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home about Digital Audio Insider is David Harrell's blog about the economics of digital music. contact Follow the advice of a certain Scottish band to send an e-mail. links music business/tech: Ad-Supported Music Central Analog Industries Ars Technica Apple 2.0 AppleInsider Brad Sucks Blog Broken Record Byte of the Apple CNET Music News Coolfer Digital Music News Digital Noise Duke Listens Epicenter Future of Music Coalition Blog Hypebot Know the Music Biz LA Times Technology Blog The ListeNerd Medialoper MP3 Insider Music Ally Music Machinery Music Think Tank MusicTank New Music Strategies Online Fandom Pampelmoose Penny Distribution Blog RAIN Rough Type Swindleeeee TuneTuzer economics/markets: The Big Picture Core Economics Freakonomics The Long Tail Marginal Revolution Odd Numbers Partially Unexpected The Undercover Economist mp3/music: 17 Dots 3hive Fingertips Shake Your Fist 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 |
June 30, 2006 Extinctby David Harrell Extinct Digital Download Services Over the past two-and-a-half years, CD Baby has delivered our two albums to a combined total of 56 online download stores, streaming services, and other digital sellers. That includes all of the bigger names -- iTunes, eMusic, Rhapsody, and Napster -- plus quite a few that I had never heard of -- Bitmunk, Sonific, etc. Some of them aren't around any more -- 9 of the 56 are now listed as "DEAD" in my CD Baby account info: CatchMusic - DEADI suppose a 84% survival rate isn't too bad for a new industry and business model. But given that the vast majority of download sales are coming from just a few providers, it seems likely that the extinctions will continue. tags: digital music download stores link 1 comments e-mail this post Digg this post follow DAI on Twitter June 26, 2006 I'm iBloggingby David Harrell I'm iBlogging The Chicago Tribune's Steve Johnson takes aim at the lower case phenomenon (and the iPod itself): In the fey little vowel imposed upon us by the iPod, the self seems to be reduced to a mere whisper. I am sorry for imposing myself on you. I am insignificant. I listen to music as I walk around, but I do it with earphones on.tags: iPod link 0 comments e-mail this post Digg this post follow DAI on Twitter June 22, 2006 Nickeled and Dimedby David Harrell Nickeled and Dimed Money managers sometimes use the mantra "maximizing shareholder value" when talking about the desired traits of stocks they want to buy. That is, they want to own the stocks of companies that have management teams that are committed to running their businesses in such a way as to maximizing the return to the investors who buy the stock. Makes perfect sense from an investment standpoint. But when you apply that maxim to a publicly-traded record company, it sure doesn't seem to result in artist-friendly business practices. Does "maximizing shareholder value" also mean "minimizing artist income" for the musicians on the label? From a recent Wall Street Journal story on the "new" Diana Ross album: Diana Ross's new jazz album isn't exactly new -- she recorded it about 35 years ago.If I were a shareholder of Vivendi, which owns Universal Music, I suppose I'd agree that paying Diana Ross the smallest possible royalty was good for the bottom line. And Ms. Ross probably isn't anyone's first choice as a poster child for starving musicians who've been deprived of their rightful royalties. Yet there seems to be a basic lack of fairness here, if Universal is indeed paying 1972 rates for something released in 2006. Granted, Universal is dropping some bucks on the promotion of this album, mixing it, mastering it, etc. But these recordings have basically been gathering dust for 30+ years. Seems like any income from them in 2006 would be considered pure gravy from an accounting standpoint, not a reason to pinch pennies on artist royalties. tags: royalties Vivendi link 1 comments e-mail this post Digg this post follow DAI on Twitter June 21, 2006 Guest Postby David Harrell Guest Post Today No, not here, but I wrote something for the excellent Shake Your Fist music blog that just went live. It's about something I've been thinking about for quite a while, but am still trying to shape into a coherent theory. Condensed version: Until very recently, the main challenge for recorded musicians (in addition to funding the recording sessions) was getting their music in front of potential buyers. The surest way to do so was the elusive major label recording contract. Short of that, the Holy Grail was "distribution" for releases on indie labels or self-released artists. Today, via free mp3 giveaways and iTunes, eMusic, etc. (which are easy for indie artists to get into) "worldwide distribution" is available to virtually everyone, at least for downloads. But because of sheer volume of available recorded music, which seems to be increasing exponentially, the ultimate challenge is becoming the competition for the listening hours of music fans. It seems likely that listening habits are becoming more eclectic (a wider variety of bands and albums) but not as "deep." That is, because you can only listen to so much music each day, you're going to end listening to fewer songs by each artist. (At least that's what's happening to me..) Anyway, here's a link to the post at Shake Your Fist, which includes a playlist composed of songs that I absolutely love, but where each song represents the ONLY track by that artist in my music library. tags: mp3 link 0 comments e-mail this post Digg this post follow DAI on Twitter June 16, 2006 Real Audio for Amazon Subscription Service?by David Harrell Real Audio for Amazon Subscription Service? I really should stop whining about Amazon.com's stocking policies for self released CDs, as I did in this post from a couple weeks back. For someone in a relatively unknown, non-touring band, every single CD sale is more than welcome, wherever it comes from, even if keeping Amazon in stock is a minor hassle. And, as Glenn pointed out in a comment to that post, Amazon does have the biggest reach. If something's not available from Amazon, there's no guarantee that an individual customer's going to buy it elsewhere. Further, while other online retailers are selling the disc for approximately the same price, for anyone already paying for the "Amazon Prime" free shipping program, Amazon ends up being the cheapest option, at least for physical CDs. But I'll offer one last gripe about Amazon's "just in time" inventory system. After ordering a single replacement copy of our "More Than Happy" disc on May 30th, Amazon followed up a second order for another single disc, six days later, before the previous order even showed as being in stock. And then the remaining Amazon copy of our second disc sold, and I'm still waiting on the replacement order for that one... Anyway, complaints aside, I did notice a couple of interesting things on Amazon recently. The first makes me wonder if Amazon.com's announced music subscription service might use the dreaded Real Audio format. While Amazon.com doesn't provide audio samples for self released albums and stuff on smaller indie labels, for some reason Amazon now has Real Audio samples for all tracks from our first disc. But unlike mainstream releases, there are no samples using the Amazon format or Windows Media. As best as I can remember, Amazon never kept any of the discs it ordered from me -- all have shown up as available stock. So the audio files are coming from somewhere else. Maybe as part of whatever Amazon is cooking up for its subscription service? Also, I noticed a few months back that Amazon.com had removed the links to free mp3 tracks from its album pages, though the files are still available via the free download section. I wondered if Amazon didn't want the free files competing with its planned music subscriptions or individual download sales. But when searching for our albums via Borders.com last week, I noticed that the Amazon pages served up DID include the associated free mp3s for the first and second Layaways discs. Same thing across the board for all of the other albums I checked from both starting points: No free mp3s listed for the Arcade Fire's Funeral if you start your search from Amazon.com, but you'll see a free mp3 for "Neighborhood #3" if you start your search from Borders.com. No free mp3s shown for Guided By Voice's "Human Amusements At Hourly Rates" collection if you start your search at Amazon.com while three free mp3s show up on the page if you start at the Border's URL. (UPDATE: Just realized that the comparisons are difficult because of some cache issues -- once you click through on a Border's link, you'll get the Border's/Amazon pages for the regular Amazon.com links as well.) Can't think this is any sort of deliberate differentiation, though. I suspect Amazon.com decided to remove the direct links and just never updated the code for the pages served up via Borders.com. Etc. Received an e-mail earlier in the week about the Bandwith music and technology conference in August. It's described as a discussion of the "issues of interest to the music and technology communities, with a particular focus on the evolving musical experience." Here's a link to the conference schedule. tags: Amazon.com Real link 0 comments e-mail this post Digg this post follow DAI on Twitter June 06, 2006 TV and Online Salesby David Harrell TV and Online Sales, Sony vs. Apple From Saturday's Wall Street Journal, a short piece on TV exposure and subsequent record sales: Snow Patrol, 'Grey's Anatomy'Memo to self: start writing songs with "cars" in the title! I have to think that the ability to purchase the songs as downloads leads to impulse sales that otherwise wouldn't have occurred. The option to download online minimizes any hassle factors associated with driving to the store or waiting for a CD to be delivered. And the 99 cent price at iTunes pretty much eliminates any hesitation based on cost. What I'd love to see is a day-by-day or even hour-by-hour breakdown of iTunes sales of the Snow Patrol song, starting the minute the episode ended. Based on this interview with Sony CEO Howard Stringer in today's WSJ, it doesn't sound like Sony will be challenging the iPod anytime soon, if ever: Mr. Mossberg: Let's talk about the [Apple] iPod for a second. Is it too late to significantly dent their share? Can you bring out a digital Walkman with the kind of end-to-end experience with the software and the service that can really go after them?tags: iTunes Sony link 0 comments e-mail this post Digg this post follow DAI on Twitter June 02, 2006 Digital Sales More Profitable than Amazon.com CD Salesby David Harrell While my mother-in-law was REALLY impressed when she found my band's albums on Amazon.com, it's not hard to sell your own CD there. You just need a bar code, shrinkwrapping, and a manufactured CD (no CD-Rs). The main downside is that Amazon.com seems to have switched to a minimalist inventory policy, at least for relatively slow selling self-released CDs. When our first disc was released in 2003, Amazon placed an initial order of 15 copies. All of those copies eventually sold, and Amazon continues to send re-stocking orders, albeit much smaller ones, generally for just one or two discs. And it seems to take a while (nearly a week) after selling a disc before the re-stocking order is placed. The problem is -- by stocking only one disc at a time -- the cost of shipping discs to Amazon now represents a significant portion of our per-disc revenue. First class postage for a single disc is $1.35, which is actually the cheapest option, as media mail for a single CD is more expensive. We sell our CDs at a "list price" of $9.99 and Amazon takes a 55% percent cut, paying us $4.50 for each disc sold. While I suppose there's a certain prestige to having your music available via Amazon.com, it's shaping up to be the LEAST profitable way for us to sell it. After factoring in manufacturing costs of around $1.25 a disc and the $1.35 it costs to mail each one to Amazon.com warehouse, that leaves about $1.90 per disc in gross profit. In comparison, here's how the numbers shake out for discs sold through stores via our distributors, online via CD Baby, and digital downloads through iTunes and eMusic: Sales in Stores, via Distributors We sell discs to our distributors for $5.50 each, hoping they'll end up in stores for somewhere around $9.99. The orders are usually large enough that the per-disc shipping cost is pretty low, usually less than 20 cents a disc. So after accounting for shipping and manufacturing, we're netting a little more than $4 a disc. CD Baby For online CD sales, CD Baby takes a $4 cut of the $9.99 price. After manufacturing and shipping costs, we clear around $4.50 a disc. Digital Downloads - iTunes and Other Stores For a $9.99 album price, Apple pays our distributor $7. The distributor takes a 9% cut, leaving $6.37 a disc for us. (No shipping or manufacturing costs here!) The numbers are similar for the other download stores that charge around $10 for a full-album download. Digital Downloads - eMusic This last example is the truly amazing one. An eMusic subscription is by far the cheapest way for someone to buy a copy of one of our albums. With a 40-downloads-a-month subscription, which costs $9.99 a month, our first album (12 tracks) "costs" the buyer $3 while our 11-track second album costs $2.75 for an eMusic download. The per-track payout rate varies each month (more details here) but the most recent payout we've received is 19 cents a track, minus the distributors 9% cut. Which works out to $2.07 take for the 12-track disc and $1.90 for the 11-track disc. The option that costs a purchaser the LEAST money still nets the same amount (or more) for us as an Amazon.com purchase. In fairness to Amazon, dealing with slow-selling CDs is no doubt something of a pain. But the given that the CDs are steady sellers, it seems like maintaining a stock of only one disc maximizes Amazon.com's labor cost, as it has to restock the disc every time one sells. It's making me think that for self-released musicians on the right-hand portion of the long tail, digital downloads may be the best bet. (Though it pretty much cuts the indie stores and distributors out of the picture...) tags: Amazon.com eMusic iTunes link 2 comments e-mail this post Digg this post follow DAI on Twitter |
Subscribe: Add this blog to Del.icio.us, Digg or Furl The Digital Audio Insider Twitter feed: Looking to hire? Looking for a job? Check out the digital audio insider job board. Most Popular Posts The New Music Equation By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion Lala.com Owes Me Sixty Cents Economists, Radiohead, and Bob Mould To Free or Not to Free Price Elasticity of Demand for McCartney The Digital Pricing Conundrum series: Part One Part Two Part Three Part Four THE LAYAWAYS "...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 Keep It to Yourself - free mp3 All Around the World - free mp3 Come Back Home - free mp3 Download from eMusic, iTunes, Amazon MP3, or CD Baby, listen to free streams at Last.fm, Lala.com, and Napster. "The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music "A wonderfully crafted recording built around tasteful songwriting and musicianship..." -- PopMatters Silence - free mp3 The Long Night - free mp3 Download from eMusic, Amazon MP3, or iTunes, listen to free streams at Last.fm, Napster, or Rhapsody. "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, listen to free streams at Last.fm, Napster, or Rhapsody. More Layaways downloads: the layaways website Current/Recent Reading and Listening:
It's written as a how-to guide for those looking to become music supervisors, but I found it to be a good resource for musicians (like me) who are trying to get their music used in movies, TV, etc. |