with Spotify, the popular streaming music service in Europe that is set to launch soon in the U.S. Overseas, Spotify boasts 7 million users and content from all four majors, and it's a widely held belief within the industry that the company is targeting mid-March to unveil its U.S. service, timed for the annual South by Southwest interactive and music conference in Austin, Texas. 

Spotify took to its Twitter to clarify Bronfman's comments, stating that WMG "is not pulling out of Spotify" and that "the media is taking things out of context." A WMG spokeswoman declined to elaborate on the record on Bronfman's comments, but did state that no current deals already in place would be affected. 

Ian Rogers (left), CEO of Topspin, and Tom Silverman at the New Music Seminar. Credit: Alex Pham, Los Angeles Times.

If you're a musician, your magic number is 1,000.

That’s the number of “true fans” required to launch a band from being a night job to a day job, at least according to Kevin Kelly, who wrote a famous essay on the topic. The theory goes that if you can get 1,000 hard core fans to pay $100 a year to attend your concerts, purchase your songs and buy your T-shirts, you'd have a tidy $100,000 income. (Of course, there are minor details, such as expenses and the fact that there may be other people in your band. But that's a topic for another day.)

So where do you find fans, now that you’ve already recruited your parents, roommates and cousins to be your fans on Facebook?

We asked the industry pros who came to the New Music Seminar in Los Angeles on Tuesday for their best, non-obvious tricks for bagging new fans. We’ve distilled their advice into five quick tips.

1)    Play nice with search engines. So the obvious thing is to get people’s email address. One of the less obvious ways to get new fans is to have good [search engine optimization]. Thirty percent of new fans come from emails. But 30% come from Google or Yahoo. It’s people who are using search engines to find you. You need to make sure that if people look for you, they will find you.  – Ian Rogers, Topspin