Last.fm, a very cool online radio / music social networking site, just announced that it will pay royalties directly to independent musicians who upload their songs.

This is pretty important, for the same reason that Google’s Adsense was important (though probably a few orders of magnitude smaller impact). The Internet does a few things really, really well – quickly build network effects, encourage the creation of lots of long tail and niche content, etc. It also has the potential to cut out the middleman in economic transactions and help pay small-audience writers, artists, and musicians, so long as there’s a viable monetization system.

Adsense is that monetization system for a huge number of web sites, and hopefully things like Last.fm’s royalty program and CDBaby will be the engine that drives more interesting music online.

By the way, I started the Geek Music group a few years ago.  Feel free to join, your listening habits will help us determine the best music to put on when writing code.