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Digital Audio Insider is David Harrell's blog about the economics of digital music.
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December 31, 2008
Looking Back at 2008by David Harrell
In a somewhat random order, here are the nine Digital Audio Insider posts that generated the most combined page views, reader comments, and e-mails:
The Latest from Lala: The Return of the Dime StoreThanks to all who read, commented, or e-mailed -- best wishes for a happy 2009!
The New Dime Store, Part 2
The Patronage Model
The New Music Equation: Radiohead, Trent Reznor, Etc.
The New Music Equation, Part 2
How We Listen
Buying Free Music
Giving It Away: A Call for Ideas
The Big Switch: Will It Happen for Music?
tags: digital music new music models
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December 23, 2008
'Tis the Season: Free Christmas EPby David Harrell
To paraphrase the old NBC slogan, if you haven't heard it, it's new to you: The Layaways' 2006 Christmas EP is available for free streaming and download on Last.fm:
The Christmas EP - The LayawaysIt includes our indie-disco take on "O Christmas Tree" and instrumental versions of "Joy to the World" and "Silent Night." Please check it out if you're in the mood for some holiday tunes.
Direct downloads are also available:
O Christmas Tree - free mp3On a related note, Daniel Levitin (author of The World in Six Songs) wrote a recent WSJ piece on why holiday music can be so annoying. While that may be true of holiday music that is forced on you by retailers and such, I'm continually amazed at the public's appetite for holiday music. It seems like more musical acts than not have holiday-themed albums. And while I'd like to think that our late-year surge (on a percentage basis, at least) of Last.fm listeners is result of the new album, it's primarily due to the spins of our Christmas tracks.
Joy to the World - free mp3
Silent Night - free mp3
tags: digital music free Christmas music the Layaways
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December 19, 2008
The New Music Equation, Part 2by David Harrell
Back in February, I posted "The New Music Equation," which reduced the "voluntary payment/purchase" music business model to the following equation:
(A x B x C) - E = DWhat this equation ignores, however, is the growing number of ways for musicians to receive compensation for "free" music. Not directly from the listener, but from a third party.
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
E = total expenses (recording, marketing, promotion, etc.)
and
D = the total revenue received
So far, it's mostly compensation for ad-supported on demand streams, such as those offered by Last.fm the free streams of paid subscription services such as Napster and Rhapsody. Lala.com also pays musicians for the free streams it offers. I'm ignoring, for now, the revamped Myspace music player, as there's not yet a way for independent/unsigned musicians to participate. There are also some models like RCRD LBL that compensate musicians for actual downloads. And TuneCore recently announced a program for corporate-sponsored downloads.
Last.fm's new artist royalty program, for example, pays artists/labels for on demand streams of individual tracks. While there's some flexibility to the payout rate, for the third quarter of 2008, the per-track rate was 0.5 cents per on demand listen. The per-song payout from Lala.com is a similar amount. Using the standard payouts from iTunes, Amazon MP3, and eMusic (a varying amount), it's easy to calculate the number of free streams needed to equal the artist compensation for a paid download:
68 listens = 1 eMusic download
However, it's important to note that it's not an either/or proposition. Free on demand listeners are also potential purchasers of the music. But even if they never buy anything, they're still adding something to the bottom line.
Incorporating this "compensated free" component within the new music equation gives us:
(A x B x C) + (A x F x G) - E = DIt seems like the key for an artist/label is to -- as much as possible -- nudge listeners toward free music where there is an artist compensation component, even if it's only a fraction of a cent per listen or download.
where
F = percent of listeners/acquirers who listen to/obtain music from an compensating source
and
G = the average amount received for each listen/download
The question is, how far do you go in steering listeners to such sources? The basic math is in favor of only offering free music via a compensating source. However, my guess is that restricting listeners to such sources would probably reduce the first component of the equation, the total number of listeners/acquirers. Some potential listeners will no doubt balk at the idea of going to Last.fm, Lala.com, or a corporate sponsor's site to stream or download music.
Obviously, there isn't a single optimal strategy for every artist and label -- what works best will vary according to the size and demographics of the audience for each specific act (not to mention the actual artistic merit of the work itself). Yet if you're willing to go "free," maximizing the total number of listeners remains paramount, and I'd be reluctant to do anything to reduce that number.
tags: digital music eMusic iTunes eMusic Last.fm Lala.com
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December 18, 2008
28 Days for iTunesby David Harrell
CD Baby delivered our third album to the iTunes store on November 20th and it went live today. Not quite as speedy as Napster, but I think that was quicker than the delivery-to-available-for-sale times for our first two discs.
As I mentioned in a previous post, there's currently no way for most self-released musicians to set a specific release date for digital retailers with either TuneCore or CD Baby.
tags: digital music iTunes Napster CD Baby
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December 11, 2008
The Future of Freeby David Harrell
I just stumbled across Mark Mulligan's Music Industry Blog. Lots of smart posts, including some recent thoughts on free music:
Jupiter surveyed many hundreds of unsigned artists and asked them about their aspirations. The vast majority wanted to get a record deal. The vast majority wanted to make money out of selling their music. So whilst many have argued that artists just want to be musicians and not make money, this simply isn't the case. Don’t get me wrong, I'm not arguing that musicians' are some money grabbing bunch, simply that they'd like to be able to get paid for doing what they love and ideally be able too give up their day jobs. Not get a yacht or private jet, just be able to make a decent living.Right now I'm working on an update my New Music Equation post to better incorporate free music. Not the "please download our free mp3s" type of free, but the "free to the listener but the musicians get paid" variety. Look for it next week!
People have cited Radiohead as an example of an artist that went free. They didn’t. No one could download the album for free -- you had to pay a minimum 'administration' fee. And then Radiohead used the success of the initiative to secure a lucrative distribution deal with XL Recordings for that outdated concept, the CD. Radiohead made more money out of In Rainbows than many other of their albums. They played the system to get better contract terms and to drum up interest.
tags: digital music free music
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December 05, 2008
Jumping On The Bandwagonby David Harrell
You can now follow Digital Audio Insider on Twitter.
tags: digital music Twitter
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December 04, 2008
Thursday Odds and Endsby David Harrell
Another reason the CD isn't going away any time soon: Music reviewers prefer physical discs, for listening convenience and -- perhaps even more -- their resale value:
I'm a member of a list serve called the "PR list" which is a group of hundreds of music PR professionals and they recently conducted an informal survey about sending music digitally to music journalists versus sending CD's. The response from writers was overwhelming. They insisted upon getting the full CD with the artwork in a jewel case with a spine or they wouldn't consider a review at all. Why? Because used CD stores only will take CDs that include cases and spines and artwork as the LA Weekly article also points out.Kudos to Napster and Amazon.com MP3. For self-released musicians, getting your music into the digital download stores is a waiting game. CD Baby and TuneCore will deliver the files, but after that there's no telling when an album will actually appear online. CD Baby warns that it can take up to three months. But Napster was superfast -- CD Baby delivered the new Layaways album on November 20th and it went live on December 3rd. Amazon.com MP3 received the album on November 10th, and it went live today.
Finally, ATO is giving away the lead-off track to Paul McCartney's new "The Fireman" release at Amazon.com MP3, but the beggars are choosy, with negative reviews outweighing the positive. Here's my favorite:
It's a 9021 KB size file that deletes pretty fast. Don't forget to empty your recycle bin after deleting, as you might accidentally restore it and re-contaminate your hard drive.The album itself is faring better with critics and eMusic subscribers.
tags: digital music promo CDs Napster Amazon.com MP3 CD Baby TuneCore Paul McCartney
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December 01, 2008
How Do You Wrap An MP3 Album?by David Harrell
Not sure how much longer it will last, but Amazon MP3 is running a "black Friday" special -- 50 of its top-selling mp3 albums for $5 each.
Meanwhile, I just noticed that the iTunes store now has its own bargain specials -- a handful of $4.99 albums are featured on the main page.
tags: digital music Amazon MP3 iTunes
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Most Popular Posts
The New Music Equation
By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
Lala.com Owes Me Sixty Cents
Economists, Radiohead, and Bob Mould
To Free or Not to Free
Price Elasticity of Demand for McCartney
The Digital Pricing Conundrum series:
Part One Part Two Part Three Part Four
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:
the layaways website
Current/Recent Reading and Listening:
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It's written as a how-to guide for those looking to become music supervisors, but I found it to be a good resource for musicians (like me) who are trying to get their music used in movies, TV, etc.