I do not know the answer to the rhetorical question posed. Netlabel culture reaches a huge group of people, but a group which is very niche and non-mainstream. Given time, an artist or set of artists will arise from netlabel culture that will gain broad mass appeal, but that is also true given time at any form of media distribution.

Netlabel culture is analogous to its predecessors mail art and tape exchange culture.
Both these prior movements arose because of a sense that corporate/institutional distribution
disserved artists and those for whom art was created. Both movements had a co-creator element to them–“fans” tended to be “creators” and not just passive “experiencers”. Both movements ended up being vibrant, and interesting, and very niche. Mail art remains a fascinating international sub-culture, but its participants are anything but a mainstream movement.

Netlabel culture offered a form of “curation” for the releases that its commercial contemporaries like soundclick and garageband.com lacked. Its ethic is based on releasing things that cannot be released on commercial labels, and proving that there is an active audience for such releases.

Yet the existence of an international “active audience” for arcane genres of music does not translate to the culture-change required to create a non-institutional music culture.

I do not believe that the viral marketing via myspace or youtube do the trick, either, particularly as a number of these artists amount to really cool purveyors of covers and near-covers–a ticket to a major, but not a sea change in music.

The mp3 bloggers, with some notable exceptions (disquiet.com, who is enormously influential in his area), have not signed on to a new GNU/Free Art/PD/CC consciousness. When this sea change occurs, if it occurs, then the old hegemony will be over.

One of two things is true, and it’s not clear to me which it is:

a. we are in an era like the early era of cell phones, when it is inevitable that mass distribution via netlabels will come, and it’s just a matter of spreading an awareness of the possibilities; or

b. netlabels will be another form of mail art, a vibrant arts movement, but fundamentally a small-scale “green” alternative to corporate record culture rather than the replacement for corporate record culture.

As to the netlabel v. weblog dilemma, let’s take a concrete example. My most popular last.fm song right now is a piece placed on a compilation by Webbed Hand, a popular netlabel. If I released that same song through my own weblog, I would be hard-pressed to find as many listeners.

When Verian and I founded NSI, we were impressed with how easy it was to find listeners. We’re less active in our second year than in our first, but we’ve still had solid feedback and reasonable downloads. NSI gave us a focal point to market an aesthetic of near-ambient music, which is a “marketing” advantage for viral spread.

Yet the question remains–is it that we called it a netlabel, or is it that we had a cool place on the web in which we presented a vision.

If individuals could have all the advantages of a netlabel with only a weblog, wouldn’t that be a better thing? That’s the question.

I sure do love a lot of netlabels, and do a lot more downloading there than at individual artist sites. That doesn’t mean I wouldn’t just download artist-direct, though, if more resources existed.

Interesting topic.