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


  digital audio insider

home

about/contact
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.

Support
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.

links

music/media/tech:
Analog Industries
Ars Technica
AppleInsider
Brad Sucks Blog
Broken Record
Digital Music News
Duke Listens
Future of Music Coalition Blog
Hypebot
LA Times Technology Blog
The ListeNerd
Medialoper
Mediashift
MP3 Insider
Music Ally
Music Machinery
Music Think Tank
MusicTank
The Music Void
New Music Strategies
Online Fandom
Pakman's Blog
RAIN
Rough Type
RoughlyDrafted
Swindleeeee
TuneTuzer
Virtual Economics

economics/markets:
The Big Picture
Core Economics
Freakonomics
The Long Tail
Marginal Revolution
The Undercover Economist

mp3/music:
17 Dots
3hive
Fingertips
Shake Your Fist
Sounds Like the 80s
Unleash the Love

archives
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
May 2010
June 2010
July 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
June 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
April 2012
May 2012
June 2012
August 2012
October 2012
November 2012
December 2012
January 2013
February 2013
March 2013
June 2013
August 2013
February 2014
March 2014
September 2014
December 2014

January 19, 2006

The Digital Pricing Conundrum Part 1: Song Length and the Number of Tracks
by David Harrell
In the late 1990s, I worked a regular Saturday shift at a Chicago record store. The pay was negligible, but I received an employee discount and had a first crack at all of the used CDs that came in. Plus, in those dark days before mp3 blogs and Internet radio, it was the best way to sample new music.

There was a staff of three on Saturdays and we'd "rotate picks" to choose the discs for in-store play. My two co-workers often opted for rap and hip-hip and I usually spun indie rock. I paid a price for that stylistic choice: Most of my CD selections had about 45 minutes of music while my co-workers' picks, with longer songs and more of them, often lasted 70+ minutes. My nominal 1/3 control of the store's stereo was sabotaged by the average track length and number of tracks of our respective CD picks.

Today, track length and the number of tracks on an album are both resulting in some major pricing discrepancies within (and between) online music stores. Let's start with iTunes, which uses a default album price of $9.99. A single slice of that pie costs 99 cents. The trouble is -- if albums are pies -- they come in different sizes and the number of slices varies with each one. As the following examples will show, it can create some real chaos. (This model, with some variations in base track/album prices, pretty much holds for the bulk of the online stores. Apple does deviate from the $9.99 album price on occasion, but not the 99 cent track price.)

Then there's the eMusic subscription model, where you pay for a set number of downloads each month. I've got the 40 for $9.99 plan, which works out to 25 cents per track, assuming you use all of your downloads. The issue here is that all downloads count equally against your monthly allotment, be they 30- second mini-songs or 20-minute opuses.

A great example of digital pricing confusion is this recent pick of mine from eMusic: McLemore Avenue by Booker T. and The M.G.'s. The 1970 release covers most of the Beatles' Abbey Road and the album artwork even features the M.G.'s crossing the street outside the Stax recording studio, just like the famed Abbey Road photo. On eMusic, it's a major bargain, as most of the songs segue into each other, so it counts as only four downloads against your monthly subscription, for a net cost of around $1. Over at iTunes, that same album costs $9.99, but how can you then charge 99 cents for the four tracks? You can't, so iTunes lets you buy the two shorter ones for 99 cents each and makes the other two "album only." And things get really goofy over at the MSN store, where the longest track on this album is priced at $1.39 and the other three at 99 cents. You can download all four tracks for a grand total of $4.36 but MSN also gives the option of downloading the entire album for $8.91!

On average, there's an iTunes/eMusic pricing multiple of approximately four: 99 versus 25 cents per track. But for this specific album it's 10, as the average track price in iTunes is nearly $2.50. The eMusic model, though, is absolutely brutal when it comes to albums with lots of short songs. Download Human Amusements At Hourly Rates by Guided By Voices and you'll burn through 32 of your monthly downloads. That's around eight bucks worth of a $9.99 subscription, so in this case the iTunes/eMusic multiple is down to 1.25.

While the Booker T. album makes a great anecdotal example, it's not just a case of a few odd albums causing pricing anomalies. Entire genres of music are affected. Many classic jazz albums feature just a few, relatively long tracks, making them incredible bargains on eMusic. Saxophone Colossus by Sonny Rollins is a mere five tracks, Relaxin' With The Miles Davis Quintet has only six tracks, and so on. (MSN somehow failed to catch this quirk: As with the Booker T. album, you can purchase all of the tracks from these discs for much less than the "buy album" price.)

From a consumer's standpoint, should a Guided By Voices disc cost eight times as much at eMusic as does a Booker T. and the M.G.'s album? And for the artist and record company, should a musician be penalized (or rewarded) for artistic decisions made about song length and the number of tracks on a disc?

If there was an easy answer, I'm thinking it would've been figured out by now. The simplest solution I can imagine is setting a standard price for an album download, then dividing that amount by the number of tracks on the disc to price individual song downloads. Another option would be to charge for music by the minute, using $9.99 for a 45-minute album as a starting point to establish a 22.2 cent charge per minute of digital music. (This model is somewhat in line with how mechanical royalties are paid for both physical CD sales and digital downloads. These royalties go to songwriters and publishers and are separate from artist royalties, which are usually set as a percentage of the wholesale price of a format. As of 1/1/2006, mechanical royalties have increased to 9.1 cents per song for songs of five minute or less, anything longer than that is paid at 1.75 cents per minute.)

But both of these solutions go against the "one price" that Steve Jobs is currently holding the line on at iTunes. And both would create a ton of accounting headaches for the digital stores, basically resulting in an infinite number of royalty rates. Plus, while I doubt most musicians would give it too much thought, it does create economic incentives for artists and record companies that could affect creative decisions. Making the fadeout on a potential hit single a bit longer could mean thousands more in digital royalties for an established artist. On the other hand, an unknown artist might feel pressured to keep songs short, to create a "bargain" price for a track.

You could argue that despite all of these weird pricing elements, consumers are still coming out ahead with digital music sales in that they now have the option now of buying single tracks instead of entire records. Whatever the track price, it's still a major bargain if you only want one or two songs from an album. Which is no doubt one factor behind the major labels' push to lift the 99 cent price ceiling, something that will be covered in part II of this series.

(Correction -- the bit about Apple's occasional deviation from the $9.99 price was added on 1/20.)

Labels: , , ,

link 3 comments e-mail listen to the Layaways on Spotify




More Digital Audio Insider: Newer Posts Older Posts



Subscribe:   RSS Feed



Add this blog to Del.icio.us, Digg, or Furl. Follow David Harrell on Google+.





The Digital Audio Insider Twitter feed:

    Digital music jobs: Looking to hire? Looking for a job? Check out the digital audio insider job board.



    Popular Posts

    A Long Tail Experiment
    By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
    Lala.com Owes Me Sixty Cents
    An Interview with Jonathan Segel of Camper Van Beethoven
    Price Elasticity of Demand for McCartney
    Sony and eMusic: What I Missed

    The Digital Pricing Conundrum series:
    Part One Part Two Part Three Part Four





    THE LAYAWAYS

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

    <a href="http://thelayaways.bandcamp.com/album/maybe-next-year">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 Last.fm.



    album cover art from The Space Between

    <a href="http://thelayaways.bandcamp.com/album/the-space-between">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 Last.fm or Napster.



    album cover art from We've Been Lost

    <a href="http://thelayaways.bandcamp.com/album/weve-been-lost">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 Last.fm, 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 Last.fm, Napster, or Rhapsody.

    More Layaways downloads:

    download the Layaways at eMusic download the Layaways at iTunes

    the layaways website