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.

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February 28, 2006

Tuesday Odds and Ends
by David Harrell
Tuesday Odds and Ends
The conclusion to the Digital Pricing Conundrum series should be up later this week. (Here are links to parts I, II, and III.) In the meantime, a few recent items:

There's a piece over at the Huffington Post about album prices at iTunes, with lots of reader comments about variable pricing and downloading, a mix of the interesting and the inane.

Also, the Big Takeover updated its website late last year and now features columns, articles, top-10 lists, etc. Greg Bartalos, formerly of Barron's Online, has written a few posts about digital distribution-related issues.

Finally, my bandmate Porter sent a link to this post on Techdirt, which reveals that Canadians pay a tax of 21 cents per blank CD-R as a "private copying levy" which is then paid to copyright holders and performers. What's truly amazing here is that rate is even MORE for blank cassettes than CD-Rs!. (Guess that's based on the assumption that almost all cassettes are used for taping music, while CD-Rs do have other uses...) Here are the numbers from the Copyright Board of Canada's proposed rates for 2007:
Levy
3. (1) Subject to subsection (2), the levy rates shall be
(a) 29¢ for each audio cassette of 40 minutes or more in length;
(b) 21¢ for each CD-R or CD-RW;
(c) 77¢ for each CD-R Audio, CD-RW Audio or MiniDisc.
The poster was incorrect in his assumption that no such tax exists in the U.S., however. As one of the comments noted, we do have one (or maybe not, please see the update at the end of this post), courtesy of the Audio Home Recording Act of 1992. But it is much lower -- 2% for hardware, 3% for recording media:
Section 1004. Royalty payments
(a) Digital audio recording devices
(1) Amount of payment.
The royalty payment due under section 1003 for each digital audio recording device imported into and distributed in the United States, or manufactured and distributed in the United States, shall be 2 percent of the transfer price. Only the first person to manufacture and distribute or import and distribute such device shall be required to pay the royalty with respect to such device

(b) Digital Audio Recording Media The royalty payment due under section 1003 for each digital audio recording medium imported into and distributed in the United States, or manufactured and distributed in the United States, shall be 3 percent of the transfer price. Only the first person to manufacture and distribute or import and distribute such medium shall be required to pay the royalty with respect to such medium.
It's section 1008 of this law, which -- in theory -- preserves the right of consumers to make digital copies for personal ("noncommercial") use:
Section 1008. Prohibition on certain infringement actions No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.
UPDATE: After more research, I can't confirm that the 3% royalty applies to data CD-R sales in the U.S. I've seen conflicting answers, but according the RIAA, the AHRA applies only to devices and media designed specifically for audio recording such as D.A.T. machines and stand-alone audio CD burners, and that general computer users are not protected under section 1008:
Multipurpose devices, such as a general computer or a CD-ROM drive, are not covered by the AHRA. This means that they are not required to pay royalties or incorporate SCMS protections. It also means, however, that neither manufacturers of the devices, nor the consumers who use them, receive immunity from suit for copyright infringement.
I'm assuming the 3% royalty does apply, however, to blank "audio" CDs. I also noticed that the RIAA site is currently conveniently vague when it comes to defining "fair use" of digital audio, with no reference to personal use:
There are some limitations. Whether the court allows you to reproduce, distribute, adapt, display and/or perform copyrighted works depends upon the nature of the use (commercial purposes, non-profit, educational), the length of the excerpt, how distinctive the original work is, and how the use will impact the market for the original work.

Generally speaking, one is not allowed to take the "value" of a song without permission, and sometimes that value is found even in a three-second clip. When in doubt, it is always wise to check with the copyright owner, because in many cases even a small clip of a song may not be "fair use."
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    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