Bands will make money on 3-D movies, like this year's U2 and Hannah Montana flicks. They'll branch out, as Elvis Costello will by hosting a Sundance Channel talk show. They'll get creative with sponsorships. How about selling naming rights? The Foo Fighters' drummer might play his Arthur Vining Davis Foundation hi-hat. Or they could emulate Nascar: U2's the Edge could play a guitar bearing a Budweiser logo. Or for the Jonas Brothers, Juicy Juice.

Dedicated fans might cry that their heroes are selling out. But it's the way things already work in China, where what seems to be the music-business model of the future is already in place. Ninety-nine percent of all downloaded music in China is illegitimate, and 85 percent of CDs sold, even in stores, are pirated. Chinese companies and artists, including popular bands such as Yu Quan, start with the understanding that they'll make nothing from sales of recordings but will generate revenue from endorsement deals, commercials, and, of course, concerts. Record labels? Copyrights? Ha. Not in China.

If that's the future of the music business in the U.S., then record labels are toast. They'll have to emulate Live Nation, which looks most like the music company of the 21st century. Originally a concert promoter, Live Nation came to see that everything an artist does must feed a single enterprise. It now handles its clients' concerts, merchandising, videos, and recording. While most old-style labels suffer, Live Nation enjoyed 2007 revenues of $4.2 billion, up 12.6 percent. Artists sense the shift: Madonna signed a deal with Live Nation last year, reportedly worth $120 million, and Jay-Z joined in April for a reported $150 million. You can bet more stars will follow.

It's all part of an unstoppable movement. "For-profit culture will move toward the nonreproducible, more thrilling aspects of music," says economist Tyler Cowen, author of Good and Plenty: The Creative Successes of American Arts Funding. Since perfect copies of music can be made and distributed for almost nothing, he says, the value moves to one-of-a-kind experiences, like a Jimmy Buffett concert. As even Ashley Dupré, Eliot Spitzer's favorite escort and would-be pop diva, can use pitch-correction software to record a perfect track, consumers increasingly will treasure the ephemeral, even flawed, live experience.

"Everybody has gotten accustomed to a kind of flawlessness that doesn't exist in reality," says Mary Davis, a music-history professor at Case Western. "Reality is sometimes awful, but it's more human." And, yeah, we'll pay for that.