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.

My personal website has links to my LinkedIn and Google+ pages and you can send e-mail to david [at] thelayaways [dot] com.

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July 30, 2007

Monday Odds and Ends
by David Harrell

Relative to CDs, digital downloads have the negatives of lower sound quality, DRM, lack of cover art and liner notes, etc. But on the plus side, there's the convenience factor.

Or so I thought -- check out some of the hoops these eMusic subscribers are jumping through to manage their music download collections. Here's one example, which isn't even the most time intensive one I saw:

At first I was burning everything to a music CD. I gave up after a few months. Now I store everything in .mp3

1) Using MusicMatch I import album art and fix year.
2) Rename the album folder to Year - Album. That way albums by the same artist are automatically sorted in chronological order. For all files I make the file name and the tags match. I name each file Track number-Artist-Song.
3) Place in holding folder.
4) When holding folder reaches 700 MB, burn to CD
5) Place in correct folder (classical, rock, Brazil, etc) in the collection (120 GB dedicated drive)

Recently I've begun to make a second backup of everything to DVD. I'm about 25 % done. I also bought a portable USB 160 GB drive so I could listen to my tunes at work. I got tired of caring all those CDs back and forth. So a copy of the file goes into the portable drive.

Other fixes: I hate the "Various Artists" tag, so I manually fix these in winamp. Exception: actual soundtracks (as opposed to a collection of songs called a soundtrack). So, for example, the Amadeus soundtrack is labeled as "Amadeus"; the Rocky Horror Punk Show has each artist credited in each corresponding track.

I am about 2 years behind listening to the daily samples. I have those in 2 folders and they are a mess. I need to clean them up some day.

And marketer/blogger Seth Godin's response to an overwhelming amount of music:

Musicians, bloggers, writers -- if you're toiling in the long tail, getting stuck at zero is now a real possibility. Being just like the other guys but trying harder is less of an effective strategy than ever before.

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July 23, 2007

Treatment of Longer Songs by eMusic
by David Harrell

One of my very first posts for this blog (The Digital Pricing Conundrum Part 1: Song Length and the Number of Tracks) explored the pricing and payout disparities in eMusic and other download stores for albums with varying numbers of tracks. Because the eMusic subscription model is based on individual tracks, albums with relatively few songs can be considered bargains for subscribers, while albums with many tracks are more expensive, as downloading one uses up more of subscriber's monthly tracks allotment.

On the label/artist side of things, I questioned whether it made sense for eMusic to apparently pay labels two or three times the amount for some albums compared with albums with fewer, longer tracks. Some examples here are a 32-track "best of" collection from Guided By Voices and a classic six-track album from Sonny Rollins.

And for albums like this one with extremely long tracks (20 minutes+) I also wondered about situations where the mechanical royalties a label might have to pay on a track could approach the total payout from eMusic for the song.

As it turns out, there is a mechanism in the eMusic model that addresses these issues -- to a degree. A reader was kind enough to share eMusic's breakdown of how it counts longer-than-average tracks when computing payouts to labels. (My band is in the eMusic catalog, but we're there via a distributor, so I don't receive the same level of information as a label that works directly with eMusic...)

The document was marked "CONFIDENTIAL - NOT FOR DISTRIBUTION," so I won't rile up the eMusic folks by reproducing it here. But here's the general gist: For tracks lasting more than seven minutes, eMusic gives extra credit for each download of the song, with a minimum "bonus" of half a track and a maximum of two tracks. For example, a song lasting 7 minutes 20 seconds would count as 1.5 downloads and any track over 20 minutes in length would count as three downloads.

Obviously, these adjustments don't result in complete payout equality for every full album, though they do level the playing field slightly. That six-track Sonny Rollins album gets a boost to seven tracks because of two 10-minute+ tracks. Yet there are plenty of albums with the same total running time (or less) that would result in much larger payouts from eMusic for the full album download. As a group, classic jazz labels appear to be on the short end of the stick with the eMusic model.

On the consumer side of things, I keep thinking that eMusic needs to address this issue, though any cure might be worse than the disease. Besides, while it's easy to find extreme examples of track number/length disparity, I'm not sure if the average subscriber really gives much thought to relative album prices, aside from seeking out the obvious "bargains" in the catalog. The only remedy I can think of would be to switch from a set number of downloads each month to a point system, where longer songs would cost more points and shorter songs fewer points. (Basically a point-per-minute of music system.)

But that change would muddy up a system that is straightforward and easy to understand and use. Plus, it might be perceived as a price increase by anyone who favors genres that feature longer, fewer tracks on each album. So maybe the current system, while not ideal, is the best compromise.

related: Bargains at eMusic and a Royalty Quandary, The Digital Pricing Conundrum Part 1: Song Length and the Number of Tracks

tags: digital music eMusic mechanical royalties song length

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July 20, 2007

Friday Fun: Dalida
by David Harrell

Why I love YouTube, reason 496:

No, this isn't Madonna in 2017 -- it's the Italian/French superstar Dalida in 1979, singing her hit "Monday Tuesday...Laissez-Moi Danser." Still, I can't help thinking this is a fairly accurate sneak peek of Ms. Ciccone in the future:

Thanks, Alex!

Labels: 1970s, 1979, Dalida, Friday Flashback Fun

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July 18, 2007

Mental Accounting: Paying for Live vs. Recorded Music
by David Harrell

It was the first of many appearances made by the singer's most annoying vocal tic: "Eeeee-yo!" -- Greg Kot, in his Chicago Tribune review of the Police at Wrigley Field.

I'm pretty much in agreement with Kot's take on the July 5th Police show I attended. It seems like half the songs in the Police catalog have some sort of "day-oo," "eeeee-yo," or "eee-aaa-ooo" vocal part in the recorded version of the song. But Sting seemed determined to inject one into EVERY tune in the set.

To me, the worst was the "Roxanne-ooo" he introduced in the jam section of what could've been the evening's highlight. Thankfully, we were spared the "every-breath-you-take-ooooo's" that I predicted after Sting unleashed the "Roxanee-ooo's."

Anyway, concert reviews are beyond the scope of this blog, but the whole thing got me thinking about the money people are willing to spend for live concerts relative to their willingness (or lack thereof) to pay for recorded music. Our mid-tier seats were about $110 each with the various surcharges and that doesn't include the $100 my friend paid to join the Police fan club, which was pretty much the only way we were going to get tickets. (Though, as Kot noted in his review, there were plenty of tickets selling for face value or less outside the venue that night.) And plenty of folks there obviously paid a lot more than that for the seats closest to the stage. But as I noted in this post, you can buy the entire Police catalog on CD or from iTunes for a fraction of the cost of a single concert ticket. Yet I'd bet that a large percentage of the concertgoers haven't done so. (That includes me -- I have Reggatta de Blanc on CD and there's a vinyl copy of Synchronicity I bought as youngster floating around my parents' attic, but that's the only recorded Police music I own.)

Of course, some music fans are spending big bucks for both. But I'd guess that casual music fans and concertgoers are likely to spend more attending a single big concert each year than they're spending on recorded music.

Maybe it isn't a fair comparison. Live music and recorded music are in many ways apples and oranges and I can think of quite a few reasons to explain the difference in willingness to pay for concert tickets vs. recorded music. (See Bob Lefsetz's latest screed for a few more examples of recent ticket prices.)

The main one is scarcity. There are only so many tickets to any show and there's no way of knowing if/when a particular act might tour again. Also, live music is a social/communal experience -- you can go with friends, bring a date, brag to your friends that you saw a particular show -- and there's obviously an economic value to that component.

Listening to recorded music, however, has become an increasingly solitary activity, especially as music is consumed via iPods and computers. And -- with rare exceptions -- there's no scarcity of supply for recorded music. Those albums will be around forever, there's no real pressure to buy them today. Plus, I'm completely ignoring the fact that almost all recorded music can be obtained without paying for it.

Of course, none of this is news, as we've been hearing for at least a couple of years now that the future to the music industry is giving away the content and making money from live shows, merchandising, and licensing. But it does seem to be something of a quirk in our collective buying habits that music fans don't think twice about paying big bucks for the ephemeral concert experience, yet they are -- on average -- parsimonious when it comes to purchasing the music that forms the foundation of those concerts.

I'm not quite sure if this qualifies as an example of mental accounting, the tendency for consumers to allocate their funds to different mental buckets in sometimes illogical divisions (more examples here). If not, I think it comes close...

But in terms of sheer personal satisfaction and enjoyment, I'd argue that recorded music often provides a better value for dollar spent. Don't get me wrong -- the very best concerts I've attended (Guided By Voices, Aztec Camera, the pre-reunion Pixies, and the re-united Big Star) are all experiences I'd never trade. Yet those were all relatively inexpensive tickets for shows in smaller venues. The big-ticket concerts I've seen in the past few years (R.E.M., Paul McCartney, and the Police) have all been enjoyable but somewhat disappointing.

My own musical tastes probably have something to do with this disappointment in these larger shows -- I'm going to concerts where I basically expect to hear an amped-up reenactment of a studio performance, in venues where the sound quality is generally poor. If I were a huge jazz fan, maybe I'd place a higher premium on the value of hearing live improvisations, perhaps even the vocalizations of a man recently referred to as the "new-wave Harry Belafonte."

Listen at 4:48 from the end for the "Roxanne-ooo's" in this audience video from the July 5th Police show:

tags: mental accounting the Police live music recorded music

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July 17, 2007

Tuesday Odds and Ends
by David Harrell

The Future of Music Coalition has filed a complaint about Clear Channel and its treatment of indie musicians:

Today, the Future of Music Coalition and Media Access Project filed a formal complaint with the Federal Communications Commission requesting clarification that Clear Channel's practice of forcing local and independent recording artists to waive potential royalties as a condition of having a song considered for broadcast airplay is tantamount to demanding payola.

Medialoper lists 5 Ways to Improve eMusic.

And, via Wired, the very nifty eMusic/internet radio mashup.

tags: digital music eMusic

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July 16, 2007

Monday Odds and Ends
by David Harrell

In a discussion of the merger of the Digital Music Group and the Orchard, eMusic subscribers wonder if it will result in the addition of Barsuk (one of the better-known eMusic holdouts) to the eMusic catalog.

From an interview in today's Wall Street Journal with CEO George Jones -- Borders wants to load your iPod:

You've got to think about America in general. There are tons of people 35 and older who don't own an MP3 player, or if they have one, they don't know how to operate it. These are people who just won't take the time to learn how to do it. I'm like that myself. I love music, but I don't download music onto my iPod. We think there is a place for a retailer to offer a comfortable environment that offers guidance and the opportunity to discover products that provide knowledge and entertainment. We'll show you. Bring in your MP3 player and let us know what you want. We'll download it for you.

And a Slate podcast on the merits of Starbucks as a music retailer.

tags: digital music iPod eMusic Starbucks

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July 13, 2007

A Drop in eMusic's Payout Rate, Part II
by David Harrell

In a comment to yesterday's post about eMusic payout rates, a reader shared a link to eMusic's label relations page.

It definitely clears up a few things for me -- it appears that every label is receiving the same per-track payout rate:

eMusic pays out royalties to its label partners on a quarterly basis. Every quarter, all of the income we receive from our subscription plan is put into the revenue pool. (Note that we have two separate revenue pools: The US pool and the EU/UK pool). Contractually allowable deductions are taken off the top, resulting in the quarterly net revenue. (For the EU/UK Pool only, we also deduct the copyright (mechanical) payment and submit directly to Buma/Stemra). This net amount is then divided by the label's paid download share. Each track generates the same amount of money per download, although there is an adjustment for longer tracks. The label's share of the quarterly net revenue is then split with eMusic.

But the "contractually allowable deductions" clause is fairly ambiguous, at least to anyone without access to the actual contract. I'd also like to find more out about the "adjustment for longer tracks." There's no indication of how long a track has to be to qualify, though I'm assuming a quadruple album like this one (four songs, four+ hours of music) fits the criteria.

tags: digital music eMusic

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July 12, 2007

A Drop in eMusic's Payout Rate
by David Harrell

Some eMusic sales from June just showed up in our CD Baby account. The per-download payout was approximately 26.2 cents a track, leaving us 23.8 cents per song after CD Baby subtracts its 9% fee.

That's a decrease from our last batch of eMusic sales, when the payout rate was 30.5 cents a track before CD Baby's cut.

While I'm not privy to the details of eMusic's revenue-sharing agreement, as I wrote last time, any variation in the per-song rate is likely due to some combination of changes in average revenue per subscriber and overall subscriber download activity.

To put the above numbers in perspective, we've had music in the eMusic catalog since March 2005. During that time, I've seen a payout rate ranging from a low of 19 cents per track to a high of 30.5 cents. (Those numbers are before CD Baby takes its distribution fee.)

I don't know if the payout rate from eMusic to CD Baby is the same rate received by all labels and distributors. Apple has apparently negotiated different iTunes payout rates for major and indie labels, but I've never seen anything indicating different rates from eMusic to different labels/digital content providers.

related: An Increase in eMusic Payouts

tags: digital music eMusic CD Baby iTunes Apple

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July 05, 2007

Thursday Odds and Ends
by David Harrell

Before last week's "Day of Silence," Kurt Hanson of RAIN and attorney/SoundExchange board member Jay Rosenthal debated webcasting, royalties, etc, in the L.A. Times.

Via Online Fandom: Pitchfork rips the Smashing Pumpkins for the releasing three additional versions of its new album (different bonus tracks for each) to Target, BestBuy, and the iTunes store.

The NY Times looks at a recent analysis of the global value of the iPod. Here's a link to the original paper (PDF).

The Rolling Stone article on the Record Industry's Decline (thanks, Evan).

...dirty, stinky hippies: Ted Nugent unloads on the Summer of Love. A friend's reaction:

Hilarious. I mean, could it really get worse at the WSJ under Rupert Murdoch? I guess it could -- he could enlist The Nuge as a reporter instead of commentator.

tags: digital music iPod Ted Nugent the Wall Street Journal

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July 02, 2007

Free Music Follow-Up
by David Harrell

Thanks again to all who left comments (and sent e-mails) in response to last Wednesday's post on the merits of giving our music away.

The consensus opinion is that -- at least for our specific situation -- it makes sense to try, that the potential upside is greater than the minimal downside. So the current plan is offer free mp3 downloads for every track from our third album, which is scheduled for a fall release.

The tracks will be absolutely free, with no strings attached. But we'll still encourage people to buy the album, if they want to -- it will be available in iTunes, eMusic, etc., and we'll also sell physical CDs through Amazon.com and our distributors.

Another possibility is encouraging the use of iTunes and eMusic as a digital "tip jar." That is, tell people that the album is absolutely free, but if they want to contribute something, an easy way to do so is to buy a single song from iTunes. Or, for eMusic subscribers, to use a couple of their monthly downloads for our tracks.

For self-released musicians, both methods are actually a fairly efficient way to transfer funds from consumer to producer. For example, if you use CD Baby or TuneCore for digital distribution, you'll end up around 64 or 70 cents in your pocket for each 99-cent iTunes download.

And on a percentage basis, it works out even better for eMusic downloads. If a subscriber is paying $9.99 for 40 downloads a month, each download costs about a quarter. Yet using a download for a specific song might actually put more than quarter in the pocket of a self-released musician. While that seems improbable, because eMusic's revenue sharing agreement is based on total download activity, the total per-song payout from eMusic to labels/artists can exceed the nominal per-song rate built into the subscription prices. (See this post for more details on eMusic payouts.)

Amazon.com has an "Honor System" which could be used for tipping purposes as well. Though a $1.00 donation (the minimum amount) gets hit hard on a percentage basis by Amazon's fees, which deduct 2.9% of the payment AND 30 cents. So a one-dollar donation actually nets recipients about the same amount they'd receive from a 99-cent iTunes download. (My preference here would be for the iTunes download!)

Finally, there's also the idea of soliciting non-monetary "tips." Inclusion of tracks in mix lists for iTunes and eMusic, reviews on Amazon.com, blog posts, recommending music within Last.fm, MySpace, etc., are all ways to help support musicians by increasing their recognition level, and none of them cost a dime.

tags: digital music free music iTunes eMusic

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THE LAYAWAYS

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

"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.

"...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.

"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.

"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:

the layaways website