Terry Ellis, who built Chrysalis into one of the world's biggest independent record labels by signing up acts like Blondie, Jethro Tull and Billy Idol, has formed the "cyberlabel" StarGig.com with the backing of Damian Aspinall.
The new joint venture company, an internet music portal, has bought a 50 per cent stake in the Band Register, which has 225,000 unsigned acts on its books.
StarGig.com will give their music away, free of charge, by allowing subscribers to download it digitally from the web or onto compact disc.
In return StarGig.com and the bands will earn money from publishing, setting up fan clubs for the individual acts and advertising.
Mr Ellis predicted that the move would have huge implications for then pricing of music and the dominance of the big five record companies - Sony, EMI, Polygram/MCA, Warner Bros and Bertelsmann.
Up until now, the web has been used mainly for selling music by online retailers such as Amazon, CDNow and Musicmaker. But there is a growing move towards publishing on the Internet, with the arrival of the MP3 player enabling anyone with a home computer to download pre-recorded music.
"We intend to make it easy for musicians to gain entry to a new style of record company - the cyberlabel," said Mr Ellis. "The impact of MTV on the music scene was profound. The impact of the Internet will go way beyond that. It will vastly increase the number of musicians who are able to make a living from their creativity and will liberate the next generation of artists from the domination of the big five record companies."
A number of small record labels are already publishing their music through the Internet but none of the big record companies has yet taken the plunge.
Instead they are working jointly on a technology which will enable them to encrypt records to protect their intellectual copyright and prevent wholesale pirating.Reuse content