Burnlounge bills itself as “the world’s first community-powered digital download service,” offering its own version of the emerging new music business model starring fans as retailers. See here and here for some cynical takes on this. Joe at spinme.com who used to be sympathetic has also now modified his opinion to “Burnlounge sucks.” Digital Media Wire recently interviewed Burnlounge co-founder Stephen Murray. Here are some excerpts:

DMW: What was the driving force behind the idea for Burnlounge?
Murray: I had a record company with Carson Daly and a couple other people including Ryan Dadd. We were trying to figure out how to market our artists in a new and unique way, using a process that’s always existed, which is friends telling friends about artists they think are cool.[...]

What’s the Burnlounge concept?
What we do is turn fans into retailers. It’s this whole crowd sourcing concept, giving tools and resources to enthusiasts to allow them to become part of the entertainment business, to go semi-pro, if you will.

So for that to occur you need two things: One, a platform, which in this case is a virtual record store. [...] The second thing is marketing resources. We need to give enthusiasts the tools of a professional [...]

So with those tools, how do store owners go about getting customers?
The same way that you already recommend music: you tell your friends about the music you’re into. The difference is you’re not telling them to check it out at another digital music service, you’re telling them to check it out at your own store.

They set it up with three different packages, depending on how serious people are about acting as music retailers. The less-serious models earn credit on all their sales which they can use toward purchasing music in their own stores. The more-serious “moguls” can translate their credits into cash. Minimum earning are apparently a whopping five cents a sale. I’m not sure I’d call this a next-generation snakeoil ponzi scheme, as the Digital Music Weblog has, but it seems like you’d have to move an awful lot of tunes to make it worthwhile.

More interesting than this instantiation of it, is the notion that fans are not just the record store customer, the fan is the record store. It used to be that working at the record store meant you were intrinsically cool (except, perhaps for my own employment at such an establishment for several years and all those bozos who worked at the corporate-owned other record store in town). In the near future will it be running your own online record store that makes you Really Cool? And how will people know you’re the cool kid from the record store when you’re out at the rock shows?

My peeve: just because people connect with each other doesn’t make it a “community.” As my friend Marc Smith says, community is a great term for marketing but a lousy term for thinking. Oh yeah, all the flash on their site is a turnoff too.

But peeves aside, the real question is where the line is to be drawn between Digital Music Weblog’s critique that they (or any other fan as retailer sites) are selling snakeoil through ponzi schemes and a more generous interpretation that they are empowering fans while benefiting musicians. How much money do fans and musicians have to make per sale to make it synergy rather than exploitation? It’s not an inherently bad idea to have fans selling the artists they love, in fact I’d argue it’s an inherently appealing idea. So the issue is what it takes to do it right.