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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 03, 2007

Digital NARM, Part II: Indie Stores and Digital
by David Harrell
Note: Sorry for the non-chronological updates on Digital NARM. I'm working my through my notes and posting as I finish things up. In the meantime, if you're looking for news coverage of each panel or presentation, check out's NARM updates.

The last panel I attended at the Digital NARM conference was a discussion about how indie stores can participate in digital sales, moderated by Don Van Cleave of the Coalition of Independent Music Stores. Participants included Kevin Arnold of IODA, Mitchell Koulouris of DMGI, Michael Kurtz of Music Monitor Network, Matt Laszuk of IRIS Distribution, Jim Logrando of Redeye, and Brad Nevin of the Orchard.

It was an interesting discussion with a few good tidbits, but clearly no one has ANY handle yet on a digital business model that will succeed (and be economically feasible) for indie stores.

Some highlights:

Sound quality/mp3 bitrate -- Van Cleave said that the lower fidelity of downloads "drives me nuts," but the consensus opinion was that it really only mattered to a small minority of the audience (10% or so). And that it might actually get worse before it gets better, if music consumers embrace over-the-air downloads to mobile devices. The assumption was that anyone truly concerned with quality was more likely to buy a physical CD.

Offering "exclusive digital content" as a bonus to CD sales didn't seem to get much of a response from the indie store audience. Van Cleave said customers basically shrugged their shoulders when he told them they could download an exclusive Pearl Jam track, that they just didn't want it. On the other hand, Redeye's Logrando said they've had a great response rate to an offer for a free ringtone and downloads included with the latest Apples in Stereo disc. (He didn't have a firm number, but guessed at a 40% response rate.) The issue was also raised that an artist would basically have to record a second album in order to offer digital exclusives to all the players -- iTunes, eMusic, Yahoo, etc. Someone else suggested the need for indie stores to create their own digital content by recording in-store performances, etc.

Windows Media just won't cut it for selling downloads: Kurtz got a laugh when he described finally "breaking the 800 barrier...dollars" for sales of protected Windows Media files. They're now switching to mp3s.

Vinyl with digital: Logrando mentioned one Redeye distributed label that only does vinyl and downloads. Van Cleave reported that vinyl (new and used) averages 15% of sales for indie stores, with some stores doing 20% vinyl. He said there's a real market for USB turntables. Everyone like the idea of offering free downloads with vinyl purchases.

Pricing: Kurtz wondered if 99 cents/$9.99 is too cheap for some records -- "It costs money to record music, to put bands on the road..."

Nevin encouraged indie stores to establish their own download stores and target the local audience.

Finally, while there was lots of talk at the conference about music subscriptions and how retailers can participate by selling them (a good chunk of it coming from Napster!), the topic didn't come up here.


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