When a new niche opens up in any system, be it ecological or technological, the normally incremental process of evolution goes completely bonkers as everyone and everything tries to find the best way to exploit it. That’s how you end up with stuff like bear-size prehistoric armadillos and turn-of-the-century cars with fake horse heads on the front. Right now the music industry is just this kind of free-for-all–the Internet has destroyed the notion of the CD as the standard format, and the major labels’ failure to adapt to that change has created a power vacuum that’s being filled by a variety of contenders pursuing new ideas about how to deliver music to the public.

The Napster model–pay a flat monthly rate for all the music you can download–has had a few years to catch on, but it’s hardly remade the business in its image. How about free downloads underwritten by ad sales, though? That’s what you get from Spiralfrog, which just went live. Or maybe you’d prefer a monetized peer-to-peer network like Grooveshark, still in private beta testing, which promises to split its revenue not just with artists and publishers but with the people who share the music that makes it work.

The majors are experimenting too. Next month, for instance, Sony and Universal plan to introduce “ringles,” CD singles that include ringtones. It’s a terrible idea, but I can see why it made it off the drawing board–business strategists are usually conservative, and it’s easier to combine two things that’ve worked in the past than to try something nobody’s ever done. A better combo, in my opinion, would be record labels and music blogs.

Two weeks ago a little-known blog called Earvolution, based in Philadelphia and New York City, lit up music-maven sites like the Daily Swarm, Hypebot, and the Velvet Rope with an announcement that it was releasing Let It Roll, an album by a band called the Pawnshop Roses, not only through digital retailer Tunecore but as an actual physical CD. All the fuss isn’t because Earvolution is the first blog to act like a record label–indie-leaning sites like the Catbirdseat, Music for Robots, and Aquarium Drunkard have released CDs before, including compilations and limited-edition one-offs featuring established artists like Simian Mobile Disco and Clap Your Hands Say Yeah. Rather, industry watchers are starting to get it into their heads that the blog-as-label phenomenon might be what’s really going to change things in the music business.

The arrangement makes sense for bloggers and their readers. Blogs already perform some of the same curatorial functions as indie labels: both look for the best acts in a particular talent pool, usually one that covers a narrow stylistic range, and then publicize them, granting their picks the blessing of their endorsement. Readers identify with blogs much as they develop loyalties to labels–and each time you download an MP3 from a blog you trust and it turns out to be something you really like, that bond gets stronger. Blogs even have some advantages over labels: since their specialty is projecting personality and fostering the illusion of a cozy one-on-one relationship, they can more easily assume the role of the cool friend who clues you into great music.

It’s not hard to understand why an enterprising blogger might decide to go from pointing people at other labels’ records to putting out his own. Though blogs haven’t yet proved particularly effective at breaking bands by releasing their albums–no artist whose primary or exclusive label is also a blog has blown up the way blog-famous acts on conventional labels sometimes do–it seems like only a matter of time before one does.

Blogs in general have been blamed for stealing eyes and dollars from old media, but music blogs are unique in that some industry people claim they’re directly destroying the very thing they disseminate–though blog hype can drive up sales and transform unsigned bands into professionals, even some respected bloggers have been responsible for spreading leaked and pirated music. Given how much this infringement pisses the majors off, imagine how they’d react if the blogosphere spawned a legion of legitimate competitors–small, highly specialized labels with direct lines of communication to their audiences and a ready-made method for spreading hype. That’s their worst nightmare, not least because they can’t sue somebody for beating them at their own game.

But that’s not to say the blog-as-label setup doesn’t have problems–foremost among them the obvious conflict of interest. Craig Bonnell from the local blog Songs: Illinois worries that a blog participating in the industry it covers is venturing into an ethical swamp. “The one guaranteed outlet Earvolution has to promote the record is Earvolution,” he says in an e-mail. “Even if they were large enough to promote the record effectively that would mean near constant plugs on Earvolution. As a reader I’d wonder if every time Earvolution posts about their band, Pawnshop Roses, being the best thing ever . . . they were just trying to push more units.”

A newspaper or a magazine can and should maintain a strict separation between its content and the ads it sells, and Earvolution owner Jeff Davidson promises his blog will pursue a similar policy concerning its own releases. The site’s primary reviewer, he wrote in an e-mail, “has nothing to do with the label and will never review an Earvolution Records release on Earvolution.com. I rarely write reviews myself. In fact, I’ve only done a single complete CD review because I happened to get the record from the band.”

Of course, there’s a big difference between a newspaper running someone else’s ad and a blog selling its own records, and it’s possible that most blogs won’t care to jeopardize their all-important cred by crossing that line. But there are precedents that suggest it could be a nonissue: Both Vice and Fader magazines have labels, and while they don’t review their own releases, they blog about their bands–check out the Editors Q & A that Fader ran or the zillion Black Lips posts from Vice. They have yet to suffer a recognizable backlash or lose the trust of their readers, something the Earvolution people seem to be hoping will hold true for them too: as of this writing, the latest bit of content in their site’s MP3 section is a plug for the upcoming Pawnshop Roses tour.

Bonnell thinks the blog-as-label has unrealized potential, though, and I agree. I also figure he’s right that Earvolution won’t be the blog to launch the first seriously competitive label. “I don’t think they have the type of traffic to their site to make a difference in terms of sales,” he says. I’m guessing that big success is waiting on a blog with a large, highly specific audience to nab the next Lily Allen or a cult MC who has a history of troubles with old-school labels.

“Of all the sites out there,” Bonnell says, “Stereogum is most likely to have success as a label.” That’s a good guess, given the blog’s huge popularity among indie rockers, but as one of the genre’s leading providers of free songs it’d be rowing against its own current by trying to sell anything. “The types of people who frequent Stereogum are typically looking for free music to add to their already gigantic iTunes libraries. So converting those fans of free music to paying customers would be a challenge.”

Davidson acknowledges that Earvolution hasn’t figured out the blog-as-label project, not even for itself. “If anything the blog is more of an experiment at this point and the label, which is really more of a new media marketing company than a traditional record label, may outlast the blog even if the label changes forms,” he says. “There are so many talented people in the music blogosphere I have no doubt people will come up with ways to improve upon the model.”

For more on music, see our blogs Crickets and Post No Bills at chicagoreader.com.

Art accompanying story in printed newspaper (not available in this archive): illustration by Kurt Mitchell.