December 9, 2004 2:15 PM PST

Record labels' street teams now online

For a clear sign of how deeply the music industry is adapting to the Internet, look no further than Warner Bros. Records' street teams.

Street teams have long been a key part of record labels' grassroots marketing efforts, a kind of Baker Street Irregulars corps of fans, students and paid marketing companies who post fliers, distribute sample discs, and talk up new albums among friends and scene members.

In Warner's case, those groups have now been moved under the corporate umbrella of "new media," in recognition of the critical role the Internet is now playing in the label's attempts to identify trends and market its music.

"We moved street marketing under new media to make it more accountable and to push more focus onto the Internet," Jeremy Welt, Warner vice president of new media, said Wednesday at the Music 2.0 music summit in Los Angeles. "But we're not just out pushing. We're trying to learn. We're trying to get them to tell us what's going on in their scene."

Tangible actions like these show that the record industry is adapting to the Net far more broadly than headline-grabbing debates over digital sales and file-swapping might indicate.

All the labels are now experimenting with download, subscription and even peer-to-peer tools for distributing digital versions of their songs. But digital sales still account for barely 1 percent of the U.S. music business, and labels are looking to the Net to help drive sales of CDs as well as downloads.

Executives say that the biggest services, such as Yahoo's Launchcast video and AOL Music, each of which reach millions of people a month, are now stops for label marketers--and as essential as MTV or the largest radio stations. They're becoming as competitive as any mainstream marketing channel, however. Launch, for example, offers just one high-profile "emerging artist" slot a month, prompting stiff competition.

New channels also are emerging quickly. Recently, the MySpace social networking community, which now has more than 6 million members, has emerged as a dramatically successful promotional ground for musicians and record labels, executives say. Warner's prerelease of R.E.M.'s latest album exclusively on MySpace was recognition of that site's newfound power, Welt said.

Even the smallest sites are getting attention. Some labels have begun offering promotional songs to bloggers, which post MP3s for download by members of their niche communities.

The move to online marketing is also helping reach customers whom

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