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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November 24, 2008

Last.fm Artist Royalty Details
by David Harrell

A disclaimer: Although I often write about how much money my band receives from various digital retailers and subscription services, I sincerely hope it doesn't come off as tacky or an obsession with my music "income." The actual dollar amount is usually small enough that it's an academic discussion at best.

Our first statement from Last.fm's artist royalty program definitely falls into the "interesting numbers but not a significant amount" category: For the third quarter of 2008, we received less than one dollar. However, we're only collecting "on demand" royalties directly from Last.fm for a three-song Christmas EP, which was definitely out of season during the second quarter of the year. CD Baby delivered our first two albums to Last.fm, so any on demand royalties for those tracks will appear in our CD Baby account. While CD Baby takes 9% cut from those royalties, it reportedly negotiated a higher royalty rate, enough so that artists will receive more that they would directly from Last.fm. (I'll post those details as soon as I see them.)

Last.fm pays royalties for two types of online plays -- on demand plays of individual tracks and a digital performance royalty for radio plays. The latter is the royalty collected (in the U.S.) by SoundExchange, so it's only paid directly to artists who haven't signed up with SoundExchange. Plays by Last.fm members of their own digital files or CDs are included in the totals plays for each artist, but they obviously don't result in any royalty income.

Here's what the numbers looked like for our third quarter report:

Free on demand: 0.5 cents per stream

Premium on demand: no royalties received

Premium radio: 0.1 cents per stream

Free radio: .057 cents per stream

The details:

On-demand plays: Last.fm pays out separate rates for free on-demand plays and premium on-demand plays (by subscribers). Last.fm's FAQs stipulates a payment of 30% of net ad revenue for each free on-demand play. We received 1/2 a cent for each play, which implies that Last.fm is receiving 1.67 cents in net ad revenue per play, though there's no way to be certain if that's the actual amount. Last.fm could be paying more than 30% to boost the artist payout level, if it believed that 30% of the actual ad revenue was an insufficient amount to keep artists/labels in the program. There were no premium on-demand plays for us in this statement. (We actually received the stipulated payment for premium on-demand plays for our free on-demand plays, so maybe Last.fm is using that amount as a minimum payout rate...)

Radio plays are paid at two levels -- premium radio (paid Last.fm subscribers) and free:

Premium radio: Last.fm promises the greater of 10% of net ad revenue or 1/20th of a cent for each premium radio play. We received 1/10th of a cent for each premium radio play, which would translate into net ad revenue equal to one cent for each radio play.

Regular radio: For our free radio plays, we received .057 cents per play -- a little more than 1/20 of a cent. Last.fm promises a 30% cut of the net ad revenue for these plays, implying net ad revenue of .19 cent per track. Again, though, it's certainly possible that Last.fm chose to pay out more than the required minimums.

tags: digital music Last.fm artist royalties CD Baby SoundExchange

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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