Heard it through the Web grapevine

In 1994, the band R.E.M. was a superstar on a par with U2. But in the space of 10 years the band has been reduced from four members to a trio, its album sales have plummeted, and it's now about as welcome on MTV as REO Speedwagon. It hardly helps that R.E.M.'s fan base has been getting tubbier, balder, and smaller - not unlike the band itself.

For the release of a new album, "Around the Sun," the band is turning to the Internet to sell more records and garner a younger fan base. A few weeks ago, the alternative rockers posted their album on MySpace.com, a Los Angeles-based website that's a social networking hub for more than 4 million people - most of them between 16 and 24 years old. R.E.M.'s idea was to create ripples of buzz through the vast online community by drawing curious listeners who would then tell other friends in the MySpace network to listen to the album.

Regardless of whether R.E.M.'s gambit translates into sales, the strategy symbolizes a significant shift within the music industry to embrace the Internet as a promotional tool. While radio, TV, print media, and concert tours are still the primary engines of music sales, record labels are realizing that online communities can spread word of mouth among the elusive demographic that watches MTV's "Total Request Live."

"The general underlying principle is that in the off-line world, people find out about new music primarily through their friends," says Chris De Wolfe, CEO of MySpace.com. The Internet works in the same fashion except on a larger scale and without any geographic constraints. "The word spreads virally from friends telling friends," says Mr. De Wolfe.

It's not just MySpace that's revolutionizing "viral marketing" of music on the Internet.

Until now, eBay has been the place to bid on everything from real estate to Britney Spears's chewed bubble gum. The site now sells bubble-gum pop by Britney and other artists. Last month, the world's largest auctioneer started a bold program to promote and sell music by making 500,000 digital songs from four major record labels available to its 114 million members.

EBay, too, is relying on word of mouth to increase music sales. With every purchase, a customer is allowed to e-mail a sample of the song to their friends. For every 10 songs sold as a result of that recommendation, the original sender gets a free song.

Other online communities are more useful to the record industry's smaller players - namely unsigned bands, musicians on independent labels, and nonmainstream artists.

A Web "club" for musicians, iFanz.com, boasts a roster that's 90 percent unknown artists in addition to well-known clients such as Clint Black, LeAnn Rimes, and Oleta Adams. The site's primary purpose is to give musicians the Internet tools to bypass record labels and sell directly to fans.

Most significantly, the entertainment company has what Ruth McCartney, the founder and CEO of iFanz, calls a "Swiss vault" of data: About 1 million music fans have opted into the system. iFanz boasts that it can "supersize" the audience base of its entertainer clients through an advanced database that sifts information to identify potential new fans. And iFanz can send an e-mail to millions of fans simultaneously.

"We have another technology called 'Word of Mouth,' " says Ms. McCartney in a recent phone interview from Los Angeles. "By having a button at the bottom of every outgoing e-mail that says 'Send Your Friend,' word of mouth and affinity marketing is obviously always the best way to grow."

Thousands of emerging artists are using MySpace.com to expand their fan base the old-fashioned way: airplay. Or maybe "webplay" is a more accurate term for it. Startup bands can make as many as four songs available for download in their personal area on MySpace.

Music is a huge component on MySpace, which adds about 25,000 new users per day. Along with movies, religion, and politics, it's one of the core topics sites that users mobilize around as a shared interest. Given the promotional possibilities of the MySpace network, it's hardly surprising that major acts such as Green Day, Black Eyed Peas, Snow Patrol, and My Chemical Romance have begun using the site as a way to connect with hardcore music enthusiasts. Rivers Cuomo, the lead singer of Weezer, regularly posts new songs on MySpace. Once, he even recorded a song written by someone he met on the site.

MySpace's De Wolfe says there's no other place on the Internet where those types of relationships have developed. "If I'm a user and I want to send the leader from the Black Eyed Peas a message, I can do it," he says. "Quite often he'll send me a message back."

One area of the Internet that has resisted the influence of big record labels is the rapidly growing community of music web logs, otherwise known as music blogs. Surf the hundreds of music blogs online and you'll find music enthusiasts who post reviews and descriptions of obscure and undiscovered tunes as well as - and this is the controversial part - MP3 clips of the songs. These bloggers, who are part amateur music journalist and part disc jockey, often don't have the permission of an artist or record company to host the songs. Yet, perhaps sensing the promotional possibilities of MP3 blogs - especially in the iPod era when single-song downloads are picking up - record companies haven't taken legal action yet. Some labels even give bloggers tacit permission to post new MP3s by sending them promo copies of albums.

"[Blogs] can't necessarily be controlled because they're the work of individual people - but they can be influenced," says Matthew Perpetua, who runs Fluxblog, a popular site, out of his New York apartment. "So you have a lot of labels sending promos to myself and some other people who do MP3 blogs, the high-profile ones. It certainly is useful, especially for small artists, who no one really knows about, in gaining buzz."

Just ask the Killers, a band that sounds like Las Vegas's answer to Duran Duran. Their album, "Hot Fuss," cracked Billboard's Top 100 albums in July thanks to advance buzz that started on blogs.

"The music blogs are really playing the role of the old-style DJ, where the musical selections are driven by passion and enthusiasm," says Todd Lappin, a senior editor at Business 2.0 magazine. "That really does lead to sales. Not necessarily sales on the level of U2 or something like that, but definitely stuff that's credible."

The value of MP3 blogs is that they act as curators and tastemakers who filter through a vast universe of music looking to identify the next big thing. It's not surprising that labels want to harness the influence of the music bloggers.

David Gutowski, a Web developer in Decatur, Ala., who runs a blog called Largehearted Boy, has already been approached by two major labels to hype new CDs through contests on his site. Though he turned them both down, he predicts that record companies, big and small, will find a way to use blogs and other sites for grass-roots marketing.

"Weblogs can be a huge force for an artist building his fan base. And also the Internet," says Mr. Gutowski. "If you build an interesting, interactive website that fosters fan participation, you're probably going to sell more albums."

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