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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May 04, 2006

Bargains at eMusic and a Royalty Quandary
by David Harrell
One quirk at eMusic, as covered in a previous post, is the lack of an "album price." All individual songs count the same toward a subscriber's monthly allotment, regardless of the number of tracks on an album or song length.

This business model leads to some interesting pricing trends and anomalies. One is example is jazz. As a genre, it's relatively cheap, because many classic, full-length albums consist of only four to six separate tracks. My bandmate Porter is an enthusiastic eMusic subscriber and often forwards the outrageous eMusic "bargains" he finds to me. He recently spotted a couple of the best non-jazz examples yet:

Lift Your Skinny Fists Like Antennas to Heaven -- godspeed you! black emperor
This is a double-album of just four songs, with a total time of 87 minutes and 23 seconds, yet it counts as only four downloads. (The album is currently #3 on eMusic's monthly download chart, no doubt helped by its super-low price.)

Absolutego - Special Low Frequency Version -- Boris
Here you have a two-track album that lasts 73 minutes and 25 seconds, with the bulk of that coming from a single, hour+ track.

You can't "buy" these albums from eMusic -- you can only download the tracks via a monthly subscription. But assuming that a 40-a-month-for-$9.99 subscriber uses all of his or her monthly allotment, you can create a table of "album prices" for various releases on eMusic. The eMusic download prices are all lower than the cost of the corresponding new CD, but they certainly don't correlate with the prices for a new disc, as the cheapest eMusic album on this list has the highest price:

Album "Price" for $9.99 a Month eMusic Subscriber, New CD at
ArtistAlbum/# of Tracks
BorisAbsolutego.../2 $0.50$13.99
Sonny Rollins Saxophone Colossus/5$1.25$10.98
Miles DavisRelaxin'/6$1.50 $11.98
Belle & Sebastian The Life Pursuit/13$3.25 $11.96
The KinksCome Dancing/18 $4.50 $9.99
Guided By Voices Alien Lanes/28 $7.00 $10.98

(The Kinks disc isn't currently stocked by, though the site does list a "club price" of $9.99 for a new disc. There's also a "new" copy listed by an individual for $8.99 with the comment "New, Only Transferred To My MP3 Player...")

What I don't know is how eMusic treats these album-length songs in terms of payments to labels and artists. The eMusic per-song payout rate varies each month (more details here). But as far as I can tell, there's no allowance for song length -- we've received eMusic payments for our two discs within the same month for songs ranging from 52 seconds to 5:18 in length and the payout amount has been the same for each.

If eMusic is indeed paying the same per-song rate for these album-length tracks, I have no idea how major labels are then handling the payments of mechanical royalties to publishers and songwriters and artist royalties to performers.

According to the latest required rates for mechanical royalties, Boris's single 65 minute song would require a mechanical royalty payment of $1.14 to the composer/publisher, in addition to any artist royalties paid. Which is six times the latest eMusic payout that I've seen (19 cents per download).

So something else must be going on -- no label is going to pay out more than it receives from eMusic to artists and publishers. It's not uncommon for a recording contract to stipulate a cap the maximum amount of mechanical royalties paid for a specific album, though the examples I've seen our based on a maximum number of songs for mechanical royalties, not a total per song.

Another possibility is that unlike iTunes sales, where the label pays the standard mechanical royalty rate and a reduced artist royalty, perhaps labels are treating eMusic income differently. Because eMusic revenue is technically coming from subscriptions, not per-song or per-album sales, maybe this distinction allows for different treatment of subsequent payments for mechanical and artist royalties.

If anyone reading has any specific knowledge about how the major labels treat mechanical and artist royalties for downloads from eMusic of these super-long tracks (or even just in general), please post a comment or send me an e-mail. I'd love to solve this little mystery.


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

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

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