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.

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March 24, 2008

Amazon.com Digital Payout Same As iTunes'
by David Harrell

Our first download sales from Amazon.com just showed up in our CD Baby account. We received 63.7 cents per download, after CD Baby's 9% cut. Which means that Amazon.com is paying out 70 cents per single-song download to CD Baby, which is the same as the standard payout for U.S. iTunes sales of 99-cent downloads.

No full-album download sales from Amazon.com have shown up yet, so I don't know what we'll receive for an $8.99 digital album. (That's the price for the Amazon.com mp3 versions of our two albums.)

Also, I don't know if that 70 cents is the standard rate for all labels and digital distributors, or if Amazon.com pays a different rate for tracks priced for less than 99 cents. (Most of Amazon's top 100 mp3 tracks are selling for 89 cents.)

My assumption is that it's a standard rate. Given that Amazon tracks are sold without DRM, I can't see the major label groups agreeing to a lower payout than what they're receiving from Apple for individual songs, particularly the best-selling tracks.

This FAQ at digital distributor TuneCore, however, notes that the Amazon.com mp3 store currently has four pricing tiers:

Amazon MP3 sells individual songs and albums at various price levels:

Front Line: The highest retail price in the store (good for new releases)

Mid Line: Slightly lower than Front Line (good for new releases and other current releases)

Catalog: Slightly lower than Mid Line (good for older or lower selling releases)

Special: The lowest retail price in the store (good for promotions, old and/or low selling catalog)

While the range of mp3 album prices is easy to observe in the Amazon.com mp3 store, it takes a bit of searching around to find individual tracks priced for less than 89 cents. But they are there, starting at 45 cents for some sub-two-minute tracks, and prices top out at $1.99 for extra-long tracks.

So there's obviously a lower payout rate for those bargain tracks and presumably a higher one for the pricier downloads. And while Amazon.com is competing with iTunes on price, it seems likely that those 89-cent tracks are profitable. Even assuming the same 70-cent "wholesale" cost, 89 cents still represents a 27% markup for a digital good.

tags: digital music mp3 digital downloads Amazon.com AMZN iTunes Apple AAPL

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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