Digital Audio Insider -- blogging the economics of digital music

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Digital Audio Insider is David Harrell's blog about the economics of digital music.

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September 23, 2008

While I Was Out
by David Harrell

A couple things that didn't get posted during my recent blogging hiatus:

Amazon.com MP3: We had previously sold some individual tracks, but our first "full album" sales recently showed up in our CD Baby account. The albums are priced at $8.99 and Amazon paid out $6.50. (We received 70 cents for individual tracks that sold for 99 cents.)

Lala.com: In August, our first two albums were delivered to Lala from CD Baby and one of them is now up and running on the site:

In addition to offering free streams and mp3 sales, Lala sells 10-cent "web songs," that allow you to stream the track an unlimited number of times. I'm curious to find out what the payout rate is for them, so I purchased the web songs for a couple of our tracks.

As I noted in an earlier post about the new Lala.com, whatever the payout rate, the dime songs appear to be a worse deal for labels than the payouts from the traditional (Napster, Rhapsody) subscription/streaming services. That is, even if Lala pays the entire dime to the label, once you get beyond 10 plays, it's a worse deal for the labels than the Napster/Rhapsody rates, which pay at least a penny a stream. Then again, it's not an either/or proposition -- the number of subscribers to the streaming services is still relatively small, so there's a good chance that sales of the dime songs are to music fans that don't subscribe to either Napster or Rhapsody.

My other thought here is that -- as much as possible -- it makes sense for musicians to try to steer listeners to free streams that offer some compensation (even if it's only a fraction of a cent per listen). For example, rather including your own Flash-based music player on a band site, why not embed an album or playlist using a Last.fm or Lala.com widget? Unless you're averse to having a branded player on your on site, it at least gives you the chance to capture some revenue for the free streams. And I can't help wonder how much some of the more popular MySpace acts would've earned if there was any sort of per-stream payout for the current MySpace music player. (I believe there'll be some sort of ad-revenue share for the new MySpace Music...)

related: The New Dime Store, Part 2

tags: digital music Amazon.com MP3 Lala.com MySpace

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September 18, 2008

Checking Out Bandcamp
by David Harrell

David Rose of Know the Music Biz recently made the case for musicians selling downloads directly from their own websites, instead of sending listeners off to iTunes, Amazon.com, etc. While my guess is that most consumers prefer to buy from a download store -- if I want to buy something I've discovered, my first impulse is to check eMusic, then Amazon.com MP3 if eMusic doesn't have it -- there's certainly no downside to doing so. Without direct sales, maybe you're missing out on some impulse purchases.

The new Layaways album is tentatively scheduled for an October 28th release. And while we're planning to offer free digital tracks (in addition to selling CDs and digital downloads in the usual places), given that "it can't hurt," I've been thinking about ways to offer direct sales. Bandcamp, which got a very positive mention from Hypebot yesterday (also see this Waxy.org interview with founder Ethan Diamond), seems like it might be an easy way to facilitate online sales.

I spent some time with it yesterday -- here's my quick take:

There's a lot to like about Bandcamp, as well as a couple things that are somewhat disappointing, though the Bandcamp folks can't be faulted for one of them.

Pro:

Great design and interface -- it's definitely one of the better looking music download sites. And the musician has complete control over the details on the album and track pages -- credits, images, lyrics, etc.

Fast -- your tracks are available for sale almost immediately after uploading. If you wanted to, you could be selling live tracks just minutes after finishing a gig.

Very flexible download/file options. Users just upload a single WAV or AIFF file for each song, Bandcamp then handles all conversions to various file formats -- 128k mp3, 320k mp3, AAC, Ogg Vorbis, FLAC, etc., and takes care of all of the ID tagging. You can decide what to offer as a free download and set the selling price for paid downloads.

East viral sharing -- anyone can create code for adding a track/album widget to social networking sites or web pages:

Responsive team -- the site was a little sluggish and I was having trouble uploading a music file. But I received an e-mail response to my help request within half an hour.

Con:

A small quibble, but as far as I can tell, there's no option for setting different prices for different file formats, other than giving away 128k mp3s and charging for other file formats. That is, you can't set one price for mp3 downloads and a higher price for lossless files.

It's not on your site! One thing that Bandcamp touts is search engine optimization -- that your Bandcamp pages will show up as the first result when a music fan does a band name/song title search. But it seems like you're essentially handing your Google ranking over to Bandcamp. My strong preference would be the ability to have the entire Bandcamp sales platform on my own site, as opposed to linking. Though that might not work with the...

...business model, which isn't finalized yet. For now, Bandcamp is free (hard to complain about that!), but there's no guarantee as to what future fees might be, though the FAQ says that any cut of digital sales would be limited to 15%. If all of the Bandcamp functionality worked within an embedded widget or was completely "behind the scenes," it would obviously limit the possible revenue models.

But what really dampened my initial enthusiasm for Bandcamp are the PayPal fees for each transaction. One of the first things I noticed when setting up a track is that the minimum price for an individual track is 50 cents, which pretty much rules out "eMusic prices" for individual tracks. I soon learned why -- the PayPal transaction fees are 30 cents per transaction plus 1.9% to 2.9% of the purchase price. At standard iTunes pricing (99-cent tracks, $9.99 albums), that works out to around 33 cents for a track and 60 cents per album.

Hence, there's not much of a financial advantage to selling a 99-cent download via Bandcamp versus a 99-cent sale via iTunes or Amazon.com. However, for album sales, a $9.99 sale would net a self-released artist a couple bucks more than an iTunes or Amazon.com MP3 transaction.

Despite the above misgivings, my initial impression is that Bandcamp mostly got everything right, and the PayPal fees aren't something they can control. I just wish there was a workaround of some sort to keep the transaction fees low enough to offer more flexibility for single-song prices.

tags: digital music download sales Bandcamp PayPal

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September 15, 2008

Future of Music Coalition Appearance
by David Harrell

I'll be attending the Future of Music Coalition's Chicago seminar next Monday, September 22nd -- and appearing on the "Music 2.0: How musicians can use technologies to promote and distribute their work" panel. Complete details and the full schedule for the day are here.

My apologies for the month-long posting drought. We mastered the new album last week and while we're making a few small changes, it's essentially finished! Next up -- insert design, CD manufacturing, a website redesign, booking some gigs, etc...

tags: digital music Future of Music Coalition

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THE LAYAWAYS

"...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

Keep It to Yourself - free mp3
All Around the World - free mp3
Come Back Home - free mp3

Download from eMusic, iTunes, Amazon MP3, or CD Baby, listen to free streams at Last.fm, Lala.com, and 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

"A wonderfully crafted recording built around tasteful songwriting and musicianship..." -- PopMatters

Silence - free mp3
The Long Night - free mp3

Download from eMusic, Amazon MP3, or iTunes, listen to free streams 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, listen to free streams at Last.fm, Napster, or Rhapsody.

More Layaways downloads: