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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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.

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June 28, 2010

Monday Odds and Ends
by David Harrell
This year's Bandwidth Conference is scheduled for August 19th and 20th in San Francisco.

A couple of new music listening tools: ExtensionFM is a browser extension for Chrome that creates a library of the mp3s on the pages you visit. And Playlistify creates and generates playlists for Spotify.

Finally, if you missed it, last month's Fingertips commentary on free music is definitely worth a read.

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June 17, 2010

C'est Lala Vie
by David Harrell
It's been two and a half weeks since Apple shuttered Lala.com and it's not an exaggeration to say that I miss the site every day. The "hear any song once for free" model was just about perfect. I'd stream albums while reading music reviews at Pitchfork, listen to tracks before deciding how to spend my monthly allotment of eMusic downloads, and it was always the first place I'd go to listen to a new (or old) album that I read about it. There are, of course, other options for streaming music online, but everything I tried in the past was inferior to the Lala experience. I had no luck with my Napster subscription (just couldn't get the music player to work on my PC), though I suppose I should try a Rhapsody or MOG subscription.

The question now is how much of Lala's functionality will Apple incorporate into iTunes. While much of the recent speculation has been about the cloud/digital locker feature, a digital locker functionality seems unlikely. Unless Apple follows the Google approach of pulling data from users' hard drives, the major label groups are likely to balk at cloud-based iTunes libraries. (See EMI's long-term harassment of Michael Robertson over digital lockers.) But what I'd most like to see in iTunes is some sort of music streaming capability, if only the "one-time free stream" option that Lala provided.

Historically, the economics have been challenging for streaming services. For paid subscription services, which can offer reasonable compensation (around one cent) to labels for each stream, the difficulty has been growing their subscriber bases. While millions of U.S. households are willing to pay for $30 or more each month for cable/satellite service, only a tiny percentage of the country appears to be willing to spend a smaller amount for music access. And the problem with free, ad-supported streams is that ad rates simply aren't high enough to allow the streaming services to offer reasonable payments to labels for each stream, let alone generate enough profit to support and grow the company. (See this recent post on Spotify payouts.)

Apple, however, should it choose to offer some sort of free streams via iTunes, has one major advantage over any other streaming music provider: It doesn't have to make money from it. Apple has famously claimed that it essentially breaks even on music sales from the iTunes store. Yet given how many high-margin iPods and iPhones Apples sells, it could even stand to lose money on iTunes music sales, provided that they encourage the purchase of Apple hardware. Ditto for free streams.

The numbers here are a little different, of course, as a one cent or 1/2 cent payout per stream means each song played is a net negative for Apple. But if a Lala-style "stream any song once" option encouraged additional iTunes music sales or iPod purchases, it could make sense for Apple.

Thank you to my friend Jeff Kelley for the title post!

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June 03, 2010

eMusic's Per-Song Payout for Q1 2010
by David Harrell
eMusic banner

After major changes to its subscription plans in the summer of 2009, the per-download payout from eMusic to the labels in its catalog continues to grow. For the first quarter of 2010, the payout rate for U.S. downloads was 40 cents, a slight increase over the Q4 2009 payout of 39 cents. That amount, however, is more than a 30% increase over the payout rate for the same quarter in 2009.

For comparison, here are the payout rates for the past five quarters:
Q1 2009 30.5 cents
Q2 2009 33.4 cents
Q3 2009 34.2 cents
Q4 2009 39 cents
Q1 2010 40 cents
A quick primer for those unfamiliar with the eMusic model: Rather than paying a fixed per-song amount like iTunes and Amazon MP3, eMusic shares 60% of its subscriber revenue, minus certain deductions, with the labels in its catalog. That shared revenue translates into a per-track amount, based on total subscriber download activity for the quarter.

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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    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