We consider Jill Sobule to be the musical muse of ATD–which we desperately need since we are obviously way, way too jacked into the matrix.

That’s precisely why we have the gifted singer-songwriter appear annually at our D: All Things Digital conference–to kick off each day’s sessions with one of her songs and, more to the point, add a lot of much-needed levity and nontechie soul to the proceedings.

And tomorrow, Sobule’s Internet-funded album, “California Years,” produced by the legendary Don Was, debuts. I urge everyone to click the link here and get a copy–online, of course.

And by Internet-funded, I mean that the $75,000 needed to produce the album was raised entirely through an innovative Web initiative Sobule ginned up in late 2007 via a site called Jill’s Next Record.

Sobule wrote about the effort several times in our Voices section, where you can read about her asking for ideas here, launching her fund-raising site here and, finally, talking about the result here.

Sobule (pictured here in cartoon form)–whose big mainstream hit a few years ago was a much-better-than-hopelessly-dopey-Katy-Perry “I Kissed a Girl”–had worked her way through four record labels (she was dropped by two and two went belly-up) with six CDs.

Sick and tired of the way musical artists had their work funded, she essentially asked her fans to become her record label, writing on her site: “It would be a sort of patronage thing, where you guys are the Medici family, except I give you prizes for donations of certain amounts.”

The $1,000 “platinum” level, for example, got the donor a theme song and the $5,000 “diamond” level got a house concert by Sobule.

And what her fans are getting now in the completed album is superb–a sometimes funny, sometimes sad and always moving work. (My young sons cannot stop singing her perfect song, “San Francisco,” for example.)

As Sobule writes:

“‘California Years’ was written over the last three years, following my move to the West Coast. It was influenced by the sights and sounds of the Golden State, especially the seductive, but not always sunny Los Angeles. Maybe the next record will be ‘The Utah Month’ or ‘Back to Brooklyn.’

“The whole thing was made possible by a small but mighty fan base. They gave me the love, encouragement and the dough to do this. I was truly surprised and so very grateful. This record is for them.”

Let’s cheer on efforts like Sobule’s and hope for a hit. Because hers is indeed a small but mighty effort, as all kinds of content creators try to figure out businesses in the new digital age, unafraid of the changes inevitably coming (AP might want to take notes about this).

Here is Sobule in a long interview on NPR last week (which you cannot embed, bad NPR!) and another video below on CNN about her digital project:

And here are two videos I did with her about the effort. The first has one of the songs on the new album, called “Nothing to Prove,” and the other an update on what she wants to do next, digitally and musically speaking:

Here’s a video I did while attending YouTube Live on Saturday–well, live–at the Herbst Pavilion at the Fort Mason Center, right on the San Francisco Bay.

The last time I had attended a big tech industry event here, it was the launch of Windows 97 from Microsoft (MSFT)–which was quite a different scene than this entertaining but freaky show, in which online celebrities jumped a little shakily into the analog world.

Let me just say, online celebrities make real-world ones seem 1,000 percent more interesting. But there is also a homespun sweetness to them too and a look-at-me striving that can be downright heartbreaking.

YouTube Live was the online video giant’s “first ever official live community celebration” and also its first try at a live-streamed event. The YouTube Live broadcast online drew about 700,000 viewers at its peak.

As such, as Peter Kafka of MediaMemo notes: “That is almost certainly a record for a Web-only event. But it’s a nonevent by mainstream entertainment standards.”

I am not sure big ratings were the point, though. Nonetheless, the show did attract a passel of Internet stars, including YouTube Founder Chad Hurley, who sat with Google Co-Founders Larry Page and Sergey Brin right up front. Google (GOOG) owns YouTube.

Here is a video of the event, including an interview I did with Obama Girl, as well as Hurley, and also some snippets of the professional performers (Katy Perry, Will.I.Am and Akon) and a passel of online celebs (including the “Free Hugs” and “Will It Blend” guys) appearing onstage:

Please see this disclosure related to me and YouTube (which is owned by Google).

That is almost certainly a record for a Web-only event. But it’s a nonevent by mainstream entertainment standards.

A poorly performing show on network TV, by comparison, draws millions of viewers: Recall that GE’s (GE) NBC canceled “Quarterlife,” the soap opera that started out on MySpace, after it drew an audience of 3.1 million in its debut. A bona fide hit draws many millions more: Last Thursday’s episode of “CSI,” for instance, garnered more than 18 million eyeballs.

Not fair to compare a weeknight audience to one on Saturday nights? OK. Try this: Last year, before anyone had ever heard of Sarah Palin, “Saturday Night Live” was averaging more than five million viewers.

You can’t blame the modest audience on a lack of effort on YouTube’s part. The video site generated plenty of publicity in advance of the event. And heavy promotion on the site itself all but compelled visitors who ventured onto YouTube last night to check it out.

Part of the issue, I think, is that while the show had a smattering of sort-of-popular singers (Katy Perry, Akon) there was no one really huge. Most of the show was dedicated to viral video stars/oddities like Tay Zonday. And the point of viral videos is that you see them on your own time, serendipitously: You take a couple minutes out of work on a Tuesday afternoon to watch Tay Zonday sing “Chocolate Rain” because your friend sends you the link. Not because he’s appearing live on Saturday night.

Could YouTube rustle up a bigger audience for a live event in the future? Absolutely. It’s one of the biggest Web sites in the world, so if it had a truly compelling show, instead of a niche event, it wouldn’t be hard to get the word out. And if parent company Google (GOOG) wanted to lend a promotional hand, game over.

So maybe that’s coming down the pike. In the meantime, if you didn’t tune in last night, here’s a sample of what you missed: Katy Perry singing “Hot ‘N Cold.”