Digital Audio Insider -- the economics of music and other digital content

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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

My personal website has links to my LinkedIn and Google+ pages and you can send e-mail to david [at] thelayaways [dot] com.

If you enjoy this site, please consider downloading a Layaways track or album from iTunes, Amazon MP3, Bandcamp, or eMusic. CDs are available from CD Baby and Amazon.


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November 17, 2015

Spotify Per-Stream Payments for July 2015
by David Harrell
Spotify Banner

As the music-streaming service takes pains to point out, Spotify doesn't pay a set per-stream amount to labels and artists, as its business model is based on a revenue share, not a set streaming royalty. Yet that revenue share does, on a monthly basis, convert to a number for each stream. (And it appears that Spotify might have a fixed minimum rate in some countries.)

The following numbers are culled from reports from CD Baby, my digital distributor, and have been adjusted to account for the 9% commission it charges. I received the following per-stream amounts for plays of my self-released music in the Spotify catalog during the month of July:
US: .68 cents, .67875 cents, .17 cents

France: .78 cents

Italy: .67 cents

Spain: .515 cents

Sweden: .772 cents, .77 cents

Weighted average for all July 2015 streams: .5867 cents
For the US, it seems obvious that the two larger amounts represent streams from premium subscribers, while the smaller number is from subscribers to the free ad-supported service. The difference between the two numbers is small enough that I attribute it to rounding/truncation of very small numbers in the CD Baby report, but I opted not to average these numbers and am including both for sake of completeness. Ditto for the two different numbers for streams in Sweden.

To put the above numbers in context, the average amount I've received for all Spotify streams since August 2009 (from all countries and subscriptions levels) is .4301 cents per stream. It's also worth noting that the major label groups have ownership stakes in Spotify and may well have negotiated different (i.e. better) revenue share arrangments for their catalogs. Finally, these numbers don't include the smaller payments from Spotify to publishers/composers via performance rights organizations such as BMI and ASCAP.

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October 19, 2015

Confirmed: Apple Music is Paying Two Tenths of a Cent for Streams by Trial Subscribers
by David Harrell
After this summer's backlash over Apple's plan to NOT pay royalties for Apple Music streams by trial subscribers, the company announced it would pay a per-stream royalty of 0.2 cents for such plays.

Our first Apple Music royalties just appeared in our CD Baby account and I can confirm that, for the month of August, Apple paid a per-stream royalty of exactly 0.2 cents. No indication yet on what we'll receive for streams by paying subscribers.

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March 16, 2015

Beats Music Beats Spotify
by David Harrell
In terms of subscribers and market share, Beats Music (acquired by Apple as part of its purchase of Beats in May of last year) is way behind Spotify. But there's one area where Beats Music appears to be ahead -- the per-stream payout to artists/labels.

The first payouts from Beats Music just appeared in my CD Baby account. After adjusting for CD Baby's commission, for December 2014, we received 1.801 cents per stream. For comparison, our per-stream payout from Spotify averages out to 0.428 cents for the past few years:

Beats Music payout vs. average Spotify payout

On its support site, Beats states that its payout rate will higher than that of other streaming services as, unlike Spotify, it has no free option:
We pay higher royalties than the other services because we are a paid subscription-only service (in other words, we have no free version of our service that we have to subsidize).
The payouts we've received from Spotify have varied greatly, as some are coming from premium subscribers and some from free subscribers. For the latter, the payout amount is based on a share of advertising revenue and is very small. However, our initial payout from Beats included two rates -- approximately 1.926 cents for some streams and 1.300 cents for others.

My only guess here is that the higher rate is for listens by monthly subscribers who pay $9.99 a month (or $119.88 a year) and the lower rate for listens from annual subscribers who pay $99.99 a year, though the payout difference is greater than the pricing differential for the two plans.

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December 10, 2014

Free Holiday Music from the Layaways
by David Harrell
My apologies for the light blogging in 2014 -- you can expect more frequent updates in 2015!

If you're in the mood for some holiday music, "Maybe Next Year" from my band the Layaways is available for free download from NoiseTrade:

You can also stream the album at Spotify.

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September 18, 2014

Punching U2's Gift Horse in the Mouth
by David Harrell
Zack Huggins/Flickr

Andrew Sullivan has a good roundup of opinions on U2's "junk mail" (to quote Bono) distribution strategy. It links to a post from Marco Arment, who wonders why U2/Apple just didn't go with an opt-in strategy, instead of the opt-out approach that was used.

However, U2 and Apple actually did that back in February, with a 24-hour free iTunes giveaway of the song Invisible, which resulted in more than 3 million downloaded tracks. My guess is that the band already had a decent idea of how many downloads might result from an opt-in strategy and wanted to go bigger.

There's no going back on that decision, as the mandatory gift horse is already out of the barn. So we're left with the following question: Was this a better strategy, in terms of money and listeners, for U2 than a standard album release?

According to Wikipedia, the band's last album, No Line on the Horizon, sold more than five million copies worldwide. An impressive number, but it's less than each of their three previous albums. We don't know how much U2 and its label received in payment from Apple, but solely from an attention standpoint, it seems safe to assume that Songs of Innocence is receiving a wider listening audience. (And Billboard's Glenn Peoples notes that the band's back catalog is getting a boost as well.) Though given the backlash, it also seems safe to assume this will be the last time the approach is used.

One final thought: Given my age/demographic it seems impossible, but a large proportion of the complaint Tweets about the album listed here are from people who apparently were previously unaware of U2!

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September 09, 2014

U2: It's Free for You, But We Got Paid
by David Harrell
In a post on the band's website, Bono makes it clear that the free album is a giveaway from Apple, not U2:
It's also free to everyone on iTunes thanks to Apple. To celebrate the ten year anniversary of our iPod commercial, they bought it as a gift to give to all their music customers. Free, but paid for. Because if no-one's paying anything for it, we’re not sure "free" music is really that free. It usually comes at a cost to the art form and the artist...which has big implications, not for us in U2, but for future musicians and their music...all the songs that have yet to be written by the talents of the future...who need to make a living to write them.
So did U2 (and Island Records) receive a flat fee for distribution of the album to more than 500 million iTunes customers, or is Apple paying a per-download amount, based on the number of iTunes customers who actually receive the album? Either way, with cash reserves of more than $160 billion (as of June), Apple can certainly afford it.

Update: According to this NY Times story, it was a flat fee:
To release U2's album free, Apple paid the band and Universal an unspecified fee as a blanket royalty and committed to a marketing campaign for the band worth up to $100 million, according to several people briefed on the deal.

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March 04, 2014

More Thoughts on iTunes Radio and Music Sales
by David Harrell
After an e-mail discussion with my bandmate Porter about last week's iTunes Radio post, I'm wondering if there are two factors in play here:

1. It's certainly possible that iTunes Radio listeners are buying more music than they would have otherwise purchased.

2. But music purchasers might be a shrinking group. That is, as more people use Spotify and other "on demand" streaming services, the total number of music fans who feel the need to own any specific song is getting smaller.

Hence, iTunes Radio could be increasing music purchases among its listeners, but any such gains aren't enough to offset the overall trend of decreasing download sales. (This is all conjecture on my part, but it reconciles the intuitive idea that iTunes Radio listeners would be more likely to purchase downloads with the continued decline in music download sales since its introduction.)

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February 28, 2014

Does iTunes Radio Increase Music Sales?
by David Harrell
Back in 2009, my band the Layaways released a digital-only holiday album. While we sell some tracks from the album every year, 2013 was, by far, our best season ever for download sales. I was stumped -- we always get some holiday airplay on Internet stations like Soma FM and the occasional spin of a few tracks on terrestrial college radio stations, but there was no evidence of increased airplay in 2013 and we hadn't made any additional promotional efforts for the album.

The mystery was solved when someone tweeted that he had discovered the record via iTunes Radio. Our version of "O Christmas Tree" had been added to the "Rockin' Holiday" station, where it was receiving regular spins:

example playlist from iTunes Radio's Rockin' Holiday station

It seems very likely that the large increase in sales of our song (relative to previous years) was a direct result of the iTunes Radio spins it received. The big question, of course, is does this single anecdotal example represent an overall trend -- is iTunes Radio increasing the sales of music downloads?

It seems intuitive that ease of purchase -- you're already in iTunes and you can click to buy right there, as opposed to being directed from another website or interface to iTunes or Amazon MP3 -- might boost sales. Yet that doesn't appear to be the case. As Glenn Peoples reported in Billboard last year, the introduction of iTunes Radio did nothing to halt a year-long trend of declining download sales in 2013.

In our case, iTunes Radio was a net positive, because more than 100,000 listeners heard a song they probably wouldn't have otherwise known about, and a small percentage of those listeners purchased the track. But as noted in Billboard, a recent study by Music Forecasting makes the case that listeners are using iTunes Radio for a "lean-back" passive listening experience, one that is unlikely to result in large increases in music purchases. (The full PDF of the report is here.)

In addition to the download sales, we also received a payout from Apple for each spin of the song. As reported last year by the Future of Music Coalition and Digital Music News, Apple opted to make a direct payment to artists/labels for digital performance royalties instead of taking the compulsory path and making payments to SoundExchange.

For 103,874 spins of "O Christmas Tree" on iTunes Radio, we received $114.99 (before the deduction for CD Baby's commission). That translates to a little more than 0.11 cents per play. That's slightly less than the "$0.0013 per song plus 15% of net advertising revenue for the first year" spelled out by Apple's contract with indie labels, though I'm uncertain if that rate also includes payments Apple makes to music publishers. After I receive my BMI statement for the quarter, I can calculate the total payment we received for each iTunes Radio play.

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    Out Now -- "Maybe Next Year" -- The New Holiday Album:

    <a href="">Joy To The World by The Layaways</a>

    "This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

    "Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs

    O Christmas Tree - free mp3 lyrics and song details
    Away In A Manger - free mp3

    Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at

    album cover art from The Space Between

    <a href="">Keep It To Yourself by The Layaways</a>

    "...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

    "Their laid-back, '60s era sounds are absolutely delightening." -- 3hive

    "...melodic, garage-influenced shoegaze." -- RCRD LBL

    Where The Conversation Ends - free mp3
    January - free mp3
    Keep It To Yourself - free mp3

    Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at or Napster.

    album cover art from We've Been Lost

    <a href="">Silence by The Layaways</a>

    "The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

    "Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio

    Silence - free mp3 lyrics and song details
    The Long Night - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at, Napster, or Rhapsody.

    album cover art from More Than Happy

    "These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover

    Let Me In - free mp3
    Ocean Blue - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at, Napster, or Rhapsody.

    More Layaways downloads:

    download the Layaways at eMusic download the Layaways at iTunes

    the layaways website