At this week's seminar on financing the record industry, Jim Carroll heard two different languages - music and money

Maybe David McWilliams was stirring it a little but his comment certainly silenced participants. Chairing one of the sessions at this week's Creative Financing and Music seminar, the broadcaster and economist said what many watching the music industry from the sidelines would no doubt also say: crisis, what crisis?

"It seems to me that the music industry are making out like bandits," McWilliams said, pointing out that most music consumers have never been happier. "The industry is blossoming in terms of access and there has been a huge reduction in costs for the consumer." But untroubled consumers and indeed such unbridled optimism were in short supply among the Irish and international music industry professionals, financiers, investors and public servants who gathered in Dublin last Tuesday for the seminar, organised as part of Ireland's EU presidency programme.

It was certainly not a place for anyone who still believes that music should be more about art than commerce. Between sessions, delegate chit-chat was about takeovers, cost-cutting, consolidation, mass lay-offs, shut-downs and evil download empires. The head of one leading Irish music company remarked that going to work nowadays was like going to the Alamo, such were the attacks the music business faced on a daily basis.

Having already heard a keynote address from new Napster boss Chris Gorog indicating that the future was very definitely digital, and quickly realising that the smooth-talking European Commission Director General for Education and Culture, Nikolaus van der Pas, had not come to Dublin with billions to hand out willy-nilly to the rock 'n' roll sector, any delegates still committed to traditional economic models or record industry business practices would have been excused for leaving the building early to go and look for a new job.

While the main focus of the event was on investment, funding strategies and support policies for the music industry, those who attended were left in no doubt from the get-go that future opportunities were about embracing change.

Introducing Gorog, entertainment business accountant Ossie Kilkenny remarked "Napster represents all that is optimistic about the music industry."

Having ignored the change and possibilities which the Internet offered the first time around, the music industry cannot afford to be so lax again.

Gorog, however, believes that it is time to say goodbye entirely to the traditional physical distribution of music: "Our competition is not the physical world, that's no more." Estimating that the online music business in the US will be worth $4.5 billion within four years, Gorog and the now legal Napster downloading service are aiming for a large chunk of that spend. "With electronic distribution, everyone wins," said Gorog. "The consumer has immediate access to a colossal catalogue, the intellectual property rights owner can cut their distribution costs and the artist sings for his supper in front of a potentially bigger audience."

Ironically, the new, improved, all-legal, all-singing, all-dancing Napster is benefiting from the "very ugly experiences" which users are encountering with the raft of illegal download services still in operation. "Consumers are ready to migrate to the legal services under certain circumstances," believes Gorog, and they will favour a service which is "fairly and attractively priced, has reasonable usage rules and offers value-added content". Already operating successfully in the US, the bullish Gorog indicated that Napster will be launched in Ireland and the UK this summer.

Yet for many delegates, the problem doesn't lie with the marketplace, digital or otherwise, but with getting the goods to market in the first place. Producing music and developing talent takes time and money, and raising finance remains one of the biggest and most resource-consuming challenges that would-be label bosses or artist managers face. Such is the desperation that many would welcome an injection of cash from anyone.

However, it quickly became apparent that when it comes to connecting the music industry to the money-men, the interpreters on hand to relay proceedings in French and German were not the only translators required, because the two sides communicate in two completely different languages.

For risk-averse financiers seeking an investment vehicle with tangible assets, a strong income or capital gain yield and a clearly defined exit strategy, investing in the music industry is like betting on two flies climbing up a wall. As one participant noted, the music industry is the only business in which even a bankable artist is not guaranteed a hit.

For the music industry, there was a palpable sense of frustration at hearing representatives from the European Investment Bank (EIB) say they had no interest in giving out loans for sums any less than €25 million. As participants outlined what they could do with even 0.1 per cent of that amount, financiers pointed to how the amount of due diligence and administration required made the provision of such small-sum soft loans unfeasible.

There was certainly no shortage of lively discussion and suggestions about what could be done to bridge the two communities. Schemes mooted for consideration included tax breaks, the bundling together of various music enterprises for investment intentions into Special Purpose Vehicles, better education policies, more transparent provision of information on public cash sources, the creation of a creative industries bank to distribute loans from the EIB, mentoring schemes and hot-houses for budding music business entrepreneurs to teach them how to communicate and work with the business community.

Yet even such suggestions merited constructive criticism. Speaking from the floor and advocating a range of hot-house initiatives, the chairwoman of the Music Board of Ireland, Ann O'Connell, said the Government "had failed to embrace the funding needs of creative industries" and that such schemes as the Business Expansion Scheme "don't work for the music industry in an Irish context".

When Patrick Zelnik set up his Naïve record label in Paris, he said, "investors found me". It helped, of course, that Zelnik already had a track record as the former head of Virgin Records in France, showing that seeking a hand-out before a note is struck or a song is written may well be pointless.

Representatives from Dublin-based company Vibe backed this up, saying would-be investors are returning its phone-calls only now - after some of its acts won Meteor Music Awards and had several Top 10 Irish singles, and another is on the cusp of a major deal in the US.

The recommendations on how public policies can be used to support the sector had a fairly familiar ring to them, especially to anyone who has followed the food chain of reports on the music industry over the past 10 years. The list included such old chestnuts as providing better information and education policies, as well as some smart proposals on tax harmonisation with regard to touring throughout Europe and fiscal policies to clearly align music as a cultural pursuit.

It's what happens next, however, that will determine the success or otherwise of this gathering. These recommendations will be presented by the Minister for Arts, John O'Donoghue, to a meeting of EU culture ministers next month and may well, at some future date, form part of the next EU cultural plan on music.

Regardless of where the millions needed to finance the next generation of music acts and entrepreneurs are going to come from, it's abundantly clear that the music sector, just like cinema and TV, needs a major actionable and achievable plan if it is to progress.

The sector also needs champions within the various national and European administrations to advance its cause and ensure that there is more than just lip-service to the notion of music's cultural importance and economic potential. Locally, the failure of the Music Board of Ireland to have had any real impact with its strategies is telling about the lack of importance paid, to date, to the music industry by the Government.

Should such political inertia continue, don't be surprised if your favourite rock 'n' roll band turns into a Special Purpose Vehicle and floats on London's AIM stock exchange to get the cash to record their next album.