LOS ANGELES — Trent Reznor was backstage one afternoon last summer, fooling around with his iPhone to stave off boredom before a show, when he realized that fans standing in line outside were broadcasting photos from the scene using their iPhones.

So he took the obvious next step: Using Twinkle, the same Twitter app the fans were using, he started sending out photos from backstage. And so an idea was born.

"We started thinking, ‘Hey, this could be pretty cool,’" Reznor recalls. A few days from now, the results should be up on Apple’s App Store for anyone to use.

The free Nine Inch Nails app, scheduled for release as soon as it gets final approval from Apple, is a mobile window on all things NIN: music, photos, videos, message boards, even — thanks to a GPS-enabled feature called Nearby — the fans themselves.

Nearby is "kind of like Twitter within the Nine Inch Nails network," says Rob Sheridan, Reznor’s long-time collaborator. "You can post a message or a photo by location, and if you’re at a show you can see conversations between other people who are right there."

Fans have had their curiosity stoked by hints about the iPhone app that have shown up on Reznor’s Twitter feed.

"We’re all waiting for it," says Brandon Dusseau, a Milwaukee-based web designer who’s one of the founders of NinWiki, one of the group’s leading unofficial fan sites. "I’m sure it will get tons of downloads, and I’m hoping it will be a really cool resource. But all I know is, it’s coming out soon."

In an exclusive interview at Reznor’s home, a coolly modern structure high above the Westside region of Los Angeles, Reznor and Sheridan previewed the new app and explained how it fits in with their plans for survival in a post-label world.

The iPhone app is the culmination, at least for now, of a process that began a year-and-a-half ago, when Nine Inch Nails succeeded in extracting itself from its contract with Universal Music Group’s

Interscope label.

"When we found out we’d been released it was like,

‘Thank god!’" says Reznor, trim and beefy in black jeans and a black T-shirt. "But 20 minutes later it was, ‘Uh-oh, now what are we going to do?’ It was incredibly liberating, and it was terrifying."

Since then, Reznor has pioneered a new, fan-centered business model that radically breaks with the practices of the struggling music industry. His embrace of "freemium" pricing, torrent distribution, fan remixes and social media seem to be paying off financially even as they have helped him forge deeper connections with the Nine Inch Nails faithful.

It’s something he never could have done before, even on an indie label.

"Anyone who’s an executive at a record label does not understand what the internet is, how it works, how people use it, how fans and consumers interact — no idea," he declares. "I’m surprised they know how to use e-mail. They have built a business around selling plastic discs, and nobody wants plastic discs any more."

Meanwhile, the entire system that for a lucky few turned those discs into hits — rock radio, MTV, music mags, CD megastores — has crumbled, and label execs have no idea where to turn. "They’re in such a state of denial it’s impossible for them to understand what’s happening," Reznor says. "As an artist, you are now the marketer."

And the only marketing vehicle that makes sense is the net. Reznor and Sheridan had used it successfully before, in the alternate-reality game they created with 42 Entertainment to explain NIN’s 2007 album, Year Zero.

But what else should they do? The Radiohead experiment — offer downloads online and ask people to pay what they want — struck him as an invitation to be insulted.

So after selling music for nearly 20 years, Reznor decided to give it away. He would expand NIN’s website into an all-inclusive resource fans could use to find not just tour dates but photos, video, music — "a one-stop shop for every bit of information you could ever want," he says. Everything in the shop — including The Slip, his most recent album — would be free.

"I’ve said it before and I’ll say it again: I don’t think music should be free," Reznor says. "But the climate is such that it’s impossible for me to change that, because the record labels have established a sense of mistrust. So everything we’ve tried to do has been from the point of view of, ‘What would I want if I were a fan? How would I want to be treated?’ Now let’s work back from that. Let’s find a way for that to make sense and monetize it."

Over the past year, NIN.com has quietly evolved into a series of interlocking services designed to deliver maximum benefit to the fans at minimal expense to the artist. To build it out, Reznor decided to use off-the-shelf resources — Blogger, Twitter, FeedBurner, Flickr, YouTube — rather than trying to duplicate what other people had already created. "They’re going to do a better job than we are," he explains, "and they’re going to have a lot more resources to put into it."

"We’re using what people are already using every day anyway," adds

Sheridan, a smaller figure with a three-day growth of beard and pale, wolf-blue eyes. "It’s media on the fans’ terms, how they want to use it, instead of trying to be like this" — he wraps his arms around his torso as if trying to hold himself in — "which is the old-media strategy."

Under the circumstances, it made little sense to try to manage what went up on the site.

Why would they, when they had an army of people who’d relish the job? "We’ll never outdo a community of obsessive fans," Reznor says.

"People who have the same maniacal completion problem that Rob and I have playing videogames — let them funnel that shit into making our website cool."

To put the fans to work, NIN’s tech team — a Glendale, California, outfit called Sudjam — used the APIs for Flickr and YouTube to enable users to connect their NIN accounts with their accounts on those sites. That meant users could tag items on Flickr and YouTube and have them pop up on NIN.com, where other users will find them neatly ordered and ready for viewing. Sudjam expects to do the same for Photobucket and Vimeo shortly.

Obviously someone has to supervise all this, but Reznor has crowdsourced that function as well. NIN.com is mostly governed by fan moderators — unpaid superfans who enjoy special privileges on the site. "It becomes a source of pride for them," says

Sheridan, "to make sure everything is what it says it is."

Next up: Incorporating a wiki into the site. The most likely candidate is NinWiki, which was built on MediaWiki, the open source software written for Wikipedia. By putting a fan wiki together with NIN.com’s media galleries, which at last count comprised some 30,000 photos and videos, the utility of the data the two sites possess could increase exponentially.

"Here’s this tour date from three years ago," Sheridan hypothesizes.

"Through MediaWiki, the fans have entered in a set list. Each song is clickable, so you can see every show that song was ever played at. And it’s tied into our image and video database, so you can also see every video that song appears in."

By making available — for free, of course — the individual tracks that make up the master recordings of his songs, Reznor has even crowdsourced the remix function. He released multi-track versions of his songs as early as 2005, but

Interscope wasn’t happy with the idea of putting fan remixes online.

Now that he’s been sprung from the label, that’s no longer an issue.

At last count, NIN.com had 11,000 fan remixes available for streaming or download. Thanks to an XML feed, you can even subscribe to them as a podcast. "I doubt I’ll ever pay someone to do a remix again,"

Reznor says, "because there’s some amazing stuff just coming out of bedrooms."

Free downloads can cost a lot of money to deliver, especially when the options include better-than-CD sound quality. So for the higher-quality offerings, Reznor turned to BitTorrent — "the domain of pirates," he acknowledges, "but it’s also a great technology that is free." Pirates are no longer the enemy anyway: "Our battle is against download costs."

To cover the costs of recording and distributing the album, Reznor also offered The Slip as a limited-edition CD for $10. Even as he urged fans to download and share the album online, he sold 250,000 numbered copies of the CD. The album is also available on iTunes for $9.90. "So we managed to permeate the marketplace," Reznor says, "and we also managed to monetize the album."

The one part of NIN.com that Reznor had custom-built is the piece that sits at the center of it all: the database of fan info that has been harvested from the registration process that’s required to take full advantage of the site. That database, created by Sudjam, is what makes the tie-ins with Flickr and YouTube work, but it’s also given Reznor 2 million e-mail addresses — which adds up to a pretty powerful distribution network.

"If The Slip had X

number of downloads, we know who those people are and we’ll reach out to them with the next thing we have," he says. A concert coming up in Atlanta? It’s a simple matter to send out e-mails to everyone within a hundred-mile radius of the city. "That seems to be the most valuable thing you can get — a way to reach people," Reznor says.

Peter

Jenner, one-time manager of Pink Floyd and The Clash and retired head of the International Music Managers’ Forum, agrees.

"There’s an enormous value in having a relationship with your fans," he says. "More value even than in selling your records. I think old Trent’s a sharp cookie."

Taking that connection mobile was the logical next step. "We created an app," Reznor says, "that reformats the website to make almost everything on it available in an iPhone-able version and also adds location-based awareness. This now brings it into the real world, where you can find people if you choose to."

When the band toured Europe last year, Sheridan regularly updated the site by posting pictures he’d snapped onstage. It was great, Reznor says: "People felt included.

People kind of felt like they were getting postcards from us."

The iPhone app takes that a big step further. NIN.com has a Google Earth plug-in that fans can use to see conversations and photos from across the planet, or at a specific location. A feature on the iPhone app’s Nearby tab will enable them to post messages and photos from their iPhones to the website and have them pop up in Google Earth.

All this is a long way from the powerlessness Reznor felt when he was starting out in Cleveland in the 1980s.

"One of the biggest wake-up calls of my career was when I saw a record contract," he says. "I said, ‘Wait — you sell it for $18.98 and I make 80 cents? And I have to pay you back the money you lent me to make it and then you own it? Who the fuck made that rule? Oh! The record labels made it because artists are dumb and they’ll sign anything’ — like I did."

Reznor is still experimenting, and it remains unclear how effective his methods will be for less-established bands. But by spurring him to try new ideas, ending his label affiliation has given him a tentative new business model as well as a new form of engagement with his fans.

If the labels had tried to connect with fans online instead of dragging them into court, he figures, the music industry wouldn’t be collapsing today. But no matter; he’s moved on.

"My quest in life now is to surround myself with smart, innovative people," he says, "instead of the gangster types who have exploited artists over the years."

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Frank Rose is a contributing editor of Wired magazine. He is writing a book on how the internet is changing storytelling, and posting on the subject at his Deep Media blog.

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