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“Looking through the pages of this latest IFPI (International Federation of the Phonographic Industry) Digital Music Report, you see a striking paradox: on one hand, there is the innovation and drive of a business that has led the way for creative industries in adapting to the digital age; on the other hand, the extraordinarily difficult environment in which these changes are taking place.”

This is IFPI Chief Executive Frances Moore, writing in the organization's “2012 Digital Music Report,” and not-so-subtly hinting at the nigh-on-treacherous “environment” facing the music industry and that oft-overlooked subclass within the industry – the artists.

Moore is writing in the language of the boardroom, not the street. So perhaps it would be worthwhile for us to translate her words into a vernacular folks who don't work for record companies might be able to understand.

The IFPI chief executive is essentially patting her industry on the back for playing a leadership role in “adapting to the digital age,” while simultaneously acknowledging that the labels have lost the ability to fully control the “environment,” i.e., the consumer dollar.

Perhaps some of you, like me, find it hard to get past the bit where Moore suggests that the record business has “led the way for creative industries in adapting to the digital age.” Talk about gilding the lily.

In fact, industry-wide failure to adapt is what caused said industry to crash in the first place. Faced with the tantalizing prospect of free music a mere mouse-click (or swipe of a smartphone screen) away, in 2012, music fans continued to quell moral qualms they might have and grab whatever they could get their hands on.

Streaming sites – Spotify, Pandora, Rdio and the like – picked up considerable speed this year. Listening to music you don't actually own, or even possess, is now the predominant choice for music consumers. Many pay a subscription fee – roughly $15 a month for a service like Rdio – to gain entry to a vast library of music they can access – as opposed to downloading, burning, ripping, making copies for friends, etc. – via smartphone, tablet, laptop or smart television.

However, the streaming sites offer both free and paid tiers. Paying offers access to much more music, obviously. The trick for these companies has been urging consumers to make the full leap to paid subscription.

Spotify and its peer group of companies have not been wholly successful in turning “free music” into cold hard cash. However, the record labels forming “the music industry,” are getting a cut of the business. The artists are, too. But it turns out that it's a much smaller cut.

Who saw that coming? Anil Prasad, respected music journalist and proprietor of the Innerviews.org site, is one of the few who actually did.

“Spotify pays out $0.005 per play to musicians. If you compare that to U.S. minimum wage for example, ($7.25 per hour), one song would have to be played 1,450 times to equal $7.25,” Prasad said during a keynote speech delivered to the assembled at the 2012 Sounds Aotearoa Music Expo in New Zealand.

Considering that Spotify took in $266 million in 2011 – and that a list of its investors includes Sony, BMG, Warner, Universal and EMI – and it's easy to see who's having a nice dinner, and who ends up hoping for a few crumbs to fall off the table.

Prasad went on during his keynote address to suggest that artists can attempt to rebalance the equation by employing alternative monetization avenues like Bandcamp, Top Spin, CD Baby, Cash Music and Kickstarter, all of which cut out the middle man, and though they force the artist to handle their own marketing, also provide them with a royalty rate much closer to the equivalent of a living wage.

Yes, as usual, in 2013, it will be up to the artists to lead the way in the ongoing digital revolution. Though the IFPI's Moore might be suggesting to her industry cohorts that the music industry is “leading the way,” the artists must realize that the ultimate destination is not somewhere they are going to want to live.

How will the artists – indie bands and big stars alike – forge a new direction? It's all well and good for a band as popular as Radiohead to offer an album download for a price determined by the consumers, as it successfully did with its “In Rainbows” album five years back. It's quite another for a struggling up-and-comer, or even a seasoned artist, to find a way forward in this alternative reality where an artist is expected to make a living from “free music.”

Here's one possibility: The estate of the late Frank Zappa will be moving into uncharted waters in early 2013. The Zappa Family Trust, and its independent label, Zappa Records, announced last week a rather maverick move. For a licensing fee of $1,000, fans can buy a master duplication copy of Zappa's fabled “Roxy & Elsewhere” album, which they can proceed to duplicate and sell. A $1.20 per CD mechanical royalty rate will be paid to Zappa Records. The profit made by Zappa Records will be poured back into future Zappa projects, among them, according to RollingStone.com, the completion of the 1974 concert film “Roxy by Proxy,” a piece of celluloid history considered the holy grail by Zappa lovers.

So the Zappa Family Trust is essentially offering consumers the chance to take over the role once held by the record labels.

Does this seem like a purely radical move that doesn't apply to the music industry as a whole? Perhaps. We'll have to check back at this time next year.