Sweet Sound of Downloads: My business week

Clive Rich, the head of digital music at investor and adviser Ariadne Capital, on why music is more popular than ever

"The times they are a changin'," to quote Bob Dylan, but the music industry is not responding fast enough.

There are good reasons for this but its lack of speed is creating opportunities for a new breed of entrepreneurs.

I see myself as a kind of business A&R man on the look-out for new music operations that "get" the internet business model.

So what kind of talent am I looking for? Well, communities of people who are passionate about music and want to share it with their friends. That's what works on the web.

The industry model used to be the opposite: it was control distribution and make millions. Now, though, it is about "letting go" putting your stuff out there on as many websites as possible, encouraging people to share it, blog about it.

Why do you want them to do this? Because they are your marketing.

One company I like is Generator X. It's a piece of software you download for free that helps you organise your hundreds or thousands of digital music files. It will put them into playlists for you, such as Music for the Gym, Music for Shopping.

It will also tell you if you've got, say, four tracks by Fatboy Slim and ask if you'd like to know the others or to buy them.

So it makes a percentage on music sales and also generates data that can be sold to mainstream music businesses.

But we shouldn't berate the mainstream businesses for lagging the internet curve. About 85 per cent of music sales are still generated the old way, and it is also hard for them to cannibalise their own businesses.

For them, the 20 billion illegal music files downloaded last year were a worry. For me, this is an opportunity: a huge appetite for sounds delivered digitally. Music has never been more popular.