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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February 26, 2007

Birders and iPods
by David Harrell
From today's Wall Street Journal, how iPods and other portable devices are changing birdwatching:
Birdwatchers have long headed into the woods with little more equipment than binoculars and a notebook. But when Laura Erickson sets out on a birding trip, she now brings along two digital cameras, a Palm device with a bird-species database and an iPod loaded with bird songs.
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February 23, 2007

MSN, Not Zune?
by David Harrell
Thanks to links from Idolator and other folks, yesterday's post about Comment Spam and Free Zunes is generating a ton of traffic. (Best Friday ever for page views!) But was I too quick to name Zune as the culprit?

Cesar (from the Zune team) made this comment to the post:
FWIW, this isn't a Zune thing - it's an MSN thing. MSN is trying to get people to make MSN their home page and offering 50 Zune devices to give away.
As my grandfather used to say, "everybody and their brother" is using iPod giveaways to promote stuff. And that's never taken as an example of Apple's desperation to sell/promote iPods. So while the comment spam campaign is lame (boo to MSN), the Zune team should get a pass here. (It's not like MSN was gonna give away iPods...)

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February 22, 2007

Comment Spam and Free Zunes
by David Harrell
Microsoft is running a little Zune promotion -- make MSN your homepage and you might win a free Zune.

Which I learned from a comment to this recent post. Before deleting it (I'm trying to keep comment spam to a minimum) I decided to cross-reference the time of the comment with the server logs to see who left it. It looks like it came from someone working for Mr. Youth, a marketing/promo company that lists -- surprise -- Microsoft as one of its clients.

So has Microsoft really been reduced to hiring companies to leave comment spam promoting free Zunes? I guess so.

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February 21, 2007

Amazon Shipping Survey Results
by David Harrell
It wasn't a random sample and it certainly wasn't scientific, but there was a clear trend among those who responded to my informal survey about Amazon.com shipping charges: the vast majority of them are qualifying for free shipping.

I received a total of 37 usable responses, a mix of comments to the blog post and e-mails from blog readers and co-workers. Here's how they broke down:
26 -- always or almost always add additional items (or wait until they have several items to order) to reach $25 and qualify for free shipping

6 -- sometimes pay shipping and sometimes qualify for free shipping on their larger orders

3 -- had paid for Amazon Prime

1 -- used an Amazon Prime account paid for by a family member

And just 1 person said that he usually pays for shipping on Amazon.com orders! (No mention of free shipping at all...)
While I can't claim these are statistically valid results, I'm still amazed. As said in the original post, my interest in shipping charges is based on a comparison of album prices for iTunes and Amazon.com I conducted over the past month. Many albums are now selling at Amazon.com for $9.99 or less, in some cases undercutting the price of the iTunes version. But if you tack on the standard $2.98 Amazon shipping charge for a single CD purchase, iTunes is almost always cheaper. Yet based on the numbers above, a decent chunk of Amazon.com shoppers aren't paying for shipping these days.

Anyway, thanks again to all who responded! Look for some posts about iTunes vs. Amazon.com prices later in the week.

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February 20, 2007

The End of Patience...
by David Harrell
...is the name of a book by David Shenk that my wife gave me in our early dating days. I was reminded of it by this bit in Bill Simmons's account of the NBA All-Star weekend:
Instead of playing full songs, clubs now play one-minute samples of songs and barrage you with choruses. I like this trend because you never know what's coming next, although it's depressing that our attention spans have been whittled down to the degree that clubs feel obligated to change songs every 60 seconds. Whatever.
So I made a mental note to dig the Shenk book out of whatever box it's now buried in and give it another read. Then I checked my e-mail and saw Bob Lefsetz's latest pronouncement on how the iPod is killing the album format:
Society is overwhelming. We've got 300 TV channels, if not MORE! We've got a bunch of new movies EVERY weekend. We've got video games. We haven't got time to sit down and listen to an hour of crap over and over again in order to get hooked. We want something ear-pleasing, NOW! We ONLY want GOOD STUFF!
I don't know if we only want "GOOD STUFF" as Lefsetz defines it. As much as I love a killer hook, it sounds like Bob's talking about the aural equivalent of fast food. Though he's right about the competition factor -- there's more content than time. As I've written here and elsewhere, my own listening patience is dwindling. Partially because of the iPod and the ease of skipping tracks, but mostly because there's now an endless stream of new (and old) music to discover and explore.

related: A Little Is Enough (a guest post I wrote for Shake Your Fist last year)

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February 15, 2007

Friday Fun: Message In A Bottle
by David Harrell
Hmm...for some reason I've been thinking about this band all week:



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February 14, 2007

Snocap, CD Baby, and Myspace
by David Harrell
CD Baby delivered our albums to Snocap back in December, but I hadn't heard a peep about the details of the business relationship until I received this e-mail yesterday:
Some people have been asking, so I just wanted to let everyone know:

Snocap (http://snocap.com/), the company that makes the "MyStore" on MySpace.com, is one of our partner companies as part of CD Baby Digital Distribution.

After 18 months(!) of contract negotiation, we got you an incredible deal as a "Premiere Snocap Partner", which means:

#1 - You'll be paid MORE for your Snocap sales through CD Baby than if you were to go through Snocap directly. (about 3 cents more per-track, but also no need for their annual fee)

#2 - You won't have to send your music to two different places. We can be a GREAT distributor for you, and do it ALL for you here.

#3 - As a "Premiere Snocap Partner", CD Baby can offer lots of PROMO opportunities, including:

- a featured "CD Baby Artist of the Week" on MySpace

- a chance to become the "Snocap Featured Download" on the Music Home Page of MySpace

- Top Seller charts for CD Baby on snocap.com and the Snocap MySpace page

... and more to come.

Soon you'll be able to personalize your Snocap store (that appears on your MySpace page if you have one), and do everything from inside your CD Baby Members Login Area, including adding new tracks, changing prices, and everything else.

They are still importing our audio files, and will be ready in a few weeks. As soon as that's done, we will send you your unique codes for linking your Snocap store, and have more details on how to make changes.
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February 13, 2007

A Survey of Sorts
by David Harrell
As mentioned in this post from last month, I've been tracking the prices of the top 25 albums at iTunes and comparing them to the prices at Amazon.com for a research report I'm working on. But direct price comparisons are hampered somewhat because there are no shipping charges for iTunes purchases.

So, in an attempt to get some sort of handle on the impact of shipping charges, I've been conducting an informal e-mail survey of my co-workers, asking them which of the following best describes how they deal with shipping fees for Amazon orders:
1. I pay them

2. I usually place orders of $25+ and qualify for free shipping

3. I paid for Amazon Prime and pay no additional shipping for individual orders

4. A family member paid for Amazon Prime and shares the account with me (I believe you can share it with four family members...)
If you'd like to weigh in, please leave a comment or shoot me an e-mail. Thanks!

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February 09, 2007

More DRM and iTunes
by David Harrell
So obviously I wasn't the only one to observe that Apple can start selling sans-DRM music without waiting for capitulation from the major labels:

Fred Wilson @ A VC also called for Apple to begin selling the eMusic portion of its catalog without DRM. He suggested that Apple offer multiple formats as well -- AAC, mp3, flac, etc.

And, via Core Economics, I found a series of posts from Jon Lech Johansen ("DVD Jon") in response to the Jobs letter. Johansen, likely one of the more knowledgeable folks on the plant when it comes to the mechanics of DRM, thinks Jobs is somewhat disingenuous. He notes that the "no DRM if the publisher doesn't request it" question was recently asked of Apple and received no response, and that the Apple could likely come up with a solution in two or three days for selective application of FairPlay.

Johansen also argues that some iTunes customers ARE effectively locked in:
If you've only bought 10 songs, the lock-in is obviously not very strong. However, if you've bought 100 songs ($99), 10 TV-shows ($19.90) and 5 movies ($49.95), you'll think twice about upgrading to a non-Apple portable player or set-top box. In effect, it's the customers who would be the most valuable to an Apple competitor that get locked in. The kind of customers who would spend $300 on a set-top box.
Finally, he's not convinced that security is the real reason behind Apple's refusal to license the FairPlay.

BTW -- I did a quick scan of the top 100 albums at iTunes this morning. Most of them aren't available at eMusic, but there are a few: Albums from Bloc Party, Apples In Stereo, Dane Cook, Of Montreal, and Cold War Kids are available as DRM-free mp3 files at eMusic.

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February 08, 2007

DRM and iTunes
by David Harrell
Just a thought: If Steve Jobs is serious about selling DRM-free music in iTunes, he can start tomorrow. Not with the major label releases, but a decent chunk of the iTunes catalog (the portion that overlaps with the eMusic catalog) consists of indie labels and self-released albums.

Those labels and artists obviously have no problem with their albums being sold without DRM, as that's how they're offered in eMusic. Apple could create a special section on the main iTunes page for "DRM-free Music," tag these releases with a special "No DRM!" icon, and even maintain a separate chart for them.

Granted, these releases only account for a small portion of iTunes sales. And I suppose there would be some technical/logistical issues with selling some tracks with DRM and some without. But playing up the lack of DRM for a portion of the iTunes catalog might increase sales and perhaps help nudge/shame the four major labels into dropping the DRM requirement.

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February 07, 2007

Updated Breakdown of Download Sales
by David Harrell
Time for another store-by-store analysis of our digital sales! Last April I posted a breakdown of total download sales for independent musicians and small labels distributed via CD Baby and followed it up with two similar lists for my own band in April and July.

CD Baby hasn't posted any updates for its overall sales (maybe I'll send them a note...) but the table below lists our reported download/streaming sales through today.

The actual dollar amounts involved here are fairly small -- as is the case with most self-released musicians, we still haven't recouped our total costs for recording, mixing, mastering, and CD manufacturing. But I think we've had enough digital sales over the past couple of years to see some valid trends:

Total Download Sales for the Layaways
as of 7/06as of 2/07
Apple iTunes47.28%43.85%
eMusic36.77%37.83%
Rhapsody7.84%6.28%
iTunes Canada1.95%5.57%
Napster1.83%1.89%
MusicNet1.18%1.66%
MusicMatch0.93%1.14%
iTunes Europe0.92%0.73%
iTunes UK0.48%0.38%
iTunes Australia0.42% 0.33%
Nokia/OD2 (LoudEye)0.37%0.30%
MusicNow0.02%0.03%
Ruckus ----0.00%
----------
100.00%100.00%

As before, iTunes and eMusic dominate. The combined totals for the four regional iTunes stores and eMusic acount for nearly 90% of our digital revenue. Ruckus is new to the list, but the total sales amount is less than .01% so far.

Both of our albums, however, have been delivered by CD Baby to 50+ digital retailers. In some cases, the albums aren't yet availabe for sale. Other retailers (DiscLogic, Etherstream, Music4cents, EMEPE3, Viztas, Mperia, etc.) went under or merged before any sales were reported. But there are a few stores where -- based on customer ratings and sales rankings -- we've definitely had sales but have yet to see any money. Either they're sloooow to pay or we haven't reached a minimum payout threshold.

One final thought: While sales via iTunes have produced the most DOLLARS, we've actually had more DOWNLOADS from eMusic. (After CD Baby's 9% cut, we receive approximately 64 cents per individual download from iTunes vs. 22 cents or so for each eMusic download.)

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February 06, 2007

Steve Jobs: Thoughts on Music
by David Harrell
An essay by Steve Jobs on music, DRM, and "opening" iTunes tracks to other players was posted by Apple this afternoon. Jobs certainly isn't a neutral party, but the best bit is his observation that the vast majority of digital music is already sold without DRM:
In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on CDs by the music companies themselves. The music companies sell the vast majority of their music DRM-free, and show no signs of changing this behavior, since the overwhelming majority of their revenues depend on selling CDs which must play in CD players that support no DRM system.

So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies.
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About the Ads
by David Harrell
No, I'm not trying to "monetize" this blog -- the average daily traffic, counting page views and RSS readers, is in the low three-figure range. It's a good group of folks (according to the IP addresses on the server log, regular visitors include employees of Universal Music, eMusic, Warner Music Group, Ryko, TVT, etc.) but not large enough that it's going to generate any real ad revenue.

But I am curious about the whole Google AdSense thing -- what kind of ads it will serve up based on the posts, click-through rates, and so on. Hence the advertising experiment.

So far, it's generated a whopping 99 cents in AdSense revenue, $99.01 short of the minimum payout level from Google. Which makes me wonder -- how does the Google accounting work for all the blogs that never reach that threshold? Google gets paid from the advertisers for the clicks, but there are no doubt thousands (tens of thousands? hundreds?) of blogs and sites with Google AdSense advertising that will be abandoned long before reaching $100 in ad sales. I have to think that at some point Google gets to "keep" and recognize the portion of the ad fees that -- in theory -- are supposed to be shared with the blogs and sites that contain the ads. (Somewhat related: Chris Anderson of the Long Tail has a great post on a Google loophole for advertisers, more thoughts from Tom Evslin.)

UPDATE: Nicholas Carr at Rough Type posted last year about "the great Google float."

Anyway, let me know (via the comments or an e-mail) if you think the text ads are totally annoying -- especially the ones in the title bar. It's easy enough to take them down. Thanks!

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More Beatles and Apple
by David Harrell
Beatles tracks in iTunes? Probably. But the bigger story, according to iLounge's Jeremy Horwitz's analysis of the old agreement between Apple Computer and Apple Corps is that the new accord opens the door for Apple to sell pre-loaded iPods:
Apple Could Sell CDs and Bundle Music with iPods: The old agreement (at Sections 1.3 and 4.3) seemingly prevented Apple from selling music on physical media, such as CDs, even though it could sell music through the iTunes Store. On paper, this seemed like a simple limitation: Apple could sell music-playing hardware like iPods, but it couldn't sell you the discs full of music to play on the iPod.

Apple's iTunes Store - the subject of the 2003 lawsuit - successfully stepped around this limitation by using the Internet to distribute music, but it left Apple with two major limitations: Apple couldn't pre-install music on iPods, or otherwise sell it on any physical medium, such as discs. This was one of the reasons that the prior U2 Special Edition iPods didn't actually include U2's music - Apple's contract with The Beatles forced you to buy it separately online.
More coverage/analysis from Wired and Jupiter Research's Mark Mulligan.

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February 05, 2007

Apple vs. Apple
by David Harrell
The rumored iTunes/Beatles ad didn't appear in last night's Super Bowl telecast, but Apple has reached an agreement with the Beatles over the Apple name. And it sounds like an iTunes announcement will be coming soon -- note the quote from Neil Aspinall. From the Wall Street Journal:
"We love the Beatles, and it has been painful being at odds with them over these trademarks," said Apple Chief Executive Steve Jobs in a prepared statement. "It feels great to resolve this in a positive manner, and in a way that should remove the potential of further disagreements in the future."

Neil Aspinall, manager of Apple Corps, said the company was glad to resolve the dispute. "The years ahead are going to be very exciting times for us. We wish Apple Inc. every success and look forward to many years of peaceful co-operation with them,'' he said.

The settlement resolves what had been a major roadblock to Apple's efforts to make the Beatles catalog available on iTunes. The joint statement didn't address whether Beatles songs would be available online.
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You Can't Do That
by David Harrell
Shelly Palmer of Media 3.0 buys a song from iTunes for use in a personal video that he posts on YouTube:
Let's review how many copyright violations I have committed. First, I'm using a published work in a synchronous performance with my video, so I would need a sync license from the publisher. Next, I would need master rights from the record company. I edited the piece (I used the beginning in the end and did a few cuts on the beat, then shortened the work and left out 80% of the song), so I would need permission to edit the master. I would also need public performance rights because it's being "broadcast" on YouTube. And lastly, I would need to pay a mechanical royalty for every download. But how?

Believe it or not, as a consumer, there is absolutely no way for me to obtain any of these rights. There's no button to click in iTunes, no publisher's site to visit, no way to find out who owns what. In fact, iTunes doesn't even tell you who the composer or the publisher of the song is. All you can find out from the metadata is that it was from "The Best of Van Halen Vol. 1" and that the work was copyrighted in 1996 by Warner Bros. Records Inc. . Anyone want to try to send them an email or call the main switchboard. I tried this morning and didn't get very far.

Now, I'm not selling this piece, so there is no commercial value being lost here -- is there? Of course there is. If I was told that to use the piece in a video I needed to pay an extra $.99 or some token amount, I would have been happy to do so. If I was told that I could not use this song with some special warning, I would have been happy to find an alternative. Unfortunately, there is no consumer education being done at all. (Unless you count the lawsuits that the RIAA keeps bringing against consumers as educational.) In the "year of self-expression" how many millions of dollars are the recorded music companies leaving on the table by not licensing music to consumers for personal use online?
I agree -- ideally, it should be easy to license music for this type of use. But I wonder much money is actually being "left on the table." At least Shelly BOUGHT the song in question, it seems like the target demographic for this sort of licensing (posting homemade videos on YouTube) probably isn't that concerned about following the letter of the law. Still, licensing should be an option -- you really can't blame anyone for flouting copyright law when there's no feasible legal option in place...

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February 02, 2007

Friday Fun: It's Cruel to Be Kind
by David Harrell
Mr. Nick Lowe:


More fun: Rockpile (Lowe, Dave Edmunds, Billy Bremner, and Terry Williams) mimes "Teacher Teacher" on American Bandstand!

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February 01, 2007

Thursday Odds and Ends
by David Harrell
From Online Fandom, the absolute worst example of online musician/fan interaction -- using the Internet to narc on your paying customers:
Black Eyed Peas Will.I.Am likes nothing more than rushing straight to the internet after a gig - to catch fans who posts illegal clips of their show on the web. The 31 year old says, "I check MySpace and I look on YouTube to see who posts up phone clips of the show first. They get arrested."
---------

How iPods are changing baseball:
Eventually, more than two-thirds of the roster had piled on and turned this team into baseball's official iSquad. Every player gets his own custom set of videos loaded onto his personal iPod, sorted by date, hitter, pitcher and opponent -- and updated every week or so.

"The great thing is, it's so easy to use," said Jennings, who became a happy iPod convert in a hurry. "It's such an easy thing to have access to. You can go to Best Buy and, by that night, you can have all your starts for the last four years on there."
---------

Finally, I'm somewhat heartbroken that both the original multi-track tapes and the final mixes from my very first "real" studio project have disappeared. (The drummer is certain he gave the tapes to me for safekeeping, I'm convinced he still has them, yet neither of us can find them.) But there are really only three people in the world who even care about those tapes.

This, however, is a real tragedy -- the original video tapes of the first moon landing are lost.

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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