Society has dragged the recording industry into the 21st century kicking and screaming. Even today, the major labels seem incapable of coping with the reality that their their primary revenue stream — the sales of recordings — simply will not return to pre-Internet levels. Some would go so far as to say that we have no more need for record labels. That, in the age of MySpace and iTunes, bands no longer need a conduit to leech away at artist's compensation with onerous contracts. It makes sense to say music costs far too much, even with inflation and all that jazz. But to assert that record labels have no place greatly underestimates the value that a "good" record label adds.

While the recording industry doubtlessly adds value to works, the idea that people should pay as much for music with significantly lower distribution and production costs has no merit. Sure, the cost of pressing the nth recording of Tony Bennett's new compilation of Christmas music is close to zero. But digital distribution allows for so much more cost cutting — cost cutting much higher in the corporate hierarchy. There's no need to keep salaried dealmakers on staff to finagle the best prices out of overseas manufacturers. There's no need to pay supply chain experts to ensure the CDs arrive at Best Buy on time and in the right quantities. It's also worth mentioning that the same technologies that allow for digital distribution of music files also greatly reduce the cost of producing music, even in a professional setting. A struggling twentysomething artist producing music in a cramped Manhattan apartment likely uses the exact same software as a professional musician in a swanky recording booth.

And, even if that makes no sense, consider the alternative consumers have to buying music legitimately, whether digitally through something like iTunes or on a physical CD. Any consumer with a shred of intelligence and an Internet connection can download just about any music at almost no cost. (The odds of the RIAA filing a suit against a given consumer are extremely low.) With that kind of competition, the price of legitimate music should come down, even if iTunes, Amazon.com and other legal digital music distributors do offer a superior product in terms of the ease of navigation, consistency of service and security. Otherwise, as people have proven over the last decade, people will just pirate music.

So the price of music should come down. But why not sound the death knell for the record labels? In my view, the recording labels and recording industry need to rethink their role in the music production process. Digital distribution essentially removes all the barriers to entry for new musical talent. When the cost of keeping a few digital music files on a server somewhere is close to zero — whether or not the public buys three copies or three million copies — Apple has no reason not to make them available. Contrast that to physical distribution. Physical stores have physical limits to the number of CDs they can keep on shelves. Not to mention a musical group wouldn't want lots of unsold physical CD recordings sitting around unsold.

Thus, the record label really has no reason to exist if its purpose were to bring music from musicians' minds to consumers' ears. But that's not really what record labels do well. Ideally, a record label acts as a filter, separating mediocre music from the truly great.

Take Deutsche Grammophon (a Universal subsidiary, alas) as a functioning example. Scads of musicians have recorded Beethoven's Piano Sonata No. 3. No doubt even more people of a certain skill level have made recordings of that piece given today's greatly reduced cost of recording. But, if I want to buy a recording of Piano Sonata No. 3, I will turn to Deutsche Grammophon's incredible library of classical recordings. I do this because I know that any classical musician recording with Deutsche Grammophon must be great: Deutsche Grammophone has a track record of picking only the most exceptional musicians to record under its banner.

That's the value that record labels add. They should accept the fact that, as has been the case in the last ten years, musicians will generate proportionally less income through the sales of recordings and proportionally more through the sale of rivalrous goods, like live performances. Record labels are no longer distributors. The record industry should embrace its role as a tastemaker. Just as some authors try to convince Oprah to make their novel the latest selection for her book club, record labels should offer artists their "seal of approval" for a fee — provided the music passes muster — which, if the label has any credibility, would influence buying habits. (Admittedly, the Oprah's Book Club parallel is not fantastic. Hopefully it conveys the general idea.)

Without a doubt, the recording industry needs to change its focus. Asking single mothers in Ohio to fork over hundreds of thousands of dollars in damages for sharing a few dozen music files makes no sense. It's mean spirited and patently ineffective. Instead, the recording industry should embrace its role as a sort of gatekeeper, an agent to help people distinguish good music from bad; to promote and notice otherwise anonymous talent.