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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December 31, 2007

Digital Audio Insider 2007 Year-End Roundup
by David Harrell
Here's a roundup of the Digital Audio Insider posts that got the most traffic and/or attention/responses/links from other sites in 2007:

By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
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. read the full post

The Digital Pricing Conundrum Part IV: The Loss of Resale
...I'm reluctant to assign a specific dollar amount to the loss of resale premium, in isolation from the other differences between physical CDs and digital downloads. However, for the subset of consumers who truly care about resale, it seems fair to say that digital albums need to be priced approximately three to five dollars below the total cost of the equivalent CD to compensate for the loss of a resale value. (At least for recent, top-selling albums.) read the full post

Going Postal
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... read the full post

Treatment of Longer Songs by eMusic
...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. read the full post

To Free or Not to Free
That's the question we're trying to answer as we finish our third album -- should we give away a few songs as mp3s (as we did with the first two discs and a freebie Christmas EP) or should we post free mp3 files for all of the tracks on the disc? read the full post

Price Elasticity of Demand for McCartney
It's getting decent reviews, but I was in no rush to buy the new Paul McCartney album, either on CD or as an iTunes download. But when it showed up today in eMusic for the equivalent of $3.25 (based on my 40-downloads-for-$9.99 plan), I didn't think twice about nabbing it. read the full post

Lala.com Owes Me Sixty Cents
...I can't help wondering if Lala.com is basically selling digital downloads through the mail, at least to a portion of its members. That is, despite warnings in the user agreement, it's easy enough to rip mp3s from every disc before passing it along in the lala.com system... read the full post

Thanks to all who read, linked, e-mailed, and commented -- happy 2008!

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December 21, 2007

Christmas Layaways
by David Harrell

the Layaways Christmas EP
Late last year, my band the Layaways recorded a quickie Christmas mini-EP and posted it online as a holiday freebie. Here's our "indie disco" take of "O Christmas Tree" and instrumental versions of two holiday standards:

O Christmas Tree - free mp3

Joy to the World - free mp3

Silent Night - free mp3

Posting will probably be light over the next couple of weeks, so happy holidays to everyone -- see you in 2008!

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December 20, 2007

David Byrne Disses iTunes?
by David Harrell
Former Talking Head David Byrne is a smart guy, but I'm a little perplexed by his take on iTunes in his Wired piece on Survival Strategies for Emerging Artists -- and Megastars, where he lists six music distribution models.

The only mention of iTunes is a somewhat negative one, with iTunes in context of a standard record deal. This large graphic shows that artists can make less from an iTunes album sale that from a physical CD.

That's certainly the case for a standard record deal. The same royalty rate applied to a record company's share of an iTunes album transaction (approximately $7.00 for a $9.99 album) results in less revenue for the artist than from the sale of CD with a higher list price.

But when Byrne gets to the business model at the end of his list -- the totally self-released model -- he makes no mention of iTunes as sales outlet, even though an iTunes sale for a self-released artist is fairly lucrative. A $9.99 iTunes sale for an artist distributed by CD Baby results in a payment of $6.37 and -- in an exchange for a small annual maintenance fee -- artists distributed by TuneCore can make approximately seven bucks for each sale.

For the self-distribution model, Byrne only writes about selling CDs at gigs and online, and downloads from your own website. Could it be that decreased royalties from iTunes sales of Talking Heads albums have simply soured him on the iTunes store, even for non-traditional models?

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December 14, 2007

Friday Flashback Fun: Je Suis Un Rock Star
by David Harrell
I downloaded Rolling Stones bassist Bill Wyman's 1981 solo hit "Je Suis Un Rock Star" from eMusic, but the audio alone can't compare to the video, with Bill getting all flirty with the camera:


Given Wyman's later marriage to a teenager, the "they'll think I'm your dad, and you're my daughter" line, with Bill's accompanying smirk, is, uh, a tad disturbing...

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December 13, 2007

More eMusic Payouts: Different Per-Song Amounts
by David Harrell

eMusic banner

Another small batch of eMusic sales, for the third quarter of 2007, showed up in our CD Baby account. Interesting, we were paid -- before CD Baby takes its 9% cut -- approximately 33 cents for some downloads and 25.5 cents for others.

My guess is that the smaller amount is for downloads within the U.S. and the larger payment is for downloads from eMusic subscribers in the U.K. and/or Europe. Which makes sense, as eMusic charges non-US subscribers more, in addition to a 17% value-added tax that is built into the subscription prices. (See this Swindleeeee post for more details about international eMusic subscription rates.)

One other difference between U.S. and U.K./Europe downloads is that eMusic doesn't withhold mechanical royalties for the U.S. That is, payments from eMusic to labels and artists "include" the mechanical royalty, currently 9.1 cents for recordings less than five minutes and 12 seconds in duration.

For the U.K. and Europe, eMusic makes a separate payment to Buma/Stemra for the mechanical royalty for each download. I don't know the statutory rates for mechanical royalties outside of the U.S., but if they're approximately equal to U.S. rates, the total compensation for a European eMusic download approaches or exceeds 40 cents a track.

See More On eMusic Payouts for additional information on how eMusic shares subscription revenue with labels.

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December 10, 2007

Monday Odds and Ends: The Radiohead Model
by David Harrell
The "Radiohead Payment Model" made the list for NY Times Magazine's Annual Year in Ideas feature:
But it's a bit unrealistic to expect five dour introverts from Oxfordshire to come up with a universal fix to save the record industry. The Radiohead payment scheme, whatever the final tally, worked for Radiohead. (It may be portable; Paste, a magazine devoted to indie rock, ran a monthlong pay-what-you-want subscription deal in the wake of "In Rainbows.") And yet at least some aspects of the old model may still prove useful. The CD of "In Rainbows" -- an actual, tactile, old-economy product -- will be available in record stores on Jan. 1. And EMI, the band's spurned label, has proved resourceful itself, quickly assembling a Radiohead boxed set in time for the holidays, happily riding on publicity it didn't pay a thing to create.
Wired's Listening Post has an interview with Tim Burgess of the Charlatans about the band's decision (pre-Radiohead announcement) to give its new album away:
Well, we knew that CD sales were going down really badly, and we knew all about this peer-to-peer ratio, where 1 legal download is like 51 illegal downloads. So we thought giving it away for free is like -- "bang, in your face" -- giving it away for free has a really big punch. Whereas Radiohead... I love that idea. They're a genius band, and what they're doing is really interesting. I think ours is just, kind of different, really.
And, from a couple weeks back, Online Fandom's Nancy Baym takes exception to the nomenclature (and credit) for the Radiohead model:
I'm all for self releasing your music when it's feasible, but what's with giving Radiohead the credit for an idea hundreds, nay thousands, of other bands have been doing for years? Silly.
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December 07, 2007

Friday Flashback Fun: Porter Wagoner and Dolly Parton
by David Harrell
The late Porter Wagoner and Dolly Parton are surprisingly funky on "Better Move It On Home."


And here's the story behind my new favorite album cover -- Wagoner's "The Cold Hard Facts of Life."

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December 06, 2007

Thursday Odds and Ends
by David Harrell
Slate's Fred Kaplan responds to recent pieces by Terry Teachout and Anthony Tommasini about the sound quality of the iPod and mp3 files:
It's worth noting that digital audio files will get better, just as compact discs did. (In their first decade, CDs and CD players sounded dreadful, worse than MP3s -- and much worse than some other, less-compressed, downloadable formats -- sound now...) When this future comes, we will all rejoice. In the meantime, to deny or dismiss the sonic differences not only deprecates the depths and delicacies that make music so alluring. It also tells the engineers and manufacturers that they don't need to improve their products, that bad sound is good enough.
Royalty Week has a breakdown of iTunes revenues between labels and artists, contrasting the treatment of a download as retail sale vs. a licensing deal (which is the issue behind the lawsuit filed last year by the Allman Brothers Band and Cheap Trick against Sony Records).

I found one figure a little confusing. Why would a major label pay a digital aggregator a commission of nearly 15 cents for every iTunes download? CD Baby will get you into iTunes for just a 9% cut, and TuneCore doesn't even take a percentage -- just a flat yearly fee. I have to assume the aggregator is providing some major promotional work, otherwise a 15-cent per-song fee seems pricey.

Finally, a little off-topic, but perhaps of interest for anyone ordering holiday gifts from Amazon.com: In last week's Digital Pricing Conundrum installment, I referred to my informal Amazon.com shipping survey, which revealed that many customers weren't paying for shipping. Via Marginal Revolution, I just found this nifty website -- Amazon Filler Item Finder. Just type in how much more you need to qualify for free shipping from Amazon.com, and it creates a list of products, ranked by price and customer rating, that will put you over the top.

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December 03, 2007

Second City Digital
by David Harrell
A couple recent digital music stories from Chicago's weekly alternative papers: In a Chicago Reader column, Miles Raymer mourns the loss of Oink's Pink Palace, and wishes the legit online stores had a similar community aspect:
Currently digital music retailers don't seem to have figured out the value of giving their customers the opportunity to interact and form communities. Amazon users can submit reviews to its MP3 store or rattle off their favorite songs with its "Listmania!" function, but there’s no way for them to just talk to one another. There's no way for them to feel like their music expertise is making a difference -- and it goes without saying that customers can't meaningfully influence the store's inventory or how it's organized. No one on Oink would've stood for finding Pink Floyd's The Wall filed under "Dance & DJ," but it's the number two album in that category at Amazon.
And New City has a feature on Thrill Jockey (and digital retailer Fina) founder Bettina Richards:
"It's not how I consume music personally," she says. "But I also think that it's the way people like to listen to music and acquire music, so if I want to represent my artists I better try to embrace it." She also looks on the bright side. "There are positive things about it -- people can have more music during the day, you don't have to carry a bunch of CDs in your backpack. You carry more music with you so you can spend more time with music, and that's cool. But I'm too old school for that. If I have a record that someone has been like, 'Check this out,' and I like it, I'm gonna go buy it. It doesn't feel like I have it, to me, unless I have it."
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    Popular Posts

    A Long Tail Experiment
    By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
    Lala.com Owes Me Sixty Cents
    An Interview with Jonathan Segel of Camper Van Beethoven
    Price Elasticity of Demand for McCartney
    Sony and eMusic: What I Missed

    The Digital Pricing Conundrum series:
    Part One Part Two Part Three Part Four





    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