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


  digital audio insider

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

February 06, 2009

Last.fm Royalties for Q4 2008
by David Harrell
Last.fm recently posted fourth quarter 2008 reports for its artists royalty program. Thanks to a new album, and an in-season Christmas EP, our total Last.fm plays increased significantly from the previous quarter, leading to a royalty payout of $17.27:

Q4 2008 Last.fm Streaming Royalties

As with the previous quarter, Last.fm paid half a cent per stream for "free on-demand plays," while the "free radio plays" rate was slightly lower this quarter -- .05 cents vs. .057 per play.

Clearly, payouts like this one don't encourage me to quit the day job. But it's easy enough to multiply these numbers to get a general idea of how much a relatively well-known act might receive from Last.fm for making its music available for free, on-demand streaming.

For example, my own band currently has a total Last.fm audience of just under 4,400 listeners. Moving up the music food chain to an act on "big indie," we find that the Broken West, on Merge records, currently has more than 16,700 Last.fm listeners. However, my guess is that they'd earn more than 4X what we did because their average number of plays per listener is much higher, as are, no doubt, their sales. (Our listener count is probably inflated somewhat by the folks who listened to various Last.fm holiday radio streams in late 2008 and heard a track or two by the Layaways.) There's also the caveat that the Broken West's albums aren't currently available for streaming on Last.fm. If they were, there's a good chance their Last.fm listens/streams would increase significantly.

Yet even a generous assumption of 100X our royalty for the quarter still only converts into $1,727, or a little more than $6,900 a year. While every little bit helps, it seems like you'd need to get to more than 1,000X our payout to reach an amount that begins to be significant to larger labels and artists. Given some of the play counts that I've seen on MySpace, however, it doesn't seem implausible that some acts could generate six-figures in total annual streaming income from Last.fm, MySpace, the free services from Rhapsody and Napster, etc.

The question, of course, is do these "on demand" royalties represent a net supplement to artist income? Or, are they simply a poor substitute for lost sales that didn't take place because listeners opted for free streams instead of purchasing a CD or digital downloads?

It's probably a case-by-case basis, with no set answer. My guess is that the cost/benefit relationship depends a lot on the previous commercial success of each artist. That is, relatively unknown acts are probably going to come out ahead by making their music available for free streams, while an established act might lose enough sales to negate the streaming income.

In a post from late last year, Glenn at Coolfer.com had some good thoughts about streaming revenues vs. those from actual sales and noted that -- given current payout rates -- an individual would have to spend 93 hours listening to digital streams to generate the same revenue as the purchase of an iTunes album. And he also pointed out that it really all comes down to CPM advertising rates. Given what online advertisers are currently willing to pay per page impression, there's a limit to how much an ad-supported streaming service can pass on to labels and artists and still have a viable business model...

tags:

link 3 comments e-mail listen to the Layaways on Spotify




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:

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



    Popular Posts

    A Long Tail Experiment
    By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
    Lala.com Owes Me Sixty Cents
    An Interview with Jonathan Segel of Camper Van Beethoven
    Price Elasticity of Demand for McCartney
    Sony and eMusic: What I Missed

    The Digital Pricing Conundrum series:
    Part One Part Two Part Three Part Four





    THE LAYAWAYS

    Out Now -- "Maybe Next Year" -- The New Holiday Album:

    <a href="http://thelayaways.bandcamp.com/album/maybe-next-year">Joy To The World by The Layaways</a>

    "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.



    album cover art from The Space Between

    <a href="http://thelayaways.bandcamp.com/album/the-space-between">Keep It To Yourself by The Layaways</a>

    "...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.



    album cover art from We've Been Lost

    <a href="http://thelayaways.bandcamp.com/album/weve-been-lost">Silence by The Layaways</a>

    "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.



    album cover art from More Than Happy

    "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:

    download the Layaways at eMusic download the Layaways at iTunes

    the layaways website