CNN Money has a piece up about Downtown, the web-savvy record label that brought the U.S. Gnarls Barkley by working the internet for all it was worth. It focuses on their next big thing, Kevin Michael, which is kind of ho-hum (whether he is or not, I can’t say), but has a few tidbits about using the net to market bands:

The company’s web strategy is even more promising. Downtown is creating two tiers of Michael songs and video. There will be “premium content” with a pricetag, as well as free material – for instance, acoustic versions of the album’s songs – on YouTube, MySpace, and other sites frequented by young music lovers. “That’s one of the things we learned,” says Deutsch. “You have to continue to feed content to the audience on the Internet.”

Deutsch is also shrewdly seeking alliances with tech companies to ensure that his artist’s work doesn’t go unnoticed in the digital realm. In recent weeks he has taken Michael to Silicon Valley to perform at the headquarters of YouTube, Apple’s (Charts) iTunes office, and Linden Lab, the company behind the elaborate virtual-reality playground, Second Life.

“I think the idea of breaking a new act is exciting to a lot of these people,” says Josephson. “It’s a recognition that they are truly players in the music business now.”

Michael – who has the voice and Afro of a ’70s soul crooner but also a thoroughly up-to-date YouTube sensibility – is pumped about a possible upcoming appearance as an avatar in Second Life. “I’m going to start doing virtual concerts,” says Michael. “They are going to totally pimp me out with a big ‘fro. I can’t wait.”

So the secret to working the web, aside from using MySpace friends for something more than demonstrating popularity, is sucking up to the tech industry bigwigs. There was a funny sad piece on the net the other day about Lou Reed doing a gig at AOL that suggests these audiences might not be the most appreciative:

He begins playing a song to the buttoned down and sitting down Web 2.0 crowd. Meanwhile there’s an audible drone of people talking in the back of the large room.

Between songs Lou looks pissed, but I think that’s normal. He tells the crowd, “You can keep on talking, I’ve only got 20 minutes. Or I can turn up the music. I can turn it up so loud it will hurt. Do you want me to turn it up? Do you want me to make it hurt?” (rough paraphrase). How awkward.

Pimp me out and make me make it hurt, I wanna be a star! Or something like that…