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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November 28, 2011

For Love or Money: Minimum Wage Musicians
by David Harrell
Digital Music News put a more negative spin on the TuneCore blog post I wrote about last week. Jeff Price of TuneCore responded over at Hypebot.

Instead of writing something new, I'm going to be lazy and quote myself, from an interview I gave to the excellent Fingertips music site two years ago:
"...other than government-funded stipends for every musician, I don't think there's a way to guarantee that all musicians will earn a living. I'm not arguing that musicians don't deserve a living wage, but it's a simple fact that -- and this is the case with any creative field -- you have more talented people than the market for their collective talent can reasonably support. And you've got more of them every day, as it's easy for anyone to release music today..."
The vast majority of TuneCore-distributed artists aren't earning the equivalent of minimum wage from their music sales, but that shouldn't be seen as a slam on TuneCore. That's the situation for almost all musicians -- and that includes most well-known professionals. From this blog's 2010 interview with Jonathan Segel of Camper Van Beethoven, someone who has had more "success" than most musicians, yet has rarely supported himself on his music income alone:
"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."

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November 23, 2011

TuneCore Releases Some Fascinating Sales Numbers
by David Harrell
To combat the blog meme that "artists not signed to major labels do not sell music or make money," TuneCore posted a fascinating document on its blog -- a July 2011 sales spreadsheet for all of the TuneCore-distributed artists who earned more than $100 in digital music royalties for the month.

Clearly, some TuneCore-distributed artists have a lot to be thankful for tomorrow -- 60 of them had digital royalties of more than $10,000 for the month, with three of them breaking into six-figure territory:

TuneCore sales chart


A couple of thoughts:

1. Some non-major label artists are obviously selling a lot of music. Yet there's a wide range of "self-released" artists in the TuneCore catalog, ranging from folks who are recording themselves in their bedrooms using Garageband to ex-major label artists with serious management teams and backing. It's certainly possible that some of that former group is among those at the top of the list above, but I'd bet it skews toward the latter group.

2. TuneCore has approximately 600,000 artist accounts and just 5,938 made the $100 cutoff point for the spreadsheet, meaning that less than 1% of TuneCore artists earned more than $100 in digital royalties for the month. That's not surprising, given that the average TuneCore client earns $179 a year in digital music royalties.

That's not an indictment of TuneCore, but it's another example of something that applies to musicians on labels of any size, as well as those who are truly independent: While relatively few of them are successful when it comes to music sales, those who are can do quite well.

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November 21, 2011

Google Music and Self-Released Musicians: What's In It For Google?
by David Harrell
Google Music banner
As I wrote last week, as a self-released musician, I was happy to see that Google Music includes the option for musicians to add their material to its music store, without having to go through a distributor. I wish the same option were available for Apple's iTunes.

But what's the real upside for Google? Most self-released artists don't sell a lot of music (though some do, see the update below) and most music fans coming to the Google Music store for the first time won't be looking for such material. Also, even if this music were considered a necessity for the Google Music catalog, Google already has relationships in place with TuneCore and CD Baby, so there's little barrier to entry and much, if not most, of that self-released material will eventually end up in Google's catalog.

There is, of course, the $25 setup fee. If a large percentage of the combined client base of TuneCore and CD Baby (more than 860,000 artist/client accounts, based on figures released by the two firms), sign up for Google's Artist Hub service, it could mean millions in setup fees. Yet that doesn't seem like much money when you consider that Google's revenue for the trailing 12 months is more than $35 billion.

For Google, the biggest advantage in courting self-released musicians might be the greater enthusiasm, and in-bound links, that result from giving such artists control over their catalogs. As with Facebook and Google+, Google has entered another market where it must battle a dominant service, Apple's iTunes Music Store, in addition to well-established alternatives like Amazon MP3 and eMusic. Perhaps the musicians who use the Artist Hub service will be more likely to push their fans to the Google Music store via their websites and social media posts. And even if relatively little of this self-released music is ever purchased, anything that directs music fans to Google Music can't be a bad thing for Google.

UPDATE, 11/23/2011: While most self-released musicians aren't selling a lot of music, a small subset of them are quite successful, as revealed by the numbers in this post on TuneCore's blog. Sixty TuneCore-distributed artists received more than $10,000 for digital music sales for the month of July 2011, with three artists receiving more than $100,000 for digital music sales for the month. Still, Google Music doesn't need a direct relationship with these artists to have their material in its catalog, as TuneCore artists can opt to have TuneCore deliver their albums to Google.

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November 17, 2011

What I Like About Google Music for Self-Released Musicians
by David Harrell
Google Music banner
Maybe it's a coincidence, but the Artist Hub feature of Google Music, which allows self-released musicians to upload and sell their albums, reminds me a lot of Bandcamp. As with Bandcamp, Artist Hub allows musicians to set their own prices. Changes are apparently instantaneous, as Google is touting the ability offer "flash sales" with short-term price reductions. And both services can be used to quickly release live recording or demos.

Unlike Bandcamp, Google charges a one-time fee of $25 to set up an artist page, but as with Bandcamp, there are no ongoing annual fees or per-album setup charges. Google takes a 30% cut on all sales and payments are made monthly. I was glad to see that unlike Google Adsense, which has a $100 minimum payment threshold, the minimum Google Music payout is only $1.

Google Music already has relationships with TuneCore and CD Baby, so if you use either service to distribute your music, you don't have to do anything -- your music will soon show up in the Google Music even if you don't create your own artist page. In my case, going direct would also eliminate paying the 9% commission to CD Baby, though you'll need ~$397 in Google Music sales ($397 x the 70% Google payout rate x the 9% CD Baby commission) to offset the $25 charge. But even if it takes a while to reach that amount of sales, or your music is distributed by TuneCore, which doesn't charge a commission, the ability to control your artist page, set/change prices, and to easily add and remove albums seems worth the one-time fee.

Finally, while I completely understand why Apple didn't want the hassle of working directly with self-released musicians, I wish the same option were available for iTunes.

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November 15, 2011

ReDigi and the RIAA
by David Harrell
And so it begins -- from today's NY Times article on ReDigi:
Last Thursday the Recording Industry Association of America, which represents the major record companies, sent ReDigi a cease-and-desist letter, accusing it of copyright infringement.

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November 11, 2011

Friday Flashback Fun: An Optimistic Outlook for Recorded Music, from 1888!
by David Harrell
Edison phonograph illustration from 1888 Scientific American magazine
From what I've read, even though the first thing Thomas Edison ever recorded was his own performance of "Mary Had a Little Lamb," he originally envisioned audio recording for preserving dictation, not music. This 1888 article (PDF) is the earliest reference I could find in the Scientific American archive at Nature.com (which is free until the end of the month, hat tip to Alexis Madrigal) to the selling of recorded music:
Another new device perfects the method of duplicating phonograms containing matter which may be worth selling, such as books, music, sermons, speeches, or plays.
Another interesting tidbit: The early plan was to rent, not sell, the playback devices:
In the United States, the Edison and Tainter patents on the phonograph have been purchased by the North American Phonograph Company, of New York, and the corporation expect to make of it the strongest sort of a monopoly. They have fixed the capital stock, as a starter, at the modest sum of $6,600,000, and will doubtless increase the amount, if the invention succeeds as well as they expect. The company proposes to follow the footsteps of the Bell Telephone Company in scooping in money. That is to say, the phonographs will be rented, not sold, the rental each year being say $40, or say five times more than the first cost of the instrument.

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November 10, 2011

Thursday Odds and Ends: CD Baby Pushes for Direct Digital Sales
by David Harrell
CD Baby has lowered its commission for direct-sold mp3s and is encouraging musicians to direct their fans to the CD Baby website for download sales. From an e-mail that went out today:
On every digital purchase (single song or album) made from CDBaby.com, you'll get paid 75% of the selling price. That means for a single-song download priced at $0.99, CD Baby has lowered our cut, so you'll now make $0.74 per song.
For comparison purposes, iTunes pays out 70 cents on a 99-cent download. CD Baby artists pay a 9% commission for digital sales, leaving them with a 63.7 cent payout for the download. The math is even better for CD Baby when it sells downloads directly, as opposed to collecting a cut on sales via iTunes or other digital stores. A 25% cut of 99-cents is almost four times the 9% commission on 70 cents, though in this case CD Baby also has to pay any credit card transaction fees.

Amazon's decision to discontinue its affiliate program in California has put the hurt on one of my favorite Internet radio stations, SomaFM:
SomaFM was quite dependent on the commissions from this affiliate program, and we are disappointed at the way Amazon and the State of California have handled this situation. Once again, it's the little businesses that get hurt.
Jeremy at Fingertips has an essay on social music that's worth a read.

And while sampling is considered a valid creative technique for creating music, that's not the case for spy novels:
"Entire sequences are from other novels," said Mr. Duns. "He didn't even bother to rework anything. It must be the worst case of plagiarism I've ever seen. How did he think he'd get away with this? He fooled me, but others were bound to notice eventually--as they did."

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November 03, 2011

Some Quick Thoughts on TuneCore's Songwriter Service
by David Harrell
As a self-released musician and self-published composer, I'm intrigued by TuneCore's new Songwriter Service. While some of the royalties that TuneCore wants to collect for songwriters already appear on my BMI statements (YouTube plays, Internet streams, etc.) I have no idea what's not making its way into my account. And I know for certain that I'm not receiving mechanical royalties for downloads of my band's music by eMusic subscribers in Europe. For European downloads, eMusic pays the mechanical royalty directly to the Dutch author society Buma/Stemra. While I had always assumed that those royalties would eventually make their way to me via BMI, it turns out that BMI doesn't collect this income, as it's for music sales, not performances.

My one concern with the new TuneCore service was that Apple and other digital retailers already include the standard 9.1 cent mechanical royalty as part of their payouts on U.S. download sales. For example, as a self-released musician, I receive 70 cents (before any commissions) from my digital distributors for a 99-cent iTunes download. In theory, 9.1 cents of that amount goes to the songwriter/publisher, but I skip the step of writing a check to myself. If TuneCore collects that 9.1 cents directly from Apple and other retailers, then take its 10% commission before passing on the remainder, a self-released musician/composer would actually earn a penny or so less per iTunes download by using the service.

But in an e-mail exchange with TuneCore's Jeff Price, he told me that Tunecore wouldn't collect the mechanical royalty for U.S. downloads sales, noting "the agreement to represent the songwriter would allow TuneCore to take 10% commission on the on the mechanical royalty owed to the songwriter (a little less than a penny), we made the decision not to do this for U.S. download sales for the exact reason you point out."

In my case, my total music sales and streams are modest enough that it might take a while to recoup the $49.99 sign-up fee. Still, when the service becomes available to all songwriters (at launch it will only be offered to TuneCore clients and I'm currently not distributing any albums via TuneCore), I'll probably sign up.

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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