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
March 2015
October 2015
November 2015
December 2015

March 20, 2006

Increased Downloads at eMusic, Per-Song Label/Artist Payout Decreases
by David Harrell
Increased Downloads at eMusic, Per-Song Label/Artist Payout Decreases
In an early post on this blog, I wrote about the "royalty" rate for songs downloaded at eMusic. But unlike iTunes, which pays a set royalty per download (currently 70 cents), eMusic doesn't have a standard per-song payout rate. Instead, eMusic pays record labels (and independent artists) a set percentage of its subscriber revenues each month. Basically, a label receives a portion of that revenue share proportional to download activity of its tracks as a percentage of all subscriber downloads for the month. (I'm assuming that eMusic went with this business model because it started out with an "all you can eat" subscription plan, without any limits on the number of tracks subscribers could download each month. A set per-song royalty could have been a big money loser, having a revenue-sharing model caps the total payout at set percentage of subscription income.)

So while the idea of an eMusic "royalty" is something of a misnomer, a per-song rate is eventually worked out for each month, probably calculated by dividing the revenue share amount by the total number of downloads for the month. The resulting payout is therefore inversely correlated to the total number of tracks that eMusic subscribers download each month: Fewer subscriber downloads means more money paid out for each download, more downloads means less money paid per track. There is a limit to how low this rate can drop, however. That limit would be reached if/when ALL subscribers maxed out their downloads each month.

Back in May 2005, the first month I have sales data for, the per-song rate for eMusic downloads was 24 cents. By November 2005, the most recent month I have numbers for, that rate had dropped to 19 cents per download. Hence, my best estimate is that total download activity by active eMusic subscribers increased approximately 20% during that time. (I'm not talking about the number of subscribers, which no doubt increased as well, I'm referring to the average number of tracks that subscribers downloaded each month.) In December, eMusic president David Pakman said that the average eMusic subscriber was downloading 31 tracks for month. Given that cheapest eMusic subscription plan allows for 40 downloads a month, the per-song payout probably has room to drop some more, if average subscriber downloads approach the monthly limits.

But as someone with a couple albums distributed by eMusic, I have no complaints. Even though the current per-song payout is less than 1/3 of what we receive from iTunes, I'm confident that we'll have more sales via eMusic, perhaps enough to offset the lower "royalty rate." I think the "use it or lose it" aspect of the eMusic subscription plan makes subscribers more likely to take chances on unknown artists. (Using up 10 of your expiring downloads to check out a new artist is very different than paying $9.99 for that same album on iTunes.)

And from a subscriber standpoint, I think this model is a good thing -- it means that eMusic has no incentive to minimize download activity. That is, if eMusic paid a set royalty for each download, eMusic's profit would increase with each download "left on the table" and the company's preference might be for its subscribers to not make full use of their monthly allotment. Which is happening now with Netflix, where the associated costs of "unlimited" movie rentals is causing the company to throttle its customers to limit the number of movies they can rent each month. With eMusic, the company has every incentive for subscribers to realize the full value of their subscriptions -- the more you use your eMusic subscription, the less likely you are to cancel it.

tags:

link 0 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