CD and tapeI follow the tribulations of the major music labels with something akin to glee. It’s partially the petty satisfaction of watching a bully get his just desserts. But as an indie artist, I also have practical reasons for rejoicing.

With the traditional business model failing, it seems that future success in the music industry will require novel approaches. The big labels have been slow to adapt, however. And the opportunities they’re missing leave some great openings for independent artists.

Witness the plummeting price of CDs. Thanks to iTunes, the big box retailers now want CDs they can sell at $9.99:

Physical retailers are pressuring the labels downward on price (of course, Wal-Mart is the biggest culprit) because they don’t want to be undercut by iTunes 9.99 on all single albums. We’re rapidly moving to a 9.99 world on the big sellers.

CD Baby’s $13 CDs were a bargain when Amazon charged $18 a pop, and that helped independent artists sell albums. So on the face of it, major retailers selling $10 CDs looks like bad news for us little guys. But the RIAA would have us believe that the cost of CDs should have risen over the last two decades. The industry is clearly, perhaps willfully, out of touch. And therein lies our opportunity.

As indies, we’re not tied to shareholders and a business model that we must defend with ridiculous cost-of-living calculations. We’re not even tied to $13 a CD. Or $10, for that matter. In fact, as Koopa showed last month with their download only single on the UK Top 40, we’re not tied to CDs at all.

Compounding the industry’s woes is the real concern that CD sales are headed for a tipping point:

But the specter of a flattened physical is now looming, and Goldberg pointed to markets like Taiwan and Korea, both of whom have experienced physical drops of about 70 percent over a 3-4 year period. For the most recent week, album sales were 14 percent below year-ago tallies, part of a multi-week trend.

We’ve seen a steady decline in CD sales over the last decade, but thanks to Walmart’s, Target’s, and Best Buy’s use of CDs as loss leaders, the big labels have a guaranteed market for their wares. If public interest in CDs continues to wane, these retailers will conclude that floor space covered with racks of CDs can be better used to sell iPod accessories. And as with falling CD prices, the major labels’ lack of response to this threat presents opportunities for artists willing to experiment with creative marketing.

So what’s an enterprising unsigned artist to do? Michael Wolff’s article Facing the Music is a few years old, but still eminently relevant. He offers this advice:

If you’re providing free entertainment, which is obviously what the music business is doing, then you have to figure out some way to sell advertising to the people who are paying attention to your free music… Or you can provide stuff that’s free, and use the free stuff to promote something else of more value that people, you hope, will buy — now called the “legitimate alternative.” (Putting video on the CD is one of those ideas — though, of course, you can file-share video too.) Or sell the CD at a level that makes it cheap enough to compete with free (free, after all, has its own costs for the consumer).

CDs may not disappear overnight, but it’s clear that the business of music has changed. If you ever plan to sell your music, the uncertainty in the industry right now presents opportunities unlike any you’ve had as an independent artist.

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