EchoMusic could be accurately labeled the company that started it all.

Eight years ago, Mark Montgomery started what at the time was a web design firm over on Nashville's Music Row. His small shop focused on a growing niche: artists who needed some of the help big labels provided, but who did have a big label deal. At the time, these were cast-off indies who had decided to take matters into their own hands (and pocket books). Echo got things moving by designing CD packages and arranging manufacturing, and then building simple artist web sites to promote them.

At the time, no one knew what a content management system was. And being an indie was about as popular as being a leper. Or working at home. Not cool.

Eventually, word started to spread about Echo. Young record label marketing directors began calling Echo to design their artist's web sites. Two clients led to 22, then 122. Before anyone knew what was happening, EchoMusic had more employees than any label in town — and half of their artists. By virtue of the success of one of their very first indie clients, Dierks Bentley, Echo started wielding the kind of clout only the labels used to own.

Artists, especially big country artists, started banking on Echo's proprietary cms, branded EchoTools. The system connected fan activity with ecommerce in ways no one had ever experienced. Montgomery was smart and aggressive, and began to charge $150 a month to license the system. Then he started charging $2000 a month for Street Team promotion. And $1500 a month to have a store. Plus 15% of ecommerce sales, and 40% of fan club memberships. Before most people even knew what they were doing, Echo was collecting huge sums of cash at every turn.

Every successful new business has to have a little luck, and Echo was plenty lucky. Getting an undiscovered but highly motivated Dierks Bentley to buy into their vision was big. It gave Echo a test case they could take to other potential clients.

But Echo also had timing on their side. As digital file delivery became popular (iTunes, Rhapsody, YouTube, MySpace), the major labels began to shrink. Faced with fewer mass market retail outlets, shrinking cash reserves, and ever-thinning staffs, the labels abdicated their role as Prime Mover to Echo — which eventually boasted more than 300 artists on their roster. Artists and managers were making money from their web site, and making nothing from retail sales. When their A-list artists' contract came up for renewal, the labels found themselves in a desperate no-win situation: Give in to the artist's direct-to-the-fan marketing plans and hand over advances to indirectly fund Echo, or lose them.

Echo had become a behemoth — not just in Nashville, but in the world of music. Big artists outside of Music City started calling and paying massive up front fees to get Echo's experienced team and powerful administrative tools. EchoTools licenses billowed well into five figures, paid in advance. Design fees regularly topped $20,000 per site.

But all was not well. Echo had become the ultimate Trojan Horse for the labels — and the labels had figured it out. Echo was largely banned from selling digital songs directly to fans, and labels refused to give them free songs to act as a loss leader for merch sales (from which the labels didn't get revenue). A Cold War eventually led to a Hot War. Some labels began to revolt directly against Echo. A couple tried to buy them.

Echo, seeing the future being driven away from the labels, knew they had to find a funding mechanism outside of artist advances. They eventually found one in TicketMaster, a company that was already doing business with most of their A-list clients.

But two years after Echo sold the company to TicketMaster for a reported $25 million, TicketMaster shut them down. After two  changes in leadership at the top of TM, the new leadership didn't have a vision for the fan- and promotion-driven company that at its heyday boasted 90 employees — including a dozen full time software developers. They saw a company that had way too many staffers with way too little revenues, and sought to make the company profitable by shrinking its footprint.

Late last month, TicketMaster sent eviction notices to 190 of its clients, telling them their web sites would go off the Internet at midnight on June 15. Another sizeable group saw the handwriting on the wall and jumped ship before the eviction notice. Six weeks notice was all they had to find another home. TM's plan is to replace Echo's 60 employees with eight in Los Angeles. Cut the unprofitable artists, and focus on ticketing revenues for the ones that remain.

There are, and will be, plenty of lessons learned from the rise and fall of Echo. Here's my take:

1. Building a web site is not a marketing strategy.

That over 200 Echo web sites were not financially viable for a company that created them and the system they run on is a stunner by any measure. I've looked at enough of these sites' admins, and met with enough of the artists, to discover why: Most of those artists rarely if ever used email marketing, had no short term strategy for marketing, had no web marketing budget, and saw the site as something you work on when you have the time — or worse, an intern to do it for you.

Having a great chain saw, and being trained on how to use it, is not the same as using it. Someone has to put gas in the thing, pull the cord, and start sawing — and that someone, I am sorry to say, is the artist!

Funny, isn't it, how the basic fundamentals of marketing are still the same? You have to have a marketing strategy, a marketing budget, a marketable product, and people to execute that plan, or all you have is a pretty store with no customers.

2. The web isn't going away

Like it or not — and most of the labels don't like it at all — the Internet will become the Television of the next generation. It is incumbent on every business to find ways to connect with their customers directly via the web, develop tools to listen to what they have to say, and respond to what they want. Sure, there will always be a market for the compact disc, but it won't sustain the old label machinery. Retailers will eventually abandon music as a wholly unprofitable product line, and then the artists and the fans will be in charge of their relationship.

3. Money talks and you know what walks

There is a myth that has to be busted: The web is free. It is not free, and never will be. Yes, there will always be Facebooks and MySpaces out there, but at the end of the day someone has to make money or there is no business. Artists MUST find a funding mechanism for their careers outside of advances from record labels and honorariums from promoters. Too many artists are scrambling in the post-Echo era with no cash whatsoever. That has to change, or the marketplace will fill the void with another label paradigm that will offer pennies on the dollar for assets they will again own forever.

4. Charge — and pay — a fair price

Any company that has to fire 200 clients has a fundamental business problem. One place where Echo went (slowly) wrong is continuing to grandfather in old clients at their original prices, while soliciting new clients at fair market prices. The benevolent but misguided idea that clients that don't make or lose us money is okay will eventually cost you in the end.

In addition, artist need to wise up and realize that you always get what you pay for. When you hire two guys on laptops at Starbucks to design your web site, you should expect to get a web site that has limited if any true functionalities that will lead to community growth and ecommerce profitability.

5. Share and share alike

The future for 90% of all creative content providers is in shared community, not silos. Echo built concrete walls between its clients' communities, which failed to take advantage of the critical mass they had aggregated. Artists must realize that fans can be trusted to be loyal, and there is a lot more money to be made from sharing your fans and promotions.

6. Work at it

Artists in general (and I can say this because I am one) have a hard time focusing on more than one thing at a time. And musicians get all their ego gratification from writing, recording and performing music, not updating their web site. But fans don't see the big gap between music and blog posts. In fact, many fans would prefer to chat with an artist online rather than listen to their songs. Artists that want to build their business must get their hands dirty and prioritize their web sites at the top of their to-do list. Too many artists and authors make excuses for not posting to their blog, not adding news stories, not uploading new photos, etc. If you don't care about your web site, how can you expect your fans to care?

What do you see as lessons learned from the rise and fall of Echo? If you've worked directly with Echo, tell us your pros and cons and what you learned from the experience.