Digital Audio Insider -- the economics of music and other digital content

home

about/contact
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.

Support
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.

links

music/media/tech:
Analog Industries
Ars Technica
AppleInsider
Brad Sucks Blog
Broken Record
Digital Music News
Duke Listens
Future of Music Coalition Blog
Hypebot
LA Times Technology Blog
The ListeNerd
Medialoper
Mediashift
MP3 Insider
Music Ally
Music Machinery
Music Think Tank
MusicTank
The Music Void
New Music Strategies
Online Fandom
Pakman's Blog
RAIN
Rough Type
RoughlyDrafted
Swindleeeee
TuneTuzer
Virtual Economics

economics/markets:
The Big Picture
Core Economics
Freakonomics
The Long Tail
Marginal Revolution
The Undercover Economist

mp3/music:
17 Dots
3hive
Fingertips
Shake Your Fist
Sounds Like the 80s
Unleash the Love

archives
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
May 2010
June 2010
July 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
June 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
April 2012
May 2012
June 2012
August 2012
October 2012
November 2012
December 2012
January 2013
February 2013
March 2013
June 2013
August 2013
February 2014
March 2014
September 2014
December 2014
March 2015
October 2015
November 2015
December 2015
October 2016
May 2017

February 29, 2008

Friday Fun: Classic Van Halen
by David Harrell

Maybe David Lee Roth doesn't know how to tip, but you can't fault his taste in pants and boots. The classic VH lineup mimes to "And the Cradle Will Rock" for a 1980 European TV appearance:

link 0 comments e-mail listen to the Layaways on Spotify

Follow @digitalaudio

February 26, 2008

The Uphill Battle
by David Harrell

Imagine your indie rock band gets a phenomenal reaction to your new album, including:

Pitchfork love -- an 8.0 out of 10

Strong support and airplay from KEXP -- one of the biggest/best known CMJ-reporting stations

Rolling Stone names you one of the "Top 10 Bands You Haven't Heard of" for the year

Magnet Magazine's #3 record of the year

And this isn't a self-released/financed album -- you've got promotional muscle (new media, retail, and radio) and tour support from a well-known indie label with solid distribution.

Any guesses as to how many units you'd sell?

According to this post from Know the Music Biz's David Rose, "Conductor," the acclaimed 2004 release by the Comas, sold just a little over 5,000 copies. (He was an executive at Yep Roc when the album was released.) Rose discusses it in terms of a lack of "magic fairy dust" preventing a great record from reaching a larger audience.

I think it's also an example of just how insanely competitive the music industry is -- and that the "indie rock" genre is incredibly crowded. My guess is that, despite Rose's disappointment, the album probably did better than the majority of indie rock releases that year. At least when you factor in all of the self-financed and micro-label releases that are all competing for the purchasing dollars and attention of a relatively small audience. (This is just one anecdotal example, but a friend who ran a small, but well-respected, Boston label in the late 1990s and early 2000s told me that he usually did an initial run of 1,500 CDs for each release. About half of those discs were sent to radio, reviewers, etc., and he was usually pretty happy if he managed to sell the remaining stock...)

tags: indie rock CD sales record sales

link 0 comments e-mail listen to the Layaways on Spotify

Follow @digitalaudio

February 21, 2008

The New Music Equation: Radiohead, Trent Reznor, Etc.
by David Harrell

It seems that the business model of giving music away and relying on voluntary payments boils down to the following equation:

A x B x C = D

where

A = the total # of people who acquire the work

B = the percent who actually pay for it

C = the average amount each person pays

and

D = the total revenue received

In theory, the beauty of the equation is that -- if all else remains the same -- any increase in A, B, or C, however small, results in more D. Also, because multiplication is commutative, the same percentage improvement in any of the components results in the same overall increase. That is, no matter what the original numbers are, a 10% increase in A, B, or C is equally effective and always results in the exact same increase in D.

In practice, however, A, B, and C aren't likely to be completely independent factors. That is, if you manage to increase A (total acquirers), you'll likely see a decrease in B, as more of those people will be casual/curious listeners who are unlikely to pay. That's not necessarily a negative to the bottom line, as what really matters here is the product of A and B, or the total number of paying listeners.

Yet B is also affected by the pricing options that average out to the C figure. Do you offer a set price those who are willing to pay (as did Trent Reznor with the Saul Williams release) or go the Radiohead approach, and allow any payment amount? The latter approach might result in a larger B amount (zero to $5 is a relatively big jump, maybe more people would pay if they had an option for $2.50), though you likely end up with a smaller dollar figure for C.

As Chris Anderson at the Long Tail and others have noted, Reznor seems to have REALLY focused on B, perhaps to the point of overlooking that the Saul Williams album did relatively well in terms of D.

However, the equation above also ignores E, promotional and marketing expenses (not to mention recording, mixing, and mastering costs). Adding that to the equation gives us:

(A x B x C) - E = D

Obviously, spending money on promotion and marketing can increase A, but it also creates the distinct possibility that D ends up being a negative amount. Which is what attorney/industry insider Chris Castle points out in this CNET story by Greg Sandoval (via this Coolfer post):

"Trent thinks that (150,000 downloads) is bad?" Castle asked. "I'll tell you bad. Bad is zero. Bad is when you spend $100,000 on marketing and tour support and you got nothing. Do you know how hard it is to go from a cold start and just get 1,000 people to listen to an album?"

Which takes me back to something that I've written about before: Musicians aren't just competing for the dollars of music fans, they're also vying for their time and attention, a commodity that is -- ultimately -- perhaps more limited than dollars. And that competition becomes a little fiercer every single day, with every new piece of music that is released and as every piece of older, previously-released music becomes available as digital downloads (legitimately or via peer-to-peer systems). Simply making your music available for any listener-determined amount won't necessarily attract enough listeners to result in profitable formula.

Right now, when practiced by high-profile acts, the model garners a fair amount of attention. But what happens if it becomes the rule, rather than the exception? At that point, the E part of the equation -- promotional spending -- might very well be the most important component. Hence, do we end up with a "new" music business model that still looks a lot like the old one, where musicians need access to outside capital to succeed at the highest levels?

Greg Sandoval thinks so:

Musicians are not the new labels. Artists need someone to provide financial support and business acumen. If we end up ridding the world of labels, we'll only have to re-create them--in some other, probably more nimble form.

I wouldn't go quite that far -- artists who are already successful could certainly go it alone and do well for themselves. But again, as the novelty of the "pay want you want" model wears off, most musicians won't be able to compete on the merits of their art alone. They'll likely need cash for promotion -- their own or someone else's...

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

tags: digital music free music

link 5 comments e-mail listen to the Layaways on Spotify

Follow @digitalaudio

February 15, 2008

That's Where the Money Is...
by David Harrell

This sort of thing may not be new, but it's the first time I've noticed it. In a nod to Willie Sutton, the relatively brief liner notes for Shelby Lynne's new Dusty Springfield-inspired CD include this plug:

Master Licensing Contact: #310-865-0770

The album, BTW, is fantastic.

tags: Shelby Lynne music licensing

link 0 comments e-mail listen to the Layaways on Spotify

Follow @digitalaudio

More Digital Audio Insider: Newer Posts Older Posts

Subscribe:

RSS Feed

Add this blog to Del.icio.us, Digg, or Furl. Follow David Harrell on Google+.

The Digital Audio Insider Twitter feed:

Apple stock analysis

Digital music jobs: Looking to hire? Looking for a job? Check out the digital audio insider job board.

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