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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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.

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August 31, 2007

Friday Odds and Ends
by David Harrell
CD Baby has posted some more details about its mp3 downloads and positions itself relative to iTunes and other digital retailers:
Every album in our Digital Distribution program is available for download on cdbaby.com. Since we are one of the largest distributors of music to Apple iTunes and other great retailers, we don't think of cdbaby.com as competition, but rather a "direct factory outlet."
There are definitely no plans for single song downloads. When asked about them on a forum, president Derek Sivers wrote: "...go to iTunes :-) We won't be selling individual tracks on cdbaby.com."

This doesn't seem quite fair: UK act Midas makes the singles chart, due in part to cell phone pre-orders by its fans, only to be "disqualified" and kicked off the charts.

And (via the Big Picture) a timeline of the development of the CD format.

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August 30, 2007

Downward Pricing Pressure From Amazon?
by David Harrell

Amazon.com banner

Earlier this year, Berry Ritholtz argued -- based on some info from an industry insider -- that the $9.99 iTunes album price was helping to drive down the price of physical CDs at Amazon.com and other retailers. But I'm starting to wonder if the reverse will happen -- that cheap CD prices at Amazon will result in downward pressure on the iTunes album price, at least for older catalog material.

Yesterday, I received an e-mail from Amazon touting its latest music promotion: 899 CDs priced at $8.99. While I'm not about to look up iTunes prices for all 899, I did a quick check of the 24 albums on the Amazon.com landing page for this promotion and found that of the 19 albums that are available at iTunes (no AC-DC, minimal Bob Seger!), only two of them are less expensive as downloads. The $8.99 CD price is cheaper for all the others.

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August 28, 2007

Update on CD Baby Direct Digital Sales
by David Harrell
From a CD Baby message board thread, president Derek Sivers responds to a question about CD Baby's cut from digital sales:
We only keep 9% of digital sales, even from cdbaby.com
As far as I know, that would make digital downloads purchased via CD Baby the most profitable digital sales for a self-released musician, short of selling the files yourself (assuming you could handle the credit card transactions for less than 9%).

A $9.99 mp3 album download from cdbaby.com would net the artist $9.09. For comparison, a $9.99 album download from iTunes results in a payment of approximately $6.37 from CD Baby to a self-released act, while an iTunes album sale for TuneCore distributed acts nets them around $7.00. Steering potential purchasers to CD Baby instead of iTunes, however, will be something of a challenge...

related: CD Baby Now Selling Digital Downloads

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August 27, 2007

CD Baby Now Selling Digital Downloads
by David Harrell
Online retailer/distributor CD Baby is giving its retail website a long-overdue update (the current bare-bones look is supposedly a transitional design that will change later this week). But the big news is that CD Baby now sells mp3 versions of the albums in its catalog. It looks the pricing for the download version of an album (mp3s and album art in a zip file) is the same as that of the physical CD -- here's the page for one of our CDs. That makes it variable, as each musician/label in the catalog sets its own retail price. There's currently no option to purchase single songs and I couldn't find any details on bit rates for the mp3 files.

And no details yet on the how the money for direct download sales will break down for the self-released musicians in the CD Baby catalog. As a distributor, CD Baby takes a 9% cut from the revenues it receives from digital retailers -- iTunes, eMusic, Napster, Rhapsody, etc. (A full list of its digital partners is here.)

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August 24, 2007

Friday Odds and Ends
by David Harrell
Matt Rosoff at CNET applied the "plays-per-listener" formula to some classic rock acts and found that there is little Last.fm love for Mr. Bob Seger. He also pointed out another caveat to this type of analysis that I should've mentioned in my post, that average song length for an artist could be a factor.

Elias from Last.fm left a comment to the post, saying that while the listeners-per-artist numbers are generally accurate, the number of plays (scrobbles in Last.fm-speak) might not be, as some listeners try to game the system in order to show up as a "top listener" for a specific act. Though I suppose you argue that this type of behavior is, by itself, an indicator of "audience devotion."

Last week, Nick sent a link to Gerd Leonhard's analysis of the Olswang report on social networks and music commerce. I printed the full PDF of the report, but haven't had time to read it all yet.

From today's Wall Street Journal: Venture capital firms are investing in aging music acts.

And Evan sent a link to this CNN story on changing attitudes about "greatest-hits" compilations:
On one hand, it remains a giant moneymaker for labels, which are urging their artists to make best-of compilations increasingly earlier in their careers. On the other, iTunes has made greatest-hits albums redundant. If you want an act's highlights, you can assemble them yourself.
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August 23, 2007

Second-Run Movies
by David Harrell
A friend just e-mailed, wondering why the new New Pornographers album, released on Tuesday, isn't showing up in eMusic. It's on Matador and -- as far as I can tell -- the Matador catalog is available in eMusic.

This is pure speculation on my part, but I wonder if Matador has been thinking that eMusic downloads cut into the more-profitable sales at iTunes and of the physical CD. (It's currently #16 on the iTunes chart and it's the #6 best seller at Amazon.com -- $9.99 for the CD or the iTunes album.)

One workaround for labels would be to treat eMusic as a "second-run" movie theatre, where albums wouldn't be available until several weeks or months after the official release date. That strategy would maximize the revenues from the fans who want an album enough to purchase it on or near its release date, while still allow capturing sales from casual fans who are unwilling to pay the full album price. (On the other hand, it could be viewed in a negative light, that it gouges the real fans of an act...)

As it turns out, an eMusic employee gave subscribers the heads up about this album in a forum post last week, and Matador did the same thing with the last Blonde Redhead album. And I wasn't so original with the second-run theatre analogy, as some subscribers already posted about that as well:
It's like those $2 movie theaters, where movies that are weeks or months past their premiere date play for a reduced price. I love those places! If eMusic became the vast $2 theater of the indie music world, I would still pay the same fees for it. I may be in the minority on that, however.
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August 21, 2007

By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
by David Harrell
One thing that music sales figures don't tell you is how much people actually like (and listen to) the music they've acquired. While artists/record companies are initially competing for your attention and dollars, after you've bought the music, they're still competing for your listening time. And it seems likely that success in this competition is the best indicator of the future willingness of an act's audience to buy its music, go to live shows, etc.

I thought it'd be fun to use Last.fm statistics to try to devise a measure of "audience devotion." Using the most popular act in the Last.fm database (The Beatles) as a comparison point, I looked up the total number of listeners and the total number of plays for 49 other acts. They include some of the biggest names in "indie" rock, some fairly unknown local acts, and a few various names from my iTunes library. I divided the number of plays for each artist by the total number of listeners to create a "plays-per-listener" ratio and then ranked the spreadsheet by that number.

A few caveats: Obviously, this type of analysis is skewed somewhat by the biases of the Last.fm audience as it's only a slice of the total audience for each artist. That is, the people who have actually downloaded and use the program. And it only accounts for music listened to on a computer -- spins in the car, on the home stereo, and the iPod don't figure, so the total number of Last.fm plays-per-listener is probably significantly deflated from the real number. Finally, the age of act probably matters a lot, as a new-ish artist has had less time for its fans to listen repeatedly to its music.

Still, the following chart, based on Last.fm statistics as of 8/13/2007, shows a few trends:

plays per listener chart


For the most part, popular artists tend to have the highest plays-per-listener ratios. Acts with less than 10,000 Last.fm listeners (like my own humble outfit) have the lowest ratios. But there are a few exceptions, which is where things start to get interesting.

While I'm not much of a fan, Sufjan Stevens seems assured of a long and healthy career. His 53.85 plays-per-listener was second only to the 64.48 plays-per-listener of the Beatles. And other well known acts like Death Cab for Cutie, Bright Eyes, the Mountain Goats, Modest Mouse, and the National all do extremely well by this measure. Yet the most surprising number was the 52.44 ratio for Hammock, the ambient instrumental band. Its total Last.fm audience is relatively small, just 6,427, but it's clearly an extremely devoted one.

On the other hand, the Last.fm numbers don't look good for the long-term prospects of the Bravery and the Walkmen. Of all the acts in this analysis with Last.fm audiences of more than 100,000 listeners, these were the only two with less than 20 plays per listener. My suspicion is that bands that receive a fair amount of mp3 blog attention might have their ratios pulled down because there are a large number of Last.fm listeners who have only heard a single track or two via a music blog. Yet Clap Your Hands Say Yeah, probably one of the biggest recipients of mp3 blogger love, has obviously managed to do a better job of converting those casual listeners to fans, as shown by its more-respectable 21.49 plays-per-listener.

A few years back, you'd read stories about young bands getting attention from labels because of huge numbers of MySpace friends. I haven't seen any such stories lately, probably because everyone quickly figured out how inflated those "friends" numbers could be. But given that Last.fm stats are harder to fake and inflate, it seems like a growing number of total listeners within Last.fm (and other music social sites) and increasing plays-per-listener ratios might be the best indicator of future success, and something of interest to labels and A&R folks...

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August 17, 2007

Friday Flashback Fun: Up the Junction
by David Harrell
Sorry for a sloooow week of posting -- I'm working on a long-ish research piece that will go up later today or on Monday.

Until then, enjoy Squeeze's 1979 Top of the Pops performance of one my all-time favorites, "Up the Junction." No, lead vocalist Glenn Tilbrook wasn't a singing drummer, though he does a very credible job of faking it here. The band was just having some fun with the lip-synching format of TOTP by switching instruments.


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August 10, 2007

Introducing the Digital Audio Insider Job Board
by David Harrell

the digital audio insider job board
Stealing an idea from Coolfer.com, which just launched its own job board, I've created the digital audio insider job board. My intention isn't to make money, I'm mostly curious about what type of ads would show up. If no one has paid to place on ad on your board, job-a-matic will "back-fill" it with existing job postings. And reading job postings is -- of course -- a nifty way to keep tabs on what various companies are doing.

I designated "digital music distribution," "Internet music," mp3," "music downloads," and "online music" as the key words for occupations and an interesting assortment of jobs shows up. Filtering by "Full-time" improves the initial results somewhat, with postings for an iTunes engineer at Apple, a business manager at SnoCap, and a web developer at Reverbnation.

So I'll keep the board up and running, and try to refine it to yield results that are closely related to the topics I write about here. I'm not going to complain if anyone wants to post a paid listing, but I see it mostly as a research tool. And maybe something of interest to any readers who are looking for a new gig.

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Friday Fun: Pop! Goes My Heart
by David Harrell
The movie Music and Lyrics wasn't so good, but the the faux-80s video that kicks off the film is a real hoot:



Watch at your own risk -- the song will probably be stuck in your head all day.

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August 09, 2007

Thursday Odds and Ends
by David Harrell
An eMusic subscriber isn't happy that subscriptions are based on 30-day periods, not actual calendar months. It's a small annoyance, but I agree that the changing expiration dates each month are something of a pain. There must be some business/accounting reason for it, though I can't think that shortening the year by five days makes that much of an impact on eMusic's bottom line.

And here's some anecdotal evidence that some subscribers consider the number of tracks on an album when using their allotted downloads. One subscriber's take on a 30-track Sloan record:
Great CD, but takes a lot of downloads. I bought it at a store instead.
The eMusic option is still cheaper than buying the disc (it'll run you $12.97 at Amazon) but it would use an entire month's download allotment for some subscribers, make it less of a relative bargain...

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August 06, 2007

Going Postal
by David Harrell

postal carrier

Despite the growing use of digital downloads by music fans (and the increasingly large role of mp3 blogs in promoting music) the physical CD isn't going away any time soon. Especially for sending your music to reviewers and radio stations. Very few (if any) college radio stations are going to deal with an mp3 download. Nor will print publications.

It's not cheap, and postage is a big part of the overall cost. The cost of mailing a CD (in a jewel case) exceeds that of a manufactured CD itself. And it just got pricier: Last month I mailed some discs for the first time since the postal rate increases that went into effect in May. While the increase in the mailing cost of a first class letter was marginal -- the bump from 39 to 41 cents was just a 5% change -- I was shocked by the huge increase in the cost of mailing a packaged CD.

Prior to the rate increase, it cost me $1.35 to send a CD in this cardboard packaging via first-class mail. (For a single CD, first class is far cheaper than the media mail option.) But the old postal rates treated small packages like letters -- you basically paid by weight. The new rates charge a higher base rate for packages, so the rate for my CD package increased to $1.81, a 34% increase.

While I could save on mailing costs by ditching the jewel cases for cardboard sleeves, I worry that CDs in sleeves are more likely to get lost in the shuffle at a radio station, if most of the releases are in standard jewel cases. Given that we're already fighting an uphill battle as a self-released, self-promoted act, I'm reluctant to send out anything to radio and reviewers that doesn't conform to the packaging norm.

I'm not wild about the Digipak format either. (Too easily scuffed and the inserts fall out, etc.) But if they're lighter, I'm willing to consider them.

Anyway, it seems like these new rates are going to have a huge impact on small labels and self-released musicians. Dischord Records has already discontinued its longstanding "free shipping" policy. And the new rates make selling CDs through Amazon.com's Advantage program even less lucrative than before, due to a "just in time re-stocking" policy that maximizes mailing costs with small re-orders.

I suppose there's no getting around it, though. If you want to get your music to radio, Amazon.com, and certain reviewers, a digital download just won't cut it, at least in the near future.

Still, the whole thing makes me question the logic of mailing digital files on plastic discs in plastic boxes in cardboard packages. I don't -- in any way -- want to disparage the influence of college radio or the DJs and music directors (some of them of them were very kind to us during our last radio campaign back in 2005 and I have fond memories of my own short stint in college radio). But I'm starting to wonder if a blurb and a link on a well-read mp3 blog is more valuable to small indie band than modest airplay on a small- or mid-size college station. Ideally, you'd want both, but these new postal rates make me slightly less inclined to send out 400 copies of our next album to college radio. We probably will anyway, but I'll try to team up with another self-released act or two to split the postage costs.

Image swiped from the Minnesota Historical Society.

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August 02, 2007

Upcoming Conferences
by David Harrell
It looks like the lineup is set for this year's Bandwidth Conference (August 17 and 18th, in San Francisco). The panel on streaming rates, with John Simson of SoundExchange and Tim Westergren of Pandora, should be a good one.

And the Future of Music Coalition will hold its two-day policy summit in September. If you're planning to attend, give me a shout.

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    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