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.

My personal website has links to my LinkedIn and Google+ pages and you can send e-mail to david [at] thelayaways [dot] com.

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March 26, 2010

Your Choice
by David Harrell
I can't fault record labels and musicians for asking for an e-mail address in exchange for a free download, though I sometimes get annoyed by the registration process and having to wait for an e-mail confirmation to actually download/hear the track.

So kudos to the National and 4AD for using an either/or approach for the free download from the band's upcoming release: You can download a 192k mp3 of "Bloodbuzz Ohio" without giving up any information or enter an e-mail address for a 320k mp3 version and artwork.

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March 25, 2010

Thursday Odds and Ends
by David Harrell
The Future of Music Coalition contemplates the payouts from YouTube's new "Musicians Wanted" program for indie musicians:
One thing seems true for the moment: if you’re gonna rely on video (or other streaming plays) as a means to lining your coffers, you be counting pennies for some time. Consider this: according to a November 2009 report, one of the most popular tracks on Europe's Spotify -- Lady Gaga's "Poker Face" -- was played more than a million times, and the artist supposedly netted a whopping $167 (or just under two ten-thousandths of a dollar per play). The veracity of these numbers has been challenged, but they do highlight the difficulties of monetizing on-demand streams at a significant level.
An essay on playlists from Fingertips:
The reason more people don't share music more often? It's all but heresy to suggest it, but what the heck, I promised a stunning conclusion: people don't share music more often because for most people, the connection to music is not primarily social at all but, rather, internal and personal.

This contradicts what the music futurists and social media mavens are telling us (24 hours a day), but I contend that most engaged music fans do not relentlessly look to their friends either for new music suggestions or to make suggestions to them. Some do, quite joyfully, but they are the vocal minority. And many who do enjoy sharing their musical discoveries with friends tend to have very specific friends with whom they do this. They are not parading with their music down the hallways of their lives on the off chance someone might connect.
And an eMusic subscriber sings the praises of "re-recorded" music downloaded via the subscription service:
I know that most times re-recorded music is not as good as the originals. But you have to give them a chance because once in a while they are very good, maybe even better than the originals. Sometimes re-recording breathes fresh life into tired old songs that have been overplayed till I never want to hear them again.
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March 24, 2010

Thirteen
by David Harrell
My bandmate Mike Porter was testing out some new recording equipment and laid down a quick cover of one of my all-time favorite songs, Big Star's beautiful "Thirteen." Take a listen:
Thirteen, as covered by Mike Porter of the Layaways -- mp3
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March 19, 2010

Alex Chilton
by David Harrell
"Each and every cut on this album has the inherent potential to become a blockbuster single. The ramifications are positively awesome."

-- Billboard magazine review of Big Star's "#1 Record," September 9, 1972.

There are, of course, hundreds -- if not thousands -- of songs and albums that "should have" been hits but never found a wide audience. Yet it's hard to imagine any another example of a greater disparity between the potential of a record and its subsequent success.

I started to write something yesterday about Alex Chilton, who found fame in the music industry, if not fortune, at the insanely young age of 16, when the Box Tops' "The Letter" hit #1 in 1967. But any attempt at an analysis of his commercial success (or lack thereof) with Big Star and his solo albums seems so inappropriate right now.

His talent as a singer, songwriter, and arranger (along with that of Big Star founder Chris Bell, who died in 1978), was staggering. The combination CD of the first two Big Star albums has been one of my favorites for the past 15 years and it easily ranks with the best output of the Beatles, the Kinks, or any other rock act. The songs, performances, and production are simply perfect.

I'm sad that this music didn't find a larger audience at the time (if there's such a thing as parallel universes, there must be one out there where Big Star actually had a #1 record), but I'm so incredibly grateful that it exists:



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March 15, 2010

Pandora's Seventy Percent
by David Harrell
The fact that Pandora (along with other Internet radio stations) pays out a large percentage of its revenues for royalties to BMI, ASCAP, and Soundexchange isn't news. But something really struck me about this bit in the Wall Street Journal's weekend magazine piece on Pandora founder Tim Westergren:
Almost 70 percent of our revenue is paid to royalties. In most businesses, as you get bigger, you get advantages of scale. Things get cheaper by the pound, cheaper by the minute. But that's not true in our case. It's the same price.
"Almost 70 percent" is nearly the same amount as the 70 cents that Apple pays labels for 99-cent downloads from the iTunes store. Which, as Apple has long claimed, is pretty much run on a breakeven basis. While some have questioned that assertion, because Apple makes such a healthy margin on iPods and iPhones, it could certainly afford to run the iTunes store for minimal profit. Or even, perhaps, at a small loss. Ditto for Amazon and its mp3 store, which pays a similar percentage to labels for the digital downloads it sells. Amazon has long been willing to sell content at a loss to establish itself as a market leader, as shown by the $9.99 pricing of digital books for its Kindle reader.

Despite not having a high-margin physical product, Pandora has been in the news because of its first-ever profitable quarter -- and rumors that it will purse an IPO. It's certainly possible, of course, that with new products, services, or tweaks to its business model, that Pandora will grow its profit margin. But without changes to how content providers (labels, artists, and publishing firms) are compensated, there are definite limits to the ultimate profitability of any music streaming business.

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March 12, 2010

EMI vs. Pink Floyd
by David Harrell


Everything I've seen about the EMI/Pink Floyd dispute over the "unbundling" of the band's tracks for digital download indicates that the band's goal is keeping its albums intact, not maximizing their total sales revenue. Indeed, if an "album only" download policy were expected to be more lucrative, it seems likely that EMI would be embracing it as well. While the "cherry picking" effect seen with digital music downloads is often blamed for decreasing total music sales revenue, in the case of an older band, one without a current hit single, perhaps the ability to cherry pick increases total sales, as listeners unwilling to purchase the full album are willing to buy an individual song or two.

As of this afternoon, despite the recent court ruling, Pink Floyd songs are still available for individual download from iTunes and Amazon MP3 in the U.K. and the United States. But if EMI stops selling individual tracks, it will be interesting to see the effect on total album sales over the next year. According to today's Wall Street Journal report on the court ruling, here are Pink Floyd's SoundScan sales for the past two calendar years, with album sales representing both CDs and digital albums:
2009: 654,000 albums, 1.71 million digital tracks
2008: 760,000 albums, 1.35 million digital tracks
Was the decrease in album sales from 2008 to 2009 a direct result of increased digital track sales, or simply due to the overall decline in sales of recorded music? If "cherry picking" was indeed the cause, removing the option to buy individual songs should increase album sales, or at least reduce the rate of the year-to-year decline.

One other thing to note -- the digital download versions of Pink Floyd albums are often relatively inexpensive, especially on Amazon MP3. There you'll find Dark Side of the Moon for $7.99, Wish You Were Here for $7.95, and Animals for just $4.95. The exception is the double-album "The Wall," which currently sells for $22.25 on Amazon MP3 and a whopping $24.99 in the iTunes store.

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March 10, 2010

Soundexchange Makes Some Calls
by David Harrell
Soundexchange banner
After Paul Maloney of RAIN wrote about the Reuters coverage of Billboard's top-40 money makers piece (Reuters reported that only 10 artists have received more than $1,000 in streaming performance royalties from Soundexchange) he received a call from a spokesperson for the non-profit royalty collection/distribution organization:
Contrary to the statement that only 10 artists earned more than $2,000 for their play on Internet radio, Williams revealed, "In fact, more than a thousand artists received more than $2,000 from SoundExchange for non-interactive webcasting only..."

Williams further revealed to RAIN that more than 500 artists earned "well above $9,000 in 2009" webcasting royalties. Beyonce, who allegedly topped the list of non-interactive streaming royalty earners, "made exponentially more than the $5,000 reported by Billboard, and actually isn't even close to #1 among earners." Although SoundExchange won't disclose exact earnings of specific artists, they revealed 2009's top-earner made "well into 'six-figures'" from Internet radio.
And Jonathan Segel of Camper Van Beethoven, who said in an interview with this blog that his band had yet to receive a payment from Soundexchange, despite hundreds of thousands of plays on Pandora, e-mailed yesterday to say that he had received a call from the organization. A Soundexchange representative offered to help expedite the paperwork for unpaid royalties for Camper Van Beethoven. While it won't be a six-figure check, the preliminary total, which Segel revealed in a comment to the interview, actually exceeds the amount of money the band raised with its recent SXSW song sponsorship campaign!

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March 08, 2010

An Interview with Jonathan Segel of Camper Van Beethoven
by David Harrell
Jonathan Segel of Camper Van Beethoven
I thought the most informative comment about my recent post on Camper Van Beethoven's song sponsorship drive to fund its 2010 SXSW appearance came from CVB founding member Jonathan Segel. So I sent Segel, who in addition to his work with Camper Van Beethoven, has released many recordings under his own name and with his bands Hieronymus Firebrain and Jack and Jill, some questions for an e-mail interview, asking him to expand on the original comments he left. As he said in his response, he really "went to town" with his answers -- read on for his thoughts on the economics of releasing CDs, the patronage model, free music, broadcast and performance royalties, and why so many "professional" musicians are actually hobbyists.

Congratulations -- it looks like you've sold all 35 sponsorship slots. Is this something you'd do again for future performances or tours and/or would you consider a fan-funded recording? (CVB clearly has a passionate fan base, it seems likely you'd be able to raise funds for future projects.)

As it turned out, 90% were fans that purchased these spots. I was hoping it would be more actual companies doing real advertising, but the campaign worked out to get us to the shows! I don't think we'd want to do this for future performances, this was really just a way to fund our travel to this particular festival that expects bands to play but doesn't pay them, while charging immense amounts of money to the conference participants. I think a fan-funded recording would be a good, idea. I like the way, for example, that Einsturzende Neubauten did their subscription service where the fans could look in on the studio via web cam! Of course, it seems highly unlikely that we could afford that much studio time, nor be able to have such a concentrated work period (given that we must actually work our "real" jobs as well) so if we do this it will more likely be a fan sponsored CD product, with perhaps some extras available on the web.

Your comments about CVB's income stream from your recordings were something of an eye opener. While I obviously didn't think the band was living Sting-style in Italian villas, given your impressive back catalog, coupled with the fact that your early albums were released on your own Pitch-A-Tent label, I had assumed you might be earning a modest annual income from CD and digital download sales. A four-figure amount at least, but you said it's three figures at best. Are you in a situation (due to releases that haven't their recouped recording/promotional costs or publishing advances -- the two Virgin albums?) where you don't receive royalties on some of your music? Or is it just that the total sales of your entire catalog are modest enough to preclude any real income?

There are several things here. One is that in the past decade, any income from cd/record sales has basically disappeared. The cost of making a cd is not a very easily recoupable investment these days, especially if you want it to sound decent. Many recording studios have folded in that past decade, as nobody makes enough in sales to justify spending hundreds-to-thousands of dollars per day to record for several weeks and expect that it can be recouped. This means of course that more people record on home systems, but there is a real audio quality difference between home recording and studio recording -- but would that matter when the audio quality is reduced to MP3 compression? Are there even listeners who care to listen to higher quality audio anymore?

Back 20 years ago, when we signed to Virgin, the advances were like $100,000. In those days they sold LPs, CDs and Cassettes, each at like $10-15 retail. We spent a week at $1000 per day to do basic tracks, do overdubs at a smaller studio for two months, then another week or so at $1000 a day to mix it later. Plus the "producer" and other engineers get paid many thousand dollars from this budget. Plus you buy some equipment to play on (why didn't I buy that 1959 Les Paul back then...?) Then you get some tour support to rent a bus to tour, etc... it pretty much eats the advance, all of which must be paid back out of company profits before the band gets money (see Steve Albini's famous article in "Commodify Your Dissent") I believe the band broke up in 1990 owing Virgin some ridiculous amount of future royalties, so, no, we've never really seen much money from those sales! So even if Our Beloved Revolutionary Sweetheart has sold 150,000 copies, it's still not enough to get to the point where the band gets paid artistic royalties.

Any advances we have received on cds or cd packages made in the past decade have been small, on the order or $5-10k at maximum! We will spend at least half of that or more on recording the cd. Then of course you have to provide the band with food and lodging while recording, while they aren't working at their other jobs that actually pay them. The most we can expect as individuals from this sort of process is maybe 10% of an advance, and that will pretty much get eaten the next month by mortgage or rent, especially when we haven't been at home working to make that money! And on the cds we have put out ourselves ("Camper Van Beethoven is Dead...", for example) we also have to pay for the manufacturing of the thing.

So if a company like Vanguard or Cooking Vinyl spends $10k on us to record a cd or set, they also have to spend money on manufacturing and promotion and marketing to sell some copies not to mention the human beings that they pay to do all that work. How many do they sell before they pay us any money? Let's say they are selling at wholesale in general, $6 or so per (physical) CD. Theoretically they must pay mechanical royalties per cd pressed right off the bat, about $1 of that which gets paid to the rightsholders of the songs (us!)... uh, at some point...

So even if they only spend $1 or 2 to manufacture each cd, that's going to add $1-2000 per 1000 cds manufactured… let's be cheap and say $1.50 per. our cost per CD is up to about $2.50 now. Then they have to pay for the people who worked the CD in it's pre-release stages, and then the people who work it in post release stages. That's several thousand dollars of labor. They probably want to send out promo copies, maybe $500 in postage. (we're just gonna forget about the cocaine and hookers for radio personalities, i guess...?) So lets imagine an initial pressing of 5000 copies. that has cost $12500 in manufacturing costs, probably another $5000 in human labor, another $1000 in postage and office supplies, another $10k that was the recording advance, we're up to about $28500, and then there's advertising -- small magazine ads are $500 - 2000 for one month's issue per magazine. Before we get there, let's regroup. Imagine we could sell 4500 of the 5000 (some have to be promotional!), we're still short of the initial investment by a bit. Publicists? Oh I forgot about mastering costs, another thousand dollars. So we'd have to go in for a larger pressing… but in this digital age, once 5000 cds are out there, the music is available digitally already... and copied. We're still dealing with this generation of folks who are under the impression that it comes from nowhere and doesn't need monetary support to spring fully formed from the head of Zeus. But you get what you pay for, really. If you like crappy sounding recordings, they're easy to come by. Especially made by people who have just learned how to play.

So the band is still waiting for our additional $5000 in mechanicals, which get divided up 50/50 between the publishing company and the rightsholders, and the publishing company uses its portion to keep itself in business (it's our company: we figured that one out pretty early) and the remaining $2500 can be sent out to the writers. So each of 5 members gets $500 for 5000 cds pressed. The recording advance is of course against artistic royalties, we won't see those until all of the expenses are recouped and the company is showing profit.

So yeah. on our level there's not much money in cds. So then we use whatever we make to make more cds on an even lower level -- In my own case as a solo artist the finances are even worse -- in the last 20 years I've made numerous cds under my own name or my various bands' names, but as I have to record, press, promo (meagerly), etc., myself, my investment has to be manageable on a small income -- it's basically a hobby. I press 100-1000 of any cd, sell maybe half of any pressing. They'll never actually *make* money! I almost had a "real" label last year for a few months, they were gonna put out a compilation of my older stuff, but they backed out later... I guess they figured it out!

So, what are the other ways to make money from recordings? Digital sales, for us, really don't amount to much. I realize that there is the promise of iTunes paying $0.60 per track sold, $6.00 per record. I believe that this is paid to the companies that place them there (like those that put out our physical cds). I don't actually keep track of CVB income, I think it would just make me angry. I'll just accept my few hundred dollars when it comes. For my own boutique label, Magnetic, where Victor and I "release" our own cds, I can tell you that we get it digitally placed via CDBaby, and those reports are looking like $20-50 a month for about 15 releases through Rhapsody, iTunes, etc...

Broadcast royalties, again, are not very high. I believe they are up to 9 or 10 cents per spin on terrestrial radio? The companies like BMI pay MORE to people that get played more, too, as if that were some sort of inspiration to us all. I personally am offended when I read how radio plays above 1 million spins will make them more than 10cents per spin, that just eats money smaller artists could make.

Additionally, please read Tim Quirk's blog about Too Much Joy's royalty distribution. I think this is very enlightening. It sort of points out that the high end gets paid, and anybody below $10k can fuck themselves. I think that similarly, the legacy of the digital revolution will prove to be economically the same as the legacy of the last 30 years' Republican administrations: a very small percentage of people with a lot of money, and a very large amount of people with very little money; there will be little or no artistic middle class.

What's your take on the music industry today vs. 20 years ago, in terms of a non-platinum act being able to earn money from music sales? Is the ready availability of free music -- both authorized and unauthorized (file sharing, etc.) -- the main reason for declining sales?

During the initial throes of the music business' movement into digital realms, I heard a lot of people trying to pep-talk to musicians about the changes to the political economy of music wherein they saw it as a movement back to a patronage model.

To recap recent history briefly, 200+ years ago the luckier composers were kept alive by patrons, who at the time were either the Church or Royalty. Their compositions were written mostly at the request of these patrons, but then ultimately disseminated to a larger non-paying audience.

The beginnings of ubiquitous physical media duplication started an era where composers had some control over the actual physical sales of their music -- first by paper (Beethoven sold/pre-sold pieces to publishers!) and later by analog duplication of the sound -- shellac, records, tapes, cassettes, cds, etc. That was certainly a high time for control of dissemination of music. As the release of the musical information from the physical medium took place, composers and artists began losing control of the dissemination of their music, hence a loss of what is referred to as Value Exchange.

I think we've all heard many pro and con argument regarding the vast potentials of digital distribution of music, or even that music is information and it should be free!* ...but the real outcome for musicians and most music-based business has been lowered income. Among the pundits there were many who proclaimed that this was a return to the patronage system, in that composers themselves now had the ability to sell directly to a vast number of patrons directly, i.e. a thousand fans buying one digital download directly was the equivalent of one Duke paying for the composer's room and board for a month.

In some cases this is true. But generally, and finally to my point, people don't pay; the vast populace waits around to hear what the Duke and Duchess have already paid for. In the case of what we are experiencing now, we are indeed in a patronage system: our patrons are the people who buy the ads. In many cases it's the same with respect to music worldwide, television or radio ads that use music are paying for it to be made and heard. To a certain extent, we could say that record labels were paying for the bands to advertise the label itself!

My second point is, the advertisers are not only the patrons of the composers, but by proxy the patrons of the internet (last.fm, pandora, lala, rhapsody, etc.). They pay room and board to various services while "the internet" disseminates the music "for free" to the greater populace. But who is getting paid? The middle man, yet again. Does he make any money? Hardly. The actual business costs of streaming or serving music are heavy, server time is heavily monetized. Somebody is paying for this (you, to your ISP, an internet radio station to their ISP).

So far, where terrestrial radio has had to pay broadcast royalties, those royalties have been very low (<$0.10 per song played). With the final wrangling of the Digital Millennium Copyright Act, internet radio has to pay a bit of this and a bit in performance royalties (not to "rights holders", or whoever owns the copyright, as the terrestrial radio does, but actual royalties to the performers of the music. Note that most other countries pay performance royalties on terrestrial radio as well, just not the US, China, North Korea, the Congo, for example.) Performance royalties are like $0.001 per song per listener. The DMCA has some interesting ways around an on-demand performance royalty thing, they make rules for internet streaming radio about number of skips allowed, no back and forth in the stream, trying to deter predictability in the music stream. Song-on-demand royalty rates are higher, so most streaming sites try for unpredictability. The Performance Rights Act in congress recently is trying to get regular radio to pay performance royalties also, the big complaints are about how much this will cost small radio stations, but the actual cost will be flat fees of $500-1000 per year, which is way less than the NAB is charging those same stations to broadcast at all! Note also that most people (like the techdirt.com writers and commentary, it seems?) seem to think this is a "tax", completely misunderstanding the difference between fees and taxes. It would be great if taxes paid for music, don't you think? I'd be in favor of moving all the money spent on guns and bombs to pay for shovels and fertilizer so the army could go in and make sewers and vegetable gardens in Iraq, Afghanistan, Sudan... Then we could probably have enough left over to fund ubiquitous music! One graphic artist friend of mine who grew up in Soviet East Germany lamented the state of an artist's economy once the wall came down. No more state sponsorship.

Most of the musicians I read about who are in favor of "freedom of information" are either already wealthy due to hard-copy sales or never made a dollar ever. That's sort of classic supply-and-demand. Once again, capitalism rears it growth-oriented head: there is no such thing as sustenance level capitalism, it can only exist in a growth oriented market.

To say that merchandising or concert ticket sales should pay for the creation and distribution of music is asinine. Take a quick look at the actual money made from these things -- it virtually precludes anybody from making money unless they are assured of having 300+ people per night for extended tour (and that the club is paying them!) How many bands can do that and how long can they do that? Rock music is ghettoized the same way jazz was. Imagine jazz musicians trying to monetize the music by means of merchandise. How could an act playing at nightclubs where ~50 people listen support a tour, much less further CD recording. The financial breakdown of time, equipment, musicians, travel, merchandise manufacturing, etc. means that almost all "professional" musicians you see, have seen or will see are basically hobbyists; their time and materials are almost never paid for by listeners. like 98% of them. I recently heard an interview on KALX, one of our local college radio stations, with Jon Vanderslice, a musician I know from SF who seems to be doing pretty well these days. One of the things he talked about was the pressure to write the next record while still touring the last so as to stay in the stream of currency (I paraphrase here) and the fact that, especially as a solo artist, everybody involved in making a record gets paid before he does. He's in debt as much as I am despite the exponential difference in numbers of CDs sold or concertgoers. That's the way it seems to be to continue.

The idea of recording is whole different ballgame as well. Despite the DIY wave of home recording, do we really want mid-fi? Ok, a musician can make a record for the cost of equipment (still several hundred dollars or more..) but then there's the time, the instruments (or not), paying the other musicians, etc. Well-made recordings sound better. A decent studio costs many hundreds of dollars a day. Decent microphones, preamps, compression, all these things cost thousands of dollars. To say nothing of manufacturing, if they choose to make cds. Or artwork.

The "leveling of the playing field" produces a level field, that is to say: mediocrity.

If you take a look at Jaron Lanier's new book "You Are Not a Gadget" you can see that there seems to be a point of view developing wherein even the earlier free-internet pundits (such as Mr Lanier) are regretting the way that mob psychology has anonymized human presence on the internet, releasing most user's inner criminals -- where they can get things without paying, they will. In Sweden, the home of Pirate Bay (and idiotically a "Pirate" political party! -- but they are open minded...) they did a study of the people who were pirating media by downloading songs and movies, and it turned out that for the most part, they did so simply because they could: they were anonymous, they had 8MBps-100MBps download speeds (yes, we are way behind here in the US) and they could find the media. But did they actually watch or listen to it? No, not really. In fact, most of the greatest piracy offenders had drives full of media that they had never listened to or watched. It was useless, essentially. They refer to this behavior as "Hamstering".

**********************
*Does it? Does information want anything? Information exists in a stone, a great deal of it, but what makes it information at all is a human being cogitating and deciphering it. That is where its value come into being, in the mind of a human. Information is valuable to people, and people for the most part should have to pay for information -- if it were all free, hence valueless, it would not be interesting to the human mind. You essentially pay with brain usage!

I'm not necessarily advocating free music (and realize of course that you can't flip the switch and give away all of your back catalog). But if your sales are modest enough, at some point can you make the case for giving away digital downloads of your music?

Actually I do give away a lot of music. http://jsegel.bandcamp.com, for example, holds many hours of music that I have made for films or dance companies, of which I already essentially got paid the $200 for making it for an ephemeral performance (in the case of the dance company music! never been paid for those films!). Now, as a recorded medium, I have chosen to put it up with a user-declared price (including $0). But again, most of this has been paid for, on some level. Its value was ephemeral.

So I guess what you mean is, if we make so little money from it, why not give it away? Perhaps. We are a "taper" band (as are all of our side projects) in that if it's an ephemeral performance of music, you are welcome to tape it and listen to it later, or give it away: but of course you cannot sell it. Take a look at http://www.archive.org, do a search for Camper Van Beethoven or my name, or Cracker, or Victor Krummenacher, you'll find an awful lot of free music to listen to!

I still believe that the recordings of songs one makes for an album collection are different - it's a process of sculpting. Playing, recording, editing, mixing, these skills are learned skills and we get better at them as we do it more and more. The time put into a good recording is multiple times the length of the track itself, the refinement of a recording is an art in itself. This is highly skilled labor (not to mention the time we've taken to learn to play!) Should that be free as well? I'm not in favor of that any more than a surgeon would be in favor of performing surgery for free (at least all the time! of course charity work is good...!)

This reminds me of something that was asked in the comments of the internet posts about our SxSW sponsored shows: Why is an "established" band even playing at SxSW? I think they have always had relatively big bands of various sorts play at the conference there, partly for fun for the attendees to see their old favorites, but also there's another aspect. Listening to a band that's been playing together for a long time is different than listening to a young band that has recently come together or even learned to play. There is a completely different musicality to seasoned musicians (or actors, or other artists), in any genre. We don't tend to value that very much in our culture. Having a band like Camper or Cracker at SxSW can be a reminder of that. The fetishization of youth brings a cult of assholes, unfortunately. Look at Hollywood! People even drive badly to emulate teenagers! (...that's what they're doing, right?)

You mentioned SoundExchange in your comment to the original post. While the organization is paying out millions in performance royalties for streams, that's not translating into a lot at the individual artist level. If you're not making much from music sales, performance rights payments, or merchandise sales, is earning income from touring all that's left? You referred to the inclusion of "Take the Skinheads Bowling" in the Bowling for Columbine movie. Is music licensing an area you've actively pursued?

Again, see Tim's Too Much Joy blog. Working for Pandora.com, I am acutely aware of how much we are obligated to pay to SoundExchange and BMI/ASCAP - it's millions. I've actually never seen anything from SoundExchange. I do know, for example, that Camper Van Beethoven has many songs spinning on Pandora, some of which have topped 100,000 spins, (nowhere the millions of spins for some other bands' tracks, of course) which should have meant $100 somewhere along the line (for that one song) but like I say...

Oh yeah, licensing nowadays is probably the only way to make money from a recording! We've licensed a couple things, one or two TV commercials. They pay a couple thousand dollars per. The market is notoriously tough, and like the major label world of the late 80s and 90s it's ruled by people who think they themselves are cool and want to use the hippest, coolest stuff, gleaning ideas from other ideas that have previously worked without ever trying to extend their world by making an actual statement. So there are now these pay services like SonicBids and SongPlacements.com that prey off the desperation of poor musicians and the gambler's mentality that one placed track will net them a couple thousand dollars so they pay into it, either bit by bit ($5-10 at time like SonicBids) or in subscription sums ($250 per year for SongPlacements) and musicians with little or no income pay like a slot machine hoping it pays off one day. I'd love to see more Camper Van Beethoven on TV, or in movies. I'm all for it. "We'd sell out if someone would buy in!"

Anything else you'd care to add about the challenges of making/selling music in 2010?

Here's what I think:

1) the royalty rates should be higher, like 100x higher. or more.
2) advertisers should be charged way more so that radio stations can pay the higher royalty rates and these rates should be offset by the federal government (yes, I'm talking arts grants)
3) subscription services should be included in internet service fees, ISPs themselves should pay these royalties. There is no reason why aac/mp3/flac/wav/aiff file tracking can't be done when in transit.

I think further on: nobody should own music in any uploadable or downloadable format. It should be available on demand for subscription fees Whatever device you listen on should connect to the source at the moment. No ownership of soft copy.

Hard copy might be better off in an analog format. Vinyl?

So none of that is probably gonna happen.

I know everything I wrote here sounds crabby or cynical, but it's not like I'm gonna quit playing music. Like that guy who cleans up after the elephant at the circus and hates the sheer amount of shit but won't quit? "What, and leave show business!?" I mean, I love music and sound, and my instruments, and recording. I'll do it til I die. I've made how many records now? (I don't even know) and I'll do it for my own entertainment if nothing else. Really there have only been a few years of my life that I've actually made a living as a musician and didn't have to rely on other jobs -- there were two years at the end of the 80s where Camper was touring or recording constantly, and another year and a half in the late 90s when I was playing in Sparklehorse and getting paid $800 a week by Capitol/EMI when we were on tour (money that no doubt came out of Mark Linkous' future artistic royalties!) The rest of the last 25 years I've worked other jobs to support my habit! I presently work full time for Pandora and also teach at community colleges in the bay area. Even with all that work, it's hard to have enough "extra" money to record and make new records (or the time or energy! dang.)

Thanks Jonathan!

One last note: just to clarify, Segel sent his responses to me before he heard the sad news about the death of Mark Linkous of Sparklehorse. As he noted on his Facebook page, where he cross-posted this interview, the reference to Linkous's future royalties was not meant as a comment on his passing.


related: More On Buddy, Can You Spare A Hundred Dollars? , Buddy, Can You Spare A Hundred Dollars?

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March 04, 2010

Egg, Chicken, Sony, and eMusic
by David Harrell
eMusic banner

Many eMusic subscribers assumed that the 2009 price increases were instituted to lure Sony to the eMusic catalog. (I also wrote that the Sony addition was likely a major factor in the decision to raise prices.) But in an Inc. magazine piece titled Coping With Fury at a Price Hike, Adam Bluestein lays out a chronology where the introduction of the Sony material to the eMusic catalog was meant to make a change that had already been decided upon more tolerable:
Stein knew there was only one way to prevent even more labels from jumping ship: raise prices for subscribers. He also knew that eMusic couldn't get away with another price hike without offering something in return. He sought ideas from his executive team and eMusic subscribers, and he held a series of focus groups. All the feedback pointed in the same direction: eMusic needed to broaden its catalog. And given that eMusic had nearly exhausted the universe of independent labels, Stein says, "It was pretty obvious that in order to take a big swing, we needed to start working with the major labels."
At the time, eMusic did say that a rate increase was necessary to keep current labels happy. However, given that the price increases weren't disclosed until after the Sony announcement, it's easy to understand why so many subscribers (and industry observers) thought the changes were made specifically to accommodate Sony.

While some of their longstanding subscribers (those who saw the biggest changes in their plans) no doubt would've preferred to keep their more-generous pre-Sony plans, the eMusic subscriber base is growing and turnover among new subscribers has decreased:
By fall, the dust appeared to have settled. Despite the uproar in the blogosphere, the site's subscription base held steady, rather than dipping slightly, through the traditionally slow summer months, and by year's end it was growing again. Among new subscribers, first-month turnover, or churn, was down 7 percent by early fall and has continued to decline.
As I noted in December, the change in subscription plans didn't result in a meaningful increase in per-download payments to labels for the third quarter of 2009. The fourth quarter of 2009, though, produced the largest per-track payment that I've seen in the past five years -- 39 cents per download.

related: eMusic's Per-Song Payout for Q4 2009, eMusic's Per-Song Payout for Q3 2009, eMusic's Per-Song Payout for Q2 2009, Sony and eMusic: Why the Per-Track Label Payout Might Not Change

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March 02, 2010

More On Buddy, Can You Spare A Hundred Dollars?
by David Harrell
My post last week about Camper Van Beethoven selling song sponsorships to fund its trip to SXSW generated a ton of traffic and a slew of comments -- 33 and counting, the most ever for a post on this blog. Three fifths of Camper Van Beethoven weighed in, as well as a couple dozen ticked off CVB fans.

In fairness to David Lowery, the first CVB member to respond, there were a couple of factors that I didn't know/mention at the time: The band originally thought the sponsorships would be purchased by companies, not individual fans. Even so, the band also vetted the idea with a Facebook note back in January and received an enthusiastic response from its fans. Finally, as a friend pointed out to me, there was a certain element of irony and humor to the whole sponsorship thing that I didn't pick up on.

In fairness to myself, however, I thought the post was a little more nuanced than most of the comment leavers perceived. I certainly understand the costs involved for travel and lodging for a SXSW appearance -- and that the artists receive a very nominal fee. The post wasn't an outright slam of the fundraising idea, more a musing on why I personally found it less appealing that the recent trend toward fan-funded recordings, and whether or not alternative fund raising activities by musicians will be a sustainable model. Believe me, I'm all for new ways for musicians to earn a living, given that they are the last ones paid under most music business models. (Also, I have to think there was at least a tiny element of calculation to Lowery's outrage, as he linked to the post from his personal Facebook page, the Camper Van Beethoven Facebook page, and the Cracker Facebook page.)

Anyway, I have no interest in feuding with Camper Van Beethoven. I'm actually something of a fan. Obviously, I didn't think the band members were living Sting-style, in Italian villas. But given its back catalog, coupled with the fact the early CBV albums were released on the band's own Pitch-A-Tent label, I had assumed the band might be earning a modest annual income (in the four-figure to low five-figure range) from CD and digital download sales. Yet CVB member Jonathan Segel, who left the most insightful comment to the post, paints a far bleaker picture of the band's finances, and the current state of the music industry:
...I don't think we've seen more than a couple hundred bucks in CD sales in the past decade. Digital sales are meaningless. Digital royalties are even more meaningless -- do you know anybody who's actually been paid by SoundExchange? Right's holders' royalties (BMI) make us a couple hundred dollars a year each, mostly due to Michael Moore having used Take the Skinheads Bowling in Bowling for Columbine in 2004 and its subsequent play on television. My own cds outside of CVB that I have released over the last 20 years are still hovering in the ~$10k region of debt.

The only money we make nowadays is touring, and the only way for a band to make money touring is

a) playing to large audiences in venues that will actually pay you and
b) scrimping.

It's not super fun much of the time, especially at our "advanced" ages (with respect to rock and roll!) and obviously we can't do it all the time due to market saturation, not to mention the fact that we have to go back to work. David is the only one who is full time professional musician, when he's not playing with Camper, he's playing with Cracker, and he bears a hellish touring schedule to make ends meet that way!

Anyway, the whole "fanbase as patrons" idea that was so touted at the onset of the digital music age has proven to be very much like the old patronage system -- if you have a patron (advertiser, record company, whatever will pay) they will pay and the rest of the peasants listen to what's been paid for. The masses don't pay for much of anything.
I exchanged several e-mails with Segel and sent him some questions for a follow-up e-mail interview. Look for something later this week or early next week!

UPDATE: My interview with Jonathan Segel.

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