Manchester’s In The City music conference this year was the first without the presence of co-founder Tony Wilson, who died two months ago.

But the local music network – and some parts of the London business – rallied to bring the event back to its roots. Unlike the endless circuit of “Future Of Music” talking shops, the panels at In The City reflect a much more practical focus. The event itself is still, first and foremost, about the 600-odd unsigned acts who perform over the three days.

Here are my highlights…

The organisers single-tracked most of the panels this year, there was less overlap – and they were excellent value.

I was intrigued to hear the views of Tommy Boy records founder Tom Silverman’s take on the future of the physical music thingy. Silverman joined a panel of three North West music shops, one mainstream, one alternative, and one specialising in the market for collectors.

Silverman said he’d lambasted his fellow RIAA board members for prolonging the life of the CD, and not being more forward looking. The CD had given them a short-term revenue boost, raising the price of the album from $8-$10 to $14-16 as the format switched from vinyl and cassette to CD. The good old days weren’t coming back.

While all three retailers were optimistic – Silverman thought things were so bad that even cautious optimism was unwarranted.

Phillippa Kennedy from Manchester’s Piccadilly Records said vinyl was doing great guns – a double-thick 200g vinyl import reissue of Led Zeppelin was flying off the shelves, for example, at £40 a time.

Silverman wondered how many artists could command this kind of high margin product – enough to build a business on?

Kennedy agreed that it wouldn’t work for 90 per cent of new releases.

The real problem was that few people felt it necessary to buy new product.

The new release was becoming a “first day” product, Silverman argued – with an unprecedented drop-off in second week sales. He cited the example of Kanye West and 50 cent, who released new CDs simultaneously and shifted 1.5 million in the first week. The second week, sales had fallen off 71 per cent.

“The drop-off used to be 20 to 30 per cent – and only the biggest flops fell 50 per cent in the second week.”

“I’ve seen a lady out with her kids in a record store, saying ‘Don’t buy it, Honey, Daddy will burn you a copy at work’. That’s the mentality – they think it’s stupid to buy a record.”

For every record sold, he argued, two copies are sold that the music industry doesn’t see anything from.

“So I don’t think it matters how attractive you make the store is going to make a difference – everyone has a piracy machine at home and blank CDs are 25 cents.”

At this, just about everyone in the room looked sheepish. We used to be warned that “Home Taping Was Killing Music” – but the negative impact was never proved. The difference today of course, is that music competes with other entertainment products, like $50 video games, so naturally, people send discretionary spending earmarked for entertainment elsewhere.

Yet even the RIAA has given up pushing “Music CD” blanks alongside identical and cheaper “Data CD” blanks. In most countries, there’s no appetite for a CD tax, and no-one realistically advocates it would do much to make up for lost income.

Here’s a funny thing.

The subject of a blanket license for digital music came up in a panel entitled “Leave Those Kids Alone…” And They’ll Sell Your Records For You”. The idea of “decriminalizing” P2P was unanimously welcomed.

What makes this unusual is that the panel was chaired by IFPI chief executive and former Universal UK chief John Kennedy, who said he’d welcome the revenue.

So the idea, which has been around for years – and was still considered too radical for most people just three years ago – is now mainstream.

However Jupiter analyst Mark Mulligan pointed out that a blanket license was no silver bullet. You couldn’t blame P2P file sharers for all the industry’s woes, he said, because the numbers just didn’t add up.

In the UK, he pointed out, just 15 per cent of internet users, and therefore something around 12 per cent of the population were using P2P file sharing. And these are often users with the lowest disposable income.

Yet the industry has seen a 30 per cent decline in revenues. There must logically be other reasons for the “value gap”.

Founder of The Orchard, Scott Cohen, was the loudest advocate of a blanket license.

There’s no point chasing pirates with view to converting a P2P transaction into a discrete paid download.

“But people are getting access to music. If they paid just $1 a month they don’t know, we have 1.1bn ISP customers and 2.6bn mobile customers, giving us $45bn overnight to be divided up.”

That might be optimistic: hardly any of those 2.6bn listen to music, and today, it’s invariably music they’ve already paid for – there’s no reason to pay for it twice. However $45bn is twice the size of the industry today – and a blanket license allows new models to arise where punters can acquire music without worrying about the cost per song, or RIAA lawsuits.

Sean Adams of music site (and now label) DrownedinSound.com agreed.

“It makes perfect sense to go to a usage model. You pay for mobile, for water, for data, for the BBC like this. What happens today is that the mobile phone company makes the money, and invests by it buying the Dome to promote their own brand!”

Adams was consistently scathing about the network operators who profit from music, but put nothing back, as well as the labels. For example, mobile phone companies hold “Pointless award shows that don’t award anything.”

He was unusually optimistic ,however.

“The record industry is incredibly heathy, and the labels are incredibly healthy – and I never defend them”.

“It’s their inability to monetize it that’s the problem. They don’t need to diversify”
The MySpace Myth

As an aside, Adams finally nailed the myth of the Arctic Monkeys and MySpace.

“It was PR by MySpace. The bands were simply using the channels to sell product,” he said. “Fans were using sendit links on our board, and journalists were wondering why they couldn’t get in. Then MySpace put out a press release.”

His point was that no one has figured out a model yet – and added that the charts vastly over-represent the tastes of 40-year olds, and not bands with younger audiences who can sell out large enues for a week – but never get played on the radio.

It was the tyranny of Radio 2.

Adams and Cohen lamented the loss of an intelligent “gatekeeper” or curator function. “MySpace doesn’t push things,” pointed out Cohen, and Adams made the point that infinite choice was really no choice at all.

Naturally Last.FM co-founder Jonas Woost disagreed, arguing that the crowd/hive mind was “the best filter we’ll ever have.”

(Unfortunately it only works for homogenous options, recommending similar artists, and ends up as the bland leading the bland.)

The panel despaired that music was such a discretionary purchase: a $300 PS3 was a no-brainer, but $5 was considered too much for music.

And Scott sounded a timely warning about advertiser-supported sites. The entire internet advertising business is just $31bn, and only a fraction of that goes back. Jupiter’s Mulligan pointed out that 100 ad impressions are needed to recoup a single digital song download. Who on earth would get that?

Refreshing stuff.