Digital Audio Insider

The Right to Re-Sell Purchased Digital Content

2012-01-27T13:41:00.004-06:00

I've long believed that the pricing of digital albums, with the exception of the sub $5 specials at Amazon MP3 and the cheaper offerings in the eMusic catalog, too often fails to account for the loss of the potential resale value that purchasers of music CDs enjoy.

But from the details in this WSJ piece on Apple's foray into the digital textbook market, it appears that Apple is offering a substantial discount from physical book prices, one that is much greater than that of most digital music:

"It's nothing new," said Gonzalo Garcia, director of technology, marketing and communications for the South Kent School, an all-boys boarding school in Connecticut, though he said the "shocking news" was the $15 price. Currently, students pay $20 to $60 for a 180-day rental or splurge as much as $100 for a higher-end title.

Meanwhile, ReDigi has responded to the complaint from EMI Capitol Records about the ReDigi marketplace for used digital music. (A PDF of the ReDigi response can be found here, along with a letter to the district judge who is overseeing the case.)

While I don't have enough knowledge of copyright law to offer any informed comments on the underlying legal arguments, I will say, that as a consumer, I'm philosophically in favor of the right to re-sell legally purchased digital content. And if that right is given up as we move from physical to digital content, the pricing of digital goods should reflect that concession.

related: The Digital Pricing Conundrum Part IV: The Loss of Resale

tags: digital music digital textbooks re-selling digital content ReDigi Apple AAPL

One Quick SOPA Thought

2012-01-19T11:11:00.002-06:00

I've mentioned it before, but the one thing that really struck me yesterday was the incredible power/platform that Google's homepage provides. It's something that has to be used sparingly, but Google can instantly air its views or promote a cause without spending a penny on advertising or lobbying. (Though GOOG does spend big bucks on the latter!)

tags: Google GOOG SOPA

The Top 7 Digital Audio Insider Posts of 2011

2011-12-30T15:55:00.004-06:00

The seven posts below generated the most page views, comments, and/or e-mails for this site over the past year. Thanks to everyone who read, commented, linked, and e-mailed. Happy New Year!

Spot the Spotify Payment
...the average streaming rate is small enough that it'd take 244 Spotify spins to equal the label cut of a 99-cent iTunes download. But the real question here, in terms of artist/label compensation, is what Spotify activity actually represents. That is, is it simply a new revenue stream, providing income from listeners who don't normally purchase music, or is there also a cannibalization factor, where some listeners opt for streaming over actual purchase? read more

A Few Thoughts On Pandora
Does Pandora's Music Genome-based programming give it a competitive advantage? That is, does it result in a better listener experience than with Internet stations like Last.fm, where "similar" artists are determined by listener overlap (listeners of artist A also like artist B), as opposed to song qualities? read more

The Downside of eMusic's Currency Pricing
Even after last year's subscription changes, average album prices at eMusic are no doubt less than the average prices at iTunes, Amazon MP3, and other digital music stores. Yet I believe that eMusic's switch from a credits system to currency pricing, in combination with Amazon MP3's $5 album deals and daily specials, presents a real challenge to eMusic's subscription-based business model. read more

How Much Does Rhapsody Pay Artists?
Here's how I'm paid for my self-released albums in the Rhapsody catalog:

1. A penny per stream. For albums distributed by CD Baby and TuneCore, I receive one cent per listener stream. CD Baby, which uses a commission business model, takes a 9% cut, resulting in a .91 cent payout per stream. TuneCore, which charges an annual maintenance fee for each album, passes on the full one cent. This one-cent rate has remained steady and unchanged from September 2004 to the present. read more

The Convergence of Owning Music and Renting Music
There are real differences, both logistical and psychological, between owning and renting music. But I'll bet that the preference for ownership will decrease as the listening experience for "owned" and "rented" music converges. read more

The Ethics of Downloading Music You've Already Paid For
An eMusic subscriber loses $200 worth of his downloads and posts this question to eMusic's message board: Is it ethical to download those same tracks from illegal sources (such as P2P sites)?

I was somewhat surprised by the responses -- by more than a 3 to 1 ratio, his fellow subscribers voted "no," most of them rather emphatically. Then again, maybe that's not surprising, as eMusic subscribers are a self-selected group of music fans who are willingly paying for digital content that they could probably download elsewhere free. read more

A Funny Spotify Experiment: Why Judas Priest Sounds Just Like Jerry Reed
The fact that the Spotify interface allows you to play tracks stored in your iTunes and Windows Media libraries made me wonder what happens when you use Spotify to "stream" a track you already own. From a performance standpoint, it makes sense for Spotify to pull the file from your hard drive. And doing so would also -- in theory -- relieve Spotify of any obligation to compensate the record company for that play, as the situation would be no different than listening to a track in iTunes. read more

tags: digital music Spotify eMusic Rhapsody

Another Advantage for Google

2011-12-28T10:33:00.004-06:00

Something I noticed for the first time this morning -- Google is plugging its Android music market on its home page:

Given the number of page views, Google's ability to advertise on its main page gives it a huge built-in advantage for almost any market.

tags: digital music Google Music GOOG

Christmas Layaways

2011-12-15T15:34:00.004-06:00

My apologies for the lack of recent posts -- I'm working on an in-depth piece on the economics of Spotify for next week. It'll address the cannibalization issue and the recent decisions by various acts and labels to withhold new material from the streaming service.

In the meantime, if you're in the mood for some seasonal music, please give a listen to "Maybe Next Year," the 2009 holiday album by the Layaways:

Maybe Next Year by The Layaways

If you like what you hear, we're giving away a free download of O Christmas Tree and a free download of Silent Night. The full album is available at the usual digital outlets -- iTunes, Amazon MP3, eMusic, Bandcamp, and Android Music. And it's streaming on Spotify, of course!

tags: digital music the Layaways Spotify

Thursday Odds and Ends: Digital Magazine Archives, eMusic Redesign, and Rumblefish and CD Baby

2011-12-08T13:43:00.003-06:00

I'm no follower of fashion, but as someone who read every single issue of Rolling Stone in my high school library's archive from cover to cover, I'm intrigued by Vogue's new online archive:

The result is a pop-culture data mine covering 120 years of American desires and aspirations. More than 425,000 images, 300,000 ads, and 100,000 articles, dating back to 1892, have been fully indexed and are searchable.

With an annual fee of $1,575, it's priced for business customers, not consumers. Will this sort of thing eventually become available for every magazine? I find it easy to get lost in the free Life magazine archive at Google Books.

The new site design of eMusic isn't drawing raves from subscribers, at least from the ones who are posting to eMusic's message boards. One commenter thinks the new design was actually optimized for the iPad:

Maybe I am reaching, but it looks like they want to make it presentable on the IPAD, but you can use it anywhere. Getting around the site is much easier on touch screen than by mouse.

Finally, Rumblefish will soon make the entire CD Baby catalog available for licensing and will add 3.5 million CD Baby-distributed tracks to YouTube's AudioSwap library. While it's a new outlet for CD Baby artists not in the AudioSwap program, the influx of additional content means musicians who are already there will have more competition for placement. As I noted last summer, my band receives a very modest royalty payment every quarter for YouTube plays of our songs that have been "swapped" into videos like this one:

tags: digital music Vogue magazine archive eMusic Rumblefish CD Baby

Some Details About the Google Music Store and Self-Released Artists

2011-12-01T13:12:00.004-06:00

One pleasant surprise: Google Music waives the $25 setup fee if an act is already included Google's database. (Thanks to Chris, who mentioned the fee waiver in a comment to my post at Hypebot.) The Layaways were already there, so I claimed the page for no charge.

Pricing Details:
Albums can be designated as "free" or for any dollar amount, as long as it ends in 49 or 99 cents.

Individual songs can be priced as "free," 49 cents, 69 cents, 99 cents, $1.29, or "album only."

You can edit album and individiual song prices after an album is published, but the changes aren't instant, as they are with Bandcamp. They do, however, appear in a few hours.

There's no need to enter a UPC barcode number for a release, or ISRC codes for individual songs. So, like Bandcamp, Google Music makes it easy to release collections of demos, live performances, etc.

Currently, Google only allows basic control over artist pages. You can add an artist bio, one picture, and links to your Google+ page (of course!) and other websites, but that's about it. At the album level, there's no ability to add descriptive text, press quotes or reviews, or album credit information.

Overall, the process was relatively straightforward and reasonably fast. I uploaded audio tracks and the artwork for the Layaways 2009 holiday album late Monday afternoon and it was available in the Android Music Market by Wednesday morning.

related: Google Music and Self-Released Musicians: What's In It For Google?, What I Like About Google Music for Self-Released Musicians

tags: digital music Google Music Bandcamp self-released musicians

For Love or Money: Minimum Wage Musicians

2011-11-28T13:09:00.002-06:00

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."

tags: digital music musicians and minimum wage TuneCore

TuneCore Releases Some Fascinating Sales Numbers

2011-11-23T14:33:00.004-06:00

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:

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.

related: Stop the Presses: Most Self-Released Artists Earn Very Little from Digital Music Sales

tags: digital music TuneCore music sales

Google Music and Self-Released Musicians: What's In It For Google?

2011-11-21T13:21:00.008-06:00

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.

related: What I Like About Google Music for Self-Released Musicians

tags: digital music Google Music GOOG iTunes self-released musicians TuneCore CD Baby Amazon MP3 eMusic

What I Like About Google Music for Self-Released Musicians

2011-11-17T16:27:00.006-06:00

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.

tags: digital music Google Music Bandcamp iTunes self-released musicians TuneCore CD Baby

ReDigi and the RIAA

2011-11-15T09:41:00.002-06:00

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.

Friday Flashback Fun: An Optimistic Outlook for Recorded Music, from 1888!

2011-11-11T14:45:00.004-06:00

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.

tags: Thomas Edison 1888 Scientific American

Thursday Odds and Ends: CD Baby Pushes for Direct Digital Sales

2011-11-10T16:06:00.003-06:00

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."

tags: digital music iTunes CD Baby

Some Quick Thoughts on TuneCore's Songwriter Service

2011-11-03T15:53:00.003-05:00

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.

tags: digital music TuneCore Songwriter Service digital music royalties mechanical royalties iTunes eMusic

Friday Flashback Fun: Goodbye to R.E.M.

2011-10-28T15:50:00.005-05:00

I have to post something, even if it's a little late, about the demise of one of my favorite bands of my youth. Up first, via Slicing Up Eyeballs, is an incredible clip of a pre-R.E.M. Michael Stipe in a local St. Louis TV news story about "Rocky Horror Picture Show" fans. Look and listen for Stipe, dressed as Frank-N-Furter, at the 1:25 mark:

And a clip I posted a few years back, of the band performing my favorite R.E.M. song on David Letterman. Note the discussion with bassist Mike Mills @ 1:01 about the effect of the lower-than-average list price for the group's debut album ($6.98 vs. the then-standard $8.98) on record sales:

tags: R.E.M.

The Convergence of Owning Music and Renting Music

2011-10-27T16:19:00.002-05:00

image by TheTruthAbout via Flickr

Earlier in the week, Hypebot pointed to this eMarketer summary of two recent studies about consumer attitudes about owning music vs. renting it:

The first of the two studies was a survey conduced by Insight Research Group on behalf of eMusic that revealed the widely noted insight that 91% of those polled preferred to own music rather than subscribing to it.

There are real differences, both logistical and psychological, between owning and renting music. But I'll bet that the preference for ownership will decrease as the listening experience for "owned" and "rented" music converges. If you're using a website or app to listen to music on your computer or portable device, where the files are coming -- your hard drive, your cloud drive, or the server of a music subscription service -- doesn't have much effect on your listening experience. And a year from now, even more people will be using Spotify, iTunes Match, Amazon's Cloud Player, Google Music, and other services to listen to music. The more they do, the more willing they'll be to forgo actual ownership.

Music ownership isn't going away, as there are plenty of circumstances where a streaming service can't replicate what can be done with purchased music -- burning it to a disc, easily copying it, playing it without an Internet connection -- and, for the present, the sound quality of a CD is much higher than what's available from any streaming service. Yet for me, there's already plenty of music for which the ability to stream it suffices.

tags: digital music music streaming music rental music subscriptions

Two Quick Thoughts About ReDigi

2011-10-18T14:02:00.002-05:00

A couple things that surprised me about the launch of ReDigi, the platform for buying and selling "used" digital music tracks:

1. No Lawsuits
Don't get me wrong, I'm glad that someone is making a strong stand for establishing a "first sale" right for digital goods. (ReDigi's FAQ section makes it clear that the firm believes the first sale doctrine gives it legal cover.) And I've long believed that digital albums are overpriced relative to CDs, given the lack of resale value. But I'm amazed that ReDigi has made it this far without being sued by the major labels or music publishers. As I noted earlier in the year, the user agreements for Amazon MP3 and eMusic prohibit the transfer of purchased music files to other parties. (I couldn't find explicit language in the iTunes user agreement forbidding the transfer of files to another party, but I assume it's in there somewhere.) It seems extremely unlikely that the labels and publishers won't soon file lawsuits. Scott Kirsner of the Boston Globe contacted the RIAA, Sony Music, and Warner Music but couldn't get anyone to comment on ReDigi.

2. The Prices
If you're selling a used car with zero miles on the odometer, you'd probably ask for something close to the price of a new one, and there's obviously no wear and tear on a digital file. Yet while the "starting at 59 cents" prices at ReDigi are a healthy discount from a $1.29 or 99-cent download, in many cases you could buy the same tracks "new" for less at eMusic, which has tens of thousands of digital tracks available for 49 cents. I suppose, however, there's only so low ReDigi can go with prices, as it has to charge enough to make selling your digital tracks an attractive option.

related: Re-ReDigi: More Details Emerge About the Used Digital Music Marketplace, A Marketplace for Used Digital Music?, The Digital Pricing Conundrum Part IV: The Loss of Resale

tags: digital music ReDigi eMusic used digital music first sale

How Much Does Rhapsody Pay Artists?

2011-10-10T10:07:00.003-05:00

Last week, Paul Resnikoff of Digital Music News asked some basic questions about how much the music streaming services pay labels/artists. He had a hard time getting detailed responses from any of the firms he contacted, including Rhapsody.

Here's how I'm paid for my self-released albums in the Rhapsody catalog:

1. A penny per stream. For albums distributed by CD Baby and TuneCore, I receive one cent per listener stream. CD Baby, which uses a commission business model, takes a 9% cut, resulting in a .91 cent payout per stream. TuneCore, which charges an annual maintenance fee for each album, passes on the full one cent. This one-cent rate has remained steady and unchanged from September 2004 to the present.

It's certainly possible that the major labels were able to negotiate a higher per-stream payout rate. I doubt, however, that any artist signed to a major label is receiving more than a cent per stream, as the payout to the artist depends on the recording contract. My guess is that most major-label artists ultimately receive a small fraction of a cent for each Rhapsody stream.

2. As mentioned in Resnikoff's post, there are also payments to songwriters and music publishers, in addition to fees paid to labels, to consider. Starting in late 2010, payments for "Rhapsody Mechanical Royalties" began showing up in my CD Baby account. Here, however, the per-stream amount varies from month to month and I've seen payments ranging from .13 cents per stream to .28 cents. The payout rate appears to correlate roughly with the date, with higher rates for more-recent performances.

3. Finally, small payouts show up for "Rhapsody Inter" on my BMI statement, approximately .16 cents per performance. I assume these payments are for plays by non-U.S. Rhapsody subscribers. I'm a self-published songwriter, so I receive all royalties paid to BMI for performances of my songs. If I were signed to a publishing company, half of those royalties would be paid to the publisher.

tags: digital music music streaming payments music subscriptions Rhapsody

Steve Jobs in 1981

2011-10-06T09:09:00.004-05:00

Via Google books: Except for the product names and dates, the quotes in this 1981 New Scientist piece on Steve Jobs sound remarkably recent:

tags: Steve Jobs Apple 1981

The Flaw in the Standard Apple vs. Amazon Digital Pricing Story

2011-10-04T15:50:00.005-05:00

Amazon's price for the upcoming Kindle Fire ($199) conforms to the storyline that has emerged over the last year or so about the respective digital pricing strategies of Amazon and Apple. That is, Apple's happy to break even on digital content sales because its iPods, iPhones, and iPads are so profitable, while Amazon prices its hardware aggressively to encourage the sales of profitable digital content.

But there's a slight problem with this narrative: digital content is often cheaper at Amazon. For example, as of this afternoon, the top 10 tracks in the iTunes store are selling for $1.29 each, while eight of those songs are available for just 99 cents each at Amazon MP3. You'll find a similar trend for digital albums -- most of the top 10 sellers are less expensive at Amazon MP3. (Due to the switch to the "agency model," prices for the best-selling digital books are usually the same in both stores.)

Unless Amazon is losing money on all of this digital content in order to build its market share (that's clearly happening in certain cases), the digital content sold by Apple is probably more profitable than generally assumed. (Way back in 2008, Saul Hansell suggested that Apple was sandbagging when it discussed the profitability of iTunes sales.) If so, it means Apple has been able to exact a premium price for both its hardware devices and the digital content that fills them.

Update: After I posted a link to this story on Google+, my friend Aaron made a comment about the role of content providers in setting prices, something I probably should've addressed in the original post. As far as I know, Apple and Amazon pay the same wholesale prices to labels and digital distributors. Yet Amazon is consistently using a smaller markup for its retail prices. While the premium Apple commands for its hardware is easy to explain (design, usability, brand appeal, etc.), the willingness for consumers to pay higher prices to Apple for identical digital content is harder to understand. I suppose it comes down to the convenience of the single system, even though music purchased from Amazon will download directly to your iTunes library!

related: Amazon MP3's $3.2 Million Customer Acquisition Experiment

tags: digital pricing strategies digital music Amazon MP3 AMZN Kindle Apple AAPL iTunes iPod iPhone iPad

Monday Odds and Ends: Beatles Edition

2011-09-26T13:21:00.002-05:00

I'm a life-long Beatles fan, but this bit from Peter Doggett's "You Never Give Me Your Money" was news to me:

In a strange precursor of the 'Home taping is killing music' campaign of the 1980s and the 21st century concern about illegal downloads, Lennon and McCartney feared that record sales would suffer if the newly devised cassette tape recorder went into mass circulation. Mardas developed an electronic signal that could be added to recorded sound to prevent it being copied. 'It seemed quite possible,' noted commentator Tony Palmer in 1969, 'that within a few years, every single record sold anywhere in the world would carry this device, and thus pay to the Beatles a royalty.'

The Wall Street Journal collects some negative quotes about the band, from "10 Ways to Recycle a Corpse" by Karl Shaw.

And nearly one year after the introduction of Beatles music to the iTunes catalog, George Harrison's "Here Comes the Sun" remains the top-selling digital Beatles track. Harrison compositions also account for three of the top-12 tracks on the group's Last.fm listener chart. As a composer, Harrison famously had to fight for space on Beatles albums -- I wonder if the emergence of this type of data has altered the internal dynamics of modern bands with multiple songwriters. It not just ego or the struggle for artistic expression -- songwriting and performance royalties (the latter are paid only to the composer and publisher for terrestrial radio play in the U.S.) often dwarf those from music sales and can result in huge income disparities among band members.

tags: digital music iTunes the Beatles George Harrison

Tuesday Odds and Ends: Unlimited Cloud Music Storage from Amazon

2011-09-06T16:38:00.004-05:00

I opened my Amazon Cloud Player for the first time in a while and noticed that Amazon has quietly (no press release, I believe) upped the storage limits for mp3 and AAC music files, perhaps in an anticipation of the release of Apple's iTunes Match. All paid Amazon Cloud storage plans now include unlimited space for music files:

BTW, my "$20 a year" subscription was a freebie upgrade after purchasing a $2.99 album from Amazon MP3. Cloud storage isn't free, but if anyone can afford to give it away, it's Amazon.

From a Billboard interview -- why Lindsey Buckingham opted to self-release his new album:

How did you go from lifelong major-label artist to self-releasing Seeds We Sow?

My deal with Warner Bros. had expired. Trying to shop this album was kind of like starting over. I actually started [shopping] with Warner Bros. [chairman] Rob Cavallo, who is a friend of mine and is in this new position over there. Rob liked it a lot, and then he had to go back and deal with the people in Burbank [Calif.], and when I talked to him on the phone, he started talking about the numbers he had to make quarterly, and I thought, "Well, that's the end of that." I did talk to a few independent labels and finally decided that what they were doing was something I could probably just as easily do myself.

Finally, I haven't digested the entire piece, but the following paragraph was excerpted on Andrew Sullivan's blog and it got me thinking about ego gratification and self-released musicians:

I'm astonished at how readily a great many people I know, young people, have accepted a reduced economic prospect and limited freedoms in any substantial sense, and basically traded them for being able to screw around online. There are just a lot of people who feel that being able to get their video or their tweet seen by somebody once in a while gets them enough ego gratification that it's okay with them to still be living with their parents in their 30s.

Without the new forms of gratification that the Internet has enabled for musicians -- music blog posts and reviews, Last.fm listening stats, etc. -- would we see much less self-released music? It's not the primary reason I record and release music, but there is a level of feedback/audience reach available today that was unimaginable a decade or so ago, and it's a "payment" of sorts for your efforts. Back in the day, a self-released album could easily disappear without a trace. Today, you can at least count on a minimal amount of online attention, even if sales are minimal.

tags: digital music Amazon AMZN iTunes self-released music

Friday Flashback Fun: 1983 Apple Commercial

2011-08-26T09:32:00.003-05:00

I don't have anything profound to say about Wednesday's news about Steve Jobs, but it somehow reminded me of something I posted a few years back -- this 1983 Apple commercial, where Kevin Costner bikes to the office on the weekend (with the family dog) to work all on night on his Apple computer:

tags: Apple AAPL Steve Jobs Kevin Costner 1983

Friday Flashback Fun: Time Magazine's October 2000 Cover Story on Napster

2011-08-05T14:52:00.003-05:00

Time flies -- it's hard to believe that this was all happening more than a decade ago:

The issue may come down to what Napster lead attorney David Boies, who successfully prosecuted the Department of Justice's case against Microsoft, describes as "the definition of commercial or noncommercial uses." It is perfectly legal for consumers to copy music for their own enjoyment--i.e., noncommercial use. Congress has even declared, in the Audio Home Recording Act of 1992, that it is legal to make recordings and lend them out to people, provided it is not done for commercial purposes. It is unlawful, of course, if it's done to make a profit. "The law does not distinguish between large-scale and small-scale sharing or lending," insists Boies, who puts Napster's chance of winning the suit at fifty-fifty.

tags: digital music Napster Time Magazine 2000

Is Apple's Stock a Buy? Either Way, You Probably Already Own It

2011-07-27T12:58:00.002-05:00

Apple's stock has had quite the run over the past few years -- it's up more than 290% since the beginning of 2009 and it closed yesterday at more than $400 a share. Even though Apple (AAPL) is only about the 35th largest company in the U.S. when measured by total revenue, in terms of total market capitalization (the total value of all of its shares), it's now the second biggest public company in the U.S.

Some stock analysts, including those at Morningstar (my employer) argue that Apple has established some unique competitive advantages over its rivals. Others are more pessimistic, pointing to concerns such as the health issues of CEO Steve Jobs, the potential vulnerability of having such large percentage of revenue coming from the iPhone line, and that relatively expensive products put Apple at a disadvantage in some markets.

Yet whatever your opinion of the prospects of Apple, and even if you've never considered purchasing the stock, you probably already own some of it. Apple is the second-largest component of the S&P 500 index and most retirement plans include index funds that seek to mimic the performance of the S&P by holding most (if not all) of its underlying components. So if you invest in such a fund via a 401(k) or 403(b) retirement plan, you currently own approximately $3 of Apple stock for every $100 invested in that fund. And some actively-managed stock funds have an even larger percentage of their assets invested in Apple. (In interest of full disclosure, I own exactly three shares of Apple directly and have additional exposure to the stock via my mutual fund holdings.)

You can, of course, say the same thing about most large public companies. That is, if you hold stock mutual funds, you own, indirectly, most well known firms, including other tech giants such as Google, Microsoft, and IBM. But if you're a fan of Apple products, perhaps it's some consolation to know that a portion of the money you've spent on your iPod, iPad, or iPhone might -- in theory -- make its way back to you if it helps increase the price of Apple's stock.

tags: digital music Apple AAPL

Friday Flashback Fun: Rock Stars and Their Parents in 1971

2011-07-22T12:50:00.008-05:00

Here's the main reason I really want an iPad (or the upcoming tablet from Amazon): The amazing collection of magazines scanned at Google Books. You can't print or download them, so a tablet computer seems like the ideal way to browse and read them.

This 1971 Life cover story is a trip, with photos of various music stars with their parents, including Elton John at the tender age of 24.

tags: digital music Google Books 1971 Life Magazine rock stars and their parents

A Funny Spotify Experiment: Why Judas Priest Sounds Just Like Jerry Reed

2011-07-21T17:08:00.003-05:00

The fact that the Spotify interface allows you to play tracks stored in your iTunes and Windows Media libraries made me wonder what happens when you use Spotify to "stream" a track you already own. From a performance standpoint, it makes sense for Spotify to pull the file from your hard drive. And doing so would also -- in theory -- relieve Spotify of any obligation to compensate the record company for that play, as the situation would be no different than listening to a track in iTunes.

After a quick experiment, I can confirm that Spotify (at least the free subscription I'm using) will default to a local file, if one is available.

I deliberately looked for a song on Spotify that I didn't own, the Judas Priest classic "Living After Midnight," and noted its length. I then searched my iTunes library for songs with the exact same length and Jerry Reed's "She Got the Goldmine (I Got the Shaft)" seemed the most ridiculous match (yes, for some reason I actually downloaded that song from eMusic...). I made a copy of the mp3 file and changed the ID tags of the copy to match the artist, song title, and album for "Living After Midnight."

Sure enough, when I play "Living After Midnight" using Spotify, I hear Jerry Reed instead of Judas Priest. However, the song appears multiple times in the Spotify catalog on different compilation records. So if I stream a version from a different album, I hear the actual Judas Priest song, as served up by Spotify. As it turns out, the song lengths don't need to match, just the ID tags -- "Hell Bent for Leather" now sounds exactly like the Flaming Lips...

Judas Priest -- Living After Midnight:

Jerry Reed -- She Got the Goldmine (I Got the Shaft):

related: More On Spotify, A Very Quick Spotify Review, Spot the Spotify Payment, Our First Spotify Payouts

tags: digital music Spotify music subscriptions Judas Priest Jerry Reed

More On Spotify

2011-07-20T13:57:00.004-05:00

About that download application: In my quick review of Spotify, I was mildly surprised that it wasn't browser-based, like the other streaming subscription services. This Businessweek story explains why:

Spotify owes a more direct technical debt to file sharing: The very technology that makes it so fast is borrowed from techniques honed while sharing pirated files. Both Ek and, later, two of his engineers say that once you click a button, anything that happens within 200 milliseconds seems directly under your control. To beat 200 milliseconds, Spotify runs not as a Web service but as an application on your computer. (According to Ek, the local application allows the company to supply labels with more granular data than other streaming services as well.) Songs you listen to often on Spotify sit, encrypted, on your hard drive. The application looks first for these; if it doesn't find them, it pulls down 15 seconds of the song from the closest server while it looks for copies of the rest of the song on the hard drives of other users near you.

At the Wall Street Journal, Katherine Boehret had a similar take to mine -- she was impressed by the streaming performance and noticed the lack of editorial content for music discovery.

As Billboard's Glenn Peoples pointed out yesterday, the U.S. launch of Spotify generated a fair amount of buzz. Will Spotify be the service that causes U.S. music fans to finally embrace the subscription streaming model? Maybe, but I can't help wondering what the folks at Napster, Rhapsody, and MOG are thinking these days. I haven't conducted (or seen) any extensive A/B tests, but it appears that Spotify might have a slight edge over the earlier services in terms of performance. Yet aside from a possible small advantage there, it's essentially identical to the other streaming services.

Being first to market, of course, doesn't guarantee success. The iPod wasn't the first portable digital music player, but it was the breakout one. If Spotify turns out to be the breakout music subscription service, it won't be because it has an iPod-like superiority to previous services. It might owe more to timing than anything else. Perhaps Spotify, with a modest performance advantage and a solid reputation in Europe, arrived at just the right moment for the U.S. market.

related: A Very Quick Spotify Review, Spot the Spotify Payment, Our First Spotify Payouts

tags: digital music Spotify music subscriptions Napster Rhapsody MOG

Tuesday Odds and Ends

2011-07-19T13:38:00.002-05:00

Trying to avoid Spotify ads? A friend reports:

tricky spotify...turn an ad down volume wise and it actually PAUSES it. So i totally turned the volume up and the ad hadn't progressed!!! Clever of them...

Felix Salmon has some suggestions for how Netflix should improve its deals with studios. Amazing, most of the deals are structured as flat rates, based one the number subscribers, as opposed to the number of movies/TV shows actually streamed.

Over at Analog Industries, Chris Randall breaks down his Bandcamp sales into three groups (Benefactors, Listeners, and the Curious) and questions the commercial benefit of the album format:

...from a crass commercial standpoint, to maximize the benefit of your Benefactors and Listeners, you should release a lot of single songs and two-song packages, rather than saving everything up for a single monumental release. Those of us that are older have an incredibly difficult time getting rid of the notion of the Long Playing Album Of 45 Minutes as a unit of music, but in this amazing modern world we live in, that is a relic of the 70s, for better or worse.

And David Lowery (Cracker, Camper Van Beethoven) is blogging again at 300 Songs. The blog is about the creation of his 300 or so recorded songs, but I like the music business scoop the best. In this post, he likens music hits to Black Swan Events and wonders if CBV's biggest hit was sparked by a handwritten note to the BBC.

tags: digital music Spotify Netflix

A Radical Idea: Should Social Media Sites Pay You to Use Them?

2011-07-18T13:18:00.003-05:00

If you go to the signup page on Facebook, it notes, perhaps to stave off the occasional rumor that Facebook will eventually charge you it use it, that "It's free and always will be."

Free, of course, is good for users. In some ways, the economics of social media sites are no different from what was established back in the 1920s for the new medium of radio -- ad-supported content that is free to consume, provided you purchase the necessary hardware. Ad-supported radio was followed by ad-supported television, and today we have lots of free, ad-supported content online, though the economics aren't quite working for much of it.

Yet there's a major, fundamental difference between traditional media content and that served up by a still-private company that might be worth close to $100 billion after an IPO: Social media content is produced by its users/consumers, not the provider. No matter how inconsequential each individual post appears to be -- your co-worker's lunch plans, Cousin Bob's vacation photos, etc. -- it's the sum total of these parts, each created by individual users, that keep people coming back. Unlike a broadcast television network, Facebook doesn't commission and finance the creation of relatively expensive content, it provides a platform for its users to produce it. So while I have no issue with the founders and early investors of Facebook profiting from the success of the company, shouldn't a portion of that wealth be shared with the content creators, the 750 million users of Facebook?

The problem is, even if there's a strong philosophical argument in favor of user compensation, there's not enough money to go around, barring major changes in the business model or online ad rates. Based on private transactions of Facebook stock, its current implied market cap of about $84 billion represents $112 for each of its 750 million users, but it's not as if Facebook could ever write a check for that amount to each user. All of that money wouldn't go into Facebook's coffers after an IPO, and the value of the company would be considerably less if investors believed that it was somehow going to "share the wealth" with its user base. And if you look at actual earnings, not market cap, there's not much money to share on a per-user basis -- Facebook likely earns less than $1 per user each year. Besides, the example of Myspace, purchased by News Corp. for $580 million in 2005, sold last month for $35 million, and reportedly losing hundreds of millions each year, demonstrates both the fickleness of the public and the weakness of the long-term profitability and viability of the social media business model.

Still, before the launch of Google+, I wondered if offering some sort of payment to users might be the best way for an upstart social media platform to compete with Facebook, even if it were only a nominal amount each year. Or maybe some sort of system akin to frequent-flier miles, where points could be accumulated and redeemed for discounted goods. Perhaps the early success of Google+ shows that it's possible to compete with Facebook on features alone, and that the non-monetary rewards of social media sites are more than enough to keep users coming back. (It's not as if I'm going to stop using Facebook or Google+ unless I'm paid.) Yet some sort of payment or reward system might be an easy way for a new social media service to distinguish itself, or for an established one to grow and maintain its user base.

tags: social media Facebook Google+ Myspace

A Very Quick Spotify Review

2011-07-15T13:21:00.004-05:00

Spotify is now live in the U.S. While you can sign up today for one of two premium options ($4.99 or $9.99 a month), you'll still need an invite to try the free version. (Thanks to my friend Krista at Passport Delicious for hooking me up!)

My first impression is that Spotify is superior to the three other streaming music services -- MOG, Rhapsody, and Napster -- that I've tried, at least in terms of streaming performance. I'm a current subscriber to MOG, but I'm frustrated by the frequent pauses for buffering, even when using a fast connection. While it's been a while since I tried Napster, it was extremely buggy for me, with even more buffering/freezing problems. I had no such issues with Spotify during my brief test.

Unlike the other three services, which are all browser based, you'll need to download a small application (~5.0 mb) to use Spotify. The Spotify interface also allows you to play tracks stored on your hard drive in your iTunes and Windows Media libraries. One area that seems light in Spotify relative to the other services is editorial -- other than a display of new releases and lists for the top 100 tracks and albums, you're pretty much on your own for music discovery. MOG, for example, has tons of celebrity playlists, Billboard chart playlists, etc. There is a "Feed" section, however, which will list any Spotify music shared by your Facebook friends, and it seems safe to assume more editorial content will be added.

The free version of Spotify is supported by ads, which weren't overly intrusive in the half hour or so I spent listening -- I streamed at least five tracks before I heard the first one. Interestingly, I also heard an advertisement while listening to tracks from my iTunes library! I'm guessing these songs are played directly from my hard drive, and not streamed, so it's not like these plays incur a cost for Spotify. Maybe the ad algorithm doesn't yet distinguish the source of the song. More on Spotify next week!

related: Spot the Spotify Payment, Our First Spotify Payouts

tags: digital music Spotify music subscriptions Napster Rhapsody MOG

About That Netflix E-Mail

2011-07-13T16:29:00.006-05:00

The upcoming price increase at Netflix is now old news, but if you're not a subscriber, here's what the announcement e-mail looked like:

From: Netflix info@netflix.com
Subject: Important Netflix Account Info: Price Change and New Plans
Date: Tuesday, July 12, 2011, 2:35 PM

Dear Laura,

We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.

Your current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
Plan 2: Unlimited DVDs, 1 out at-a-time (no streaming) for $7.99 a month

Your price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). You don't need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.

These prices will start for charges on or after September 1, 2011.

You can easily change or cancel your unlimited streaming plan, unlimited DVD plan, or both, by going to the Plan Change page in Your Account.

We realize you have many choices for home entertainment, and we thank you for your business. As always, if you have questions, please feel free to call us at 1-888-357-1516.

- The Netflix Team

No one likes a price increase, but I think $7.99 a month for unlimited streaming is still quite the bargain, relative to the prices of other digital content subscriptions. We don't have cable or Direct TV, so Netflix (streamed through a Roku box) is the main viewing option in our house. There's a ton of great shows for the kids, with no worry about them scratching up discs, along with plenty of the British mysteries and classics my wife and I enjoy. Don't tell Reed Hastings, but I'd gladly pay double the new price.

The DVD portion of the subscription, however isn't a great deal for us, given how infrequently we watch anything on DVD. We'll either drop it entirely or switch to the two-discs-a-month plan for $4.99.

tags: digital music streaming video Netflix NFLX

Friday Odds and Ends: Spotify, Google+

2011-07-08T16:01:00.005-05:00

Ethan Kaplan on Spotify:

I've been a Spotify user for a few years now thanks to an early hook up from Daniel. And I love Spotify. It truly is like magic, and really fun to use. However, I don't find myself using it all that often. Paradoxical? Maybe.

The issue for me is how I consume music. I don't consume music like I consume information. I curate, digest, browse and meander the stacks as it were. Maybe it is a generational thing, as I do remember going to Tower Records every Saturday morning and doing the same. What it comes down to is that Spotify democratizes music to such an extent that it becomes just files and audio rather than atomic entities known as albums, artists and genres.

Following up on my post from yesterday, I'm still not certain if Spotify (and other streaming services -- Rhapsody, Napster, etc.) is required to make direct payments to performance rights organization for streams in the U.S. This story from a couple years back makes it clear that Spotify is paying PROs in Europe. But for the U.S., I now believe the label is responsible for payments to songwriters and publishers for streams. On my own BMI statement, I've received payments for "Rhapsody International," but apparently nothing for domestic Rhapsody plays. (I am receiving per-stream Rhapsody payments via CD Baby and TuneCore.)

Finally, the Atlantic's Alexis Madrigal is posting like mad about Google+. I'm finally in (thanks Christine!), if you want to follow me there.

tags: digital music Spotify Google+

Spot the Spotify Payment

2011-07-07T12:45:00.009-05:00

The U.S. launch of Spotify is imminent. And while I haven't had the same success as this musician (thanks to Glenn for the tip), two of my band's albums have been in the Spotify catalog since August of 2009.

Without any promotion in the regions where Spotify is currently available, our total number of plays is relatively small, though our Spotify activity seems to be increasing each month. The per-spin payouts we receive via CD Baby are quite variable, ranging from around two hundredths of cent to more than one cent for each stream. (We also had a few spins that rounded out to "$0.00000000" after CD Baby's commission.) I'm assuming the payout amount depends on free vs. premium listens, as well the subscription prices in each region and currency exchange rates.

Here's what we've seen so far:

Spotify Per-Stream Payouts August 2009 to March 2011

Smallest: 0.02056 cents
Largest: 1.1456 cents
Average: 0.2865 cents

These numbers are all before CD Baby's 9% commission. It's also possible that the major labels have been able to negotiate different rates for their content, and the label/artist payout doesn't include any payments for songwriters and publishers that Spotify makes to performance rights organizations such as BMI and ASCAP. Update II -- Spotify makes direct payments to PROs in Europe, but I think PRO payments are made by labels for music streaming in the U.S. More here. (This post from earlier in the year reports a per-stream rate of 0.22 Euro cents for independent artists.)

Still, the average streaming rate is small enough that it'd take 244 Spotify spins to equal the label cut of a 99-cent iTunes download. But the real question here, in terms of artist/label compensation, is what Spotify activity actually represents. That is, is it simply a new revenue stream, providing income from listeners who don't normally purchase music, or is there also a cannibalization factor, where some listeners opt for streaming over actual purchase? (There's also the "exposure" argument that hearing something via Spotify or another streaming service will entice some listeners to purchase the download.) My best guess is that, given the relatively small percentage of consumers who regularly purchase music, any additional income streams are a net positive.

related: Our First Spotify Payouts

tags: digital music Spotify streaming royalties music subscriptions

Tuesday Odds and Ends

2011-07-05T11:54:00.004-05:00

Another free music debate -- when should musicians give away live music?

Tom Petty doesn't like Michele Bachmann using American Girl, but while using a track without permission in an ad is a definite no-no, playing recorded music at an assembly is apparently fine, as long as the venues/campaigns have paid for BMI/ASCAP licenses.

It's now illegal in Tennessee to share passwords for Rhapsody, Netflix, and other streaming services.

The decline of rock radio in Chicago:

"Over time, we've realized that this music is going to live forever; the radio stations, not necessarily."

One thing that seems likely to live forever on Chicago radio is 70s-era Rolling Stones. I was channel surfing in the car on Sunday afternoon and heard a simultaneous Stones triple play on three classic rock stations: "Ain't Too Proud to Beg," "It's Only Rock 'n Roll," and "Shattered."

Finally, the last thing I want is another social networking page to maintain, but I'm intrigued by the "circles" feature in Google+. In theory, you can do the same thing on Facebook by creating friend lists, then posting certain items only for specific lists. But you'd have trust FB not to screw everything up with its next privacy overhaul, and its track record isn't so good in that area. (I've only seen the demo, no invite yet for the actual "Field Trial." So if any Google folks are reading...)

tags: digital music Google+ GOOG

Some Details (and Questions) About Apple's iTunes Match Service

2011-06-21T14:00:00.006-05:00

A Chicago label is getting some attention for opting out of Apple's iTunes Match service. Numero's Ken Shipley also shared some financial details about iTunes Match in a comment to a recent Hypebot post on Numero's decision. Based on that information, we can make some assumptions about how the service will work:

1. Apple Is Reaching Out to Indie Labels
We know that all four major label groups are on board with iTunes Match, but it appears that Apple is contacting at least some indie labels directly to convince them to include their catalogs in the matching service.

2. A Match Is Enough
I had wondered if payments to labels might be based on the number of times a track was played. But the way Shipley describes it, if a track is contained in an iTunes library, that constitutes a "match," and a payment to the label.

3. The Per-Track Payouts Are Small (and Variable)
This was a given, of course. At $24.99 a year, there's simply not a lot of cash to share with labels. Shipley gives a figure of .0035 cents per match for a 5,000 track library, of which .0006 cents would be shared with the publisher of the song. However, I'm wondering if he meant .35 cents instead of .0035. Apple will share 70% of the $24.99 annual subscription fee, or $17.50 with labels. If you multiply 5,000 by .35 cents, it equals $17.50. Assuming that the payout is the larger figure, it'd still require 200 matches to equal the 70 cents that Apple pays for a 99-cent iTunes download. Though if the payout is based on the size of an individual user's iTunes library, the per-track amount will vary. Apple says it will support libraries of up to 25,000 tracks. If you divide $17.50 by that number, the per-match rate would be .07 cents.

4. Avoiding the "S" and "D" Words
At this point, no one seems to know for certain if matched tracks will be streamed by Apple to a device or if a match simply allows a subscriber to download the track. I thought the language on Apple's site suggested streaming, though I've read that it's a download, as Apple is worried that streaming would result in a huge bandwidth/data problem if iPhone users streamed their music collections all day.

According to Shipley's comments, Apple is avoiding both the "streaming" and "downloading" words because they don't want to be liable for current streaming rates or mechanical royalties.

We'll learn more details over the summer, but for now, here are a couple of unanswered questions:

1. A One-Time or Annual Payment?
Will a label receive a payment every year, as long as the track remains in a user's iTunes library? Given that subscribers pay the $24.99 maintenance fee each year, it seems more likely that it's an ongoing payment.

2. Is a Match Based Solely on Metadata?
While Apple has been lauded for coming up with a model that results in a revenue stream for music that might have been obtained illegally, that's a negative in Shipley's view. Whatever the quality/bit rate of the file on your hard drive, iTunes Match will upgrade it to 256k AAC file. Yet if the match is based solely on a music file's metadata, you don't even have to obtain the actual track -- you could simply change a file's metadata in iTunes or another program. It'd be a pain, but that with a few clicks and a bit of typing you could match any track in the iTunes catalog.

If you work for a label and can confirm any of the above, or have other details you're willing to share, please leave a comment or shoot me an e-mail. Thanks!

related: Some Quick Thoughts On iTunes Match

tags: digital music iTunes iTunes Match Apple AAPL music subscriptions

A Few Thoughts On Pandora

2011-06-16T11:32:00.008-05:00

Pandora has a lot going for it: It's the best-known name/brand in Internet radio and it has more than 90 million registered users, with 30 millions "active" users. Yet as noted in this WSJ piece, the newly-public company has yet to turn a profit. Like all Internet radio stations, it pays out a very large percentage of its revenue to music publishers and labels.

Also, unlike competitors such as Last.fm, Pandora has an additional expense, that associated with building and maintaining the "Music Genome Project," which classifies individual songs based on up to 450 criteria. A song's "DNA," as determined by Pandora's team of musicians and musicologists, along with listener feedback, is used to program individual Pandora stations.

So here's the big question: Does Pandora's Music Genome-based programming give it a competitive advantage? That is, does it result in a better listener experience than with Internet stations like Last.fm, where "similar" artists are determined by listener overlap (listeners of artist A also like artist B), as opposed to song qualities?

For me, the answer is a definite "no." I've tried Pandora multiple times and have never been impressed with the playlists. One example: when I played a U2 station, the next three artists it served up were Pearl Jam, Coldplay, and...the Goo Goo Dolls?! Coldplay makes some sense, but someone is going to have to explain to me how the music DNA of U2 suggests that the Goo Goo Dolls are one of the three most similar artists. (It's also apparent that, in addition to song DNA, Pandora uses a popularity component in its programming algorithm. If I create a station for my own band, it primarily serves up equally obscure artists. To be fair, I could easily hear why most of these artists were considered similar, based on the songwriting and arrangements. And I can completely understand the reason for including a popularity component -- while I'm open minded when it comes to music, you don't necessarily want to listen exclusively to acts you've never heard of before!)

I'm not saying the Pandora listener experience is a bad one, I just haven't found it superior to Last.fm or Slacker. The size of the company's user base and the business relationships it has established (deals with many car manufacturers) might well give it an ongoing advantage over its competitors. But in my opinion, music programming isn't a major differentiator for Pandora.

related: Prospectus for Pandora, Pandora's Seventy Percent, Some Quick Thoughts on the Quirk Presentation

tags: digital music Pandora P Internet radio

Some Quick Thoughts On iTunes Match

2011-06-07T10:14:00.008-05:00

My question from last week was answered -- by matching any song on a hard drive that's available in the iTunes store, iTunes Match is a game changer. Assuming that Google and Amazon don't add a similar feature, Apple's service will launch with a major advantage over its competitors. However, as Amazon was quick to Tweet yesterday, it appears that iTunes Match won't allow you to download tracks, only stream them. Update: I might be wrong about downloading vs. streaming. I've read several reports that indicate that the iTunes Match/iCloud service will only allow downloading of files to devices, as opposed to true streaming. (And I haven't used the beta version of iTunes in the Cloud yet.) If so, it seems somewhat illogical, as the big advantage of scanning and matching is that it eliminates the need to upload digital music files. To then turn around and require a download to listen to them makes little sense to me. The Apple site is vague, though "all the music iTunes matches plays back at 256-Kbps iTunes Plus quality" seems to imply streaming.

Will iTunes Match legitimize/monetize pirated digital music files? At the very least, it introduces a new revenue stream for labels that didn't exist before, allowing them to reap additional revenue for purchased digital tracks, as well as songs ripped from CDs, downloaded as free legal mp3s, or acquired via P2P sharing. How much revenue? The service will cost users $24.99 a year and Apple will share 70% of that amount, $17.50, with labels and publishers. As of late 2010, Apple claimed 160 million iTunes users worldwide. If 10% of those users signed up for iTunes Match, that'd translate into $280 million a year for labels and publishers. That's a lot of money, but it doesn't begin to offset the declines in recorded music sales over the past decade. (Maybe Apple will be able to convert more than 10% of its iTunes user base. Netflix, for example, has 20 million subscribers who are paying substantially more for that service.)

How will Apple divide that money and pay it out? It could be based on an individual user's streaming activity, where either a set amount is paid for each song stream or a variable per-stream amount, based on the total number of streams during the month. That is, if a user only streamed one song in a month, the label and publisher for that release would receive the full amount. But it seems like any user-based accounting system would be a bookkeeping nightmare for Apple. My guess is that the subscription fees will be divvied up based on total subscriber behavior, with label and publishers receiving a portion of the iTunes Match subscription fee proportionate to the total activity of each track.

One final thought: Steve Jobs has long pooh-poohed the idea of music subscriptions, but maybe Apple is taking some baby steps toward a full-blown subscription service. As described, iTunes Match is essentially a music streaming service that's limited to a maximum of 25,000 tracks stored your iTunes library. At some point, it'd seem logical to allow users to stream the full iTunes catalog (18 million songs) for an additional fee.

related: Apple's iCloud Will Scan, But How Much Will It Match?

tags: digital music iTunes iTunes Match Apple AAPL music subscriptions

Apple's iCloud Will Scan, But How Much Will It Match?

2011-06-02T13:20:00.005-05:00

image by José Picardo via Flickr

The news that Apple's iCloud will launch with a "scan and match" feature suggests that the service has a major advantage over the offerings from Amazon and Google, both of which requires users to upload their digital music files to the cloud. The size of that advantage, however, remains to be determined: Will the deals Apple reached with the four major label groups allow it to give users access to online versions of all of the music files on their hard drives, or just the digital tracks purchased from the iTunes store and other digital music retailers? If it's the former, it'd be an advantage that would pretty much force Amazon and Google to reach similar deals with the label groups. If the latter, the Apple edge would be considerably smaller, as purchased tracks represent a small portion of most digital music collections.

I have to think the issue was a sticking point in Apple's negotiations with the labels. While it's likely that the majority of the digital tracks in most music collections were ripped from their owners' CDs (that's the case for mine, at least), I'm sure the position of the labels was that they didn't want Apple giving consumers access to music tracks acquired from P2P networks. We'll find out next week what kind of agreement Apple was able to reach...

tags: digital music iCloud Apple AAPL iTunes Amazon AMZN Google GOOG

Amazon MP3's $3.2 Million Customer Acquisition Experiment

2011-06-01T13:05:00.002-05:00

Apple's seamless integration of software, hardware, and content (iTunes and the iTunes store, iPods and iPhones, and iTunes downloads) is often cited as the reason for its continued dominance of the digital music market. Yet this advantage is more one of perception that reality -- you can easily configure your settings with Amazon MP3 and eMusic to have downloads automatically appear in your iTunes library. I'd even argue that purchase process with Amazon MP3 is faster and more streamlined than with iTunes.

But a large percentage of digital music purchasers probably don't realize that Amazon MP3 and other digital retailers are viable alternatives to the iTunes store. (Some might not even know that you can play content purchased elsewhere in iTunes and on iPods!) Last week's 99-cent special for the new Lady Gaga album was an obvious attempt to reach those consumers.

Amazon MP3 moved approximately 440,000 digital albums at that loss leader price, which, according to Billboard's Glenn Peoples, cost Amazon about $3.2 million, as it paid the full wholesale price on each of those albums to Interscope/Universal Music Group. The question is, how many of those purchasers were first-time Amazon MP3 customers? After you've made your first purchase, any subsequent purchases are much easier, as you've already created and configured your account. Assuming that enough of last week's sales were to first time customers, I predict we'll see several more 99-cent album deals over the summer for other big-name releases.

tags: digital music Amazon MP3 AMZN Apple AAPL iTunes

A Flat Fee or Commissions for Digital Music Distribution is an Economic Decision, Not a Moral Dilemma: TuneCore vs. CD Baby

2011-05-19T03:00:00.002-05:00

I've been meaning to post a detailed CD Baby vs. TuneCore comparison for several years now and thought that last week's changes at TuneCore (a bunch of new features, accompanied by a hefty price increase for the annual maintenance fee) would motivate me to start writing. But what finally got me going was TuneCore C.E.O. Jeff Price's comments about the ethics of charging commissions. His desire to defend his company and its business model is understandable, but I don't think we need to frame the flat fee vs. commissions question as a moral argument.

Overlapping, Not Identical
As a self-released musician, I've used both CD Baby and TuneCore for distributing my music and -- for the most part -- I'm very satisfied with both services. I realized long ago that the best way to make money in the music industry is to sell stuff to aspiring musicians, many of whom will spend every cent they make from gigs, music sales, and their day jobs to support their dreams of a music career. In a world of scammers and rip-offs, both CD Baby and TuneCore provide a valuable service -- instant worldwide distribution for virtually any musician, something that was unthinkable 15 years ago. Both do so for reasonable fees and both firms have good reputations.

A direct comparison of the two companies is difficult, as their distribution services overlap somewhat, but they're certainly not identical. CD Baby began as online seller of physical CDs and later expanded to digital distribution, TuneCore was a digital distributor from the get-go. With TuneCore's recent enhancements, it currently provides more features on the digital end, while CD Baby will sell your CD through its online store and, via a deal with Super D distribution, allows people to order your CD from almost any record store.

The business models differ as well: CD Baby charges a one-time set-up fee and a 9% commission on digital sales, TuneCore doesn't charge commissions on digital sales but you'll pay an annual maintenance fee in addition to the initial set-up charge. Please note: I'm limiting this post to a discussion of CD Baby and TuneCore, the two services I've actually used. There are other alternatives, of course, but that's for a later post!

Running the Numbers
With the caveat that the services aren't identical, let's assume that digital distribution itself is basically a commodity service. That is, once your music is available within the catalogs of iTunes, Amazon MP3, eMusic, and other digital retailers and subscription services, there's no real difference between the distribution providers. If you don't need/want the extra bells and whistles that TuneCore provides, nor CD Baby's distribution of physical CDs, it simply comes down to how much you end up paying for digital distribution. (That's assuming, of course, that you trust the distributor to make timely, accurate royalty payments and to stay in business. I have no worries with either CD Baby or TuneCore.)

For the first year, no math is necessary -- because the initial set-up charges are virtually identical, you'll come out ahead with TuneCore. While CD Baby's album set-up fee is just $39, that amount doesn't include a UPC bar code. CD Baby charges $20 for a bar code, but you can easily purchase one on your own for $10, giving you a total cost of $49, which basically matches the $49.99 initial fee with TuneCore. No matter what your total digital sales are for the first year of a release, you'll pocket more with TuneCore, as you'll pay no commission on those sales.

After the first year, you have to determine if 9% of your ongoing annual royalties from the digital sales of an individual album will exceed TuneCore's annual maintenance fee. (Keep in mind that the iTunes payout for a 99-cent download is 70 cents.) Before TuneCore's price change, the crossover point was $222 in digital royalties, which represents approximately $317 in total digital sales. That's about 320 99-cent individual song downloads, 32 $9.99 digital albums sales, or some combination of the two.

With TuneCore's new annual maintenance fee of $49.99, the crossover point jumps to $555.44 of digital royalties, or approximately $794 in total digital sales for the album. That translates into 802 99-cent downloads or 80 digital albums. If you don't sell that much for an individual release, you're better off paying the 9% CD Baby commission. In fairness to TuneCore, you can turn the math around to calculate how much extra you might end up paying with a commission model. For example, if you manage to sell 5,000 99-cent downloads each year, you'll generate $3,500 in digital royalties and pay $315 in commissions to CD Baby, more than six times the annual TuneCore maintenance fee. (TuneCore also claims that some of its clients were already spending $65 to $70 per release each after paying for additional services such as tracking reports, and that the new all-inclusive fee will actually represent a price decrease for these clients.)

But the real question here is which outcome is more likely for most self-released musicians -- a few hundred dollars in digital sales per album each year or a few thousand? You could make the argument that a serious musician with any sort of talent could/should move enough units to exceed the crossover points above. And in the wake of last week's news about the pricing changes at TuneCore, there were plenty of Twitter and message board posts along the lines of "if you can't sell $50 of downloads then you shouldn't be releasing music." Yet the sales threshold isn't $50 in music sales a year -- it's selling enough digital downloads, each and every year (in a world where CD sales still dominate), to justify an ongoing annual maintenance fee instead of a small commission on each sale.

I hate to say it, but for the vast majority of self-released musicians, that seems unlikely. In a post from three years ago, I highlighted the example of an indie rock band that released a strong album, one that got a great response from both college radio and the music press, including:

Pitchfork love -- an 8.0 out of 10

Strong support and airplay from KEXP -- one of the biggest/best known CMJ-reporting stations

Listed in "Top 10 Bands You Haven't Heard of" for the year by Rolling Stone magazine

Magnet Magazine's #3 record of the year

And this wasn't a self-released/financed album -- it was backed by the promotional muscle (new media, retail, and radio) and tour support of a well-known indie label with solid distribution. Yet it sold just a little over 5,000 total units. That album was released in 2004 and I doubt it has sold enough digital copies in the subsequent years to make the TuneCore model more attractive than the commission approach.

That's just one cherry-picked example, however, and you could just as easily point to dozens of TuneCore-distributed artists who would've paid significantly more for digital distribution under a commission-based model. Indeed, for the bigger-name acts featured on TuneCore's homepage -- acts like Cheap Trick, Joan Jett, Public Enemy, and Moby -- the decision to go with TuneCore was likely a no-brainer.

But new acts or those without established fan bases can't be sure they're going to sell. Here's what the founder of one well-respected indie label, spinART records, recently said about music sales:

I believed in every single of the 230+ releases and artists I signed and released. I did not think for a second that any of them would not sell. But the reality is, most did not take off, my label had the same hit to miss ratio as all other indie labels. Yes, we released successes like The Pixies, Apples In Stereo, The Dears and Clem Snide, but we also released The Technical Jed, Apollo Sunshine, Kaito, Head Of Femur and many others that, sadly, despite all of our marketing efforts, very few people bought.

The label owner? TuneCore founder Jeff Price!

While you never know what's going to happen with any individual release, it appears that the typical self-released artist doesn't fare well under the TuneCore model. As recently calculated by Digital Music News, the average TuneCore client earns just $179 in digital royalties each year, and that's on a per-client basis, not $179 for each album. Any artist/small label earning this amount is obviously better off with the commission model, even before TuneCore's price increase.

However, if you get lucky and have a "hit" with a self-released album, you'll pay far more in commissions to CD Baby than you would with TuneCore's set annual fee. The worst-case scenario with the TuneCore model is that you'll pay more in annual fees than with a commission model, but you're only out fifty bucks a year at most. But if you sell tens of thousands of digital downloads with CD Baby, it will cost you thousands of dollars in commissions. Yet it's a risk that you can easily hedge against.

The Best of Both Worlds
CD Baby or TuneCore isn't necessarily an either/or question -- you can use both services together to maximize your income from digital sales in the first year and eliminate ongoing maintenance fees. If I were releasing a new album both on CD and as a digital download, touring to support it, and conducting a college radio campaign, I'd probably use TuneCore for digital distribution (at least for the first year) and CD Baby for online CD sales and inclusion in the Super D distribution catalog. After the first year or two, if the total digital sales of the album were below the crossover thresholds listed above, I'd ask TuneCore to pull the album from the digital stores and initiate digital distribution with CD Baby. (Because the album would already be in the CD Baby system, you wouldn't have to pay the $39 fee again.)

The downside to this approach is that you'd have a period of at least several weeks when the album wouldn't be available in digital stores, and you'd likely lose any customer ratings and reviews in each store. For that reason, I think RouteNote is an intriguing alternative -- it's a digital distributor that gives you the choice of a $30 annual maintenance fee or "free" distribution with a 15% commission on sales, and allows you to switch between the two pricing structures, based on your subsequent sales. I'd love to see CD Baby and TuneCore offer that kind of flexibility.

For now, I'm taking a wait-and-see approach with my TuneCore distributed album. Its annual sales don't justify paying a $49.99 maintenance fee, but TuneCore has announced a new "YouTube deal." No details are available yet, but I'm guessing that it involves inclusion of TuneCore-distribution material in YouTube's AudioSwap program, which allows YouTube users to add pre-cleared music to their videos, with a small royalty paid to the artist for each play. If so, that income stream might be enough for me to keep the album with TuneCore. If not, I'll make the switch to CD Baby.

tags: digital music TuneCore CD Baby

Stop the Presses: Most Self-Released Artists Earn Very Little from Digital Music Sales

2011-04-26T10:18:00.004-05:00

Paul Resnikoff of Digital Music News seems surprised that the average TuneCore artist is earning just $179 a year from digital music sales, and cites a similar figure ($174) for CD Baby artists.

As a self-released musician who uses both services, I'm not. I'd also point out that these averages are probably boosted by the sales of the top-selling artists in both catalogs. The median annual sales figure -- the dollar amount that divides the artists into two equal groups, one earning more than the median and one earning less -- might be even smaller. (Though it's also mathematically possible for the median to be more than the mean, which would occur if large numbers of self-released artists are selling just a few dollars worth of digital music each year.)

I'm working on an in-depth post about the economics and pricing of both services, but I really have nothing negative to say about either company -- both provide access to worldwide distribution that was unthinkable for a self-released musician a decade ago. Yet while the total sales for TuneCore and CD Baby artists add up to some impressive numbers, the actual market for most individual self-released (and self-promoted) artists is minimal.

tags: digital music TuneCore CD Baby self-released music

Would 99-Cent Albums Find the Same Success as 99-Cent Books?

2011-04-25T12:21:00.003-05:00

There was a fascinating story in the Wall Street Journal last week about self-published authors who are selling a ton of bargain-priced digital books at Amazon.com:

Mr. Locke, who published his first paperback two years ago at age 58, says he decided to jump into digital publishing in March 2010 after studying e-book pricing.

"When I saw that highly successful authors were charging $9.99 for an e-book, I thought that if I can make a profit at 99 cents, I no longer have to prove I'm as good as them," says Mr. Locke. "Rather, they have to prove they are ten times better than me."

Mr. Locke earns 35 cents for every title he sells at 99 cents. Altogether, he says his publishing revenue amounted to $126,000 from Amazon in March alone. It costs him about $1,000 to have his book published digitally, complete with an original dust jacket image. He also hires an editor to work with him at additional expense.

In March, he sold 369,000 downloads on Amazon, up from about 75,000 in January and just 1,300 in November. His titles are also sold by digital bookstores operated by Kobo Inc., Barnes & Noble Inc., and Apple.

The article doesn't specify if these ultra-cheap books are crowding out sales of higher-priced digital books or if it's an example of the price elasticity of demand, where the cheap goods are causing consumers of digital books to purchase more than they would at traditional prices.

My immediate question -- would 99-cent digital albums from unknown musicians find similar chart success at Amazon MP3 (and iTunes), or are book fans more likely than music fans to accept low-cost substitutes for name brand content?

One anecdotal example is the daily digital special at Amazon MP3, which invariably tops Amazon MP3's download chart (or at least lands in the top five), even when the artist is relatively unknown. Yet with thousands of musicians already trying to give away free music, music fans have almost endless choices for free downloads, even without turning to P2P networks. And while free digital books are available for thousands of out-of-copyright works, readers looking to fill their Kindles have fewer options than music fans for finding free versions of recent works.

Then again, free mp3s on artist websites, music blogs, MySpace, Facebook, etc., are a different matter than bargain-priced material sold within the dominant digital marketplace. If promoted on the homepages of iTunes and Amazon MP3, it seems likely that the highest-quality bargain albums (as determined by customer reviews) might climb the download charts.

tags: digital music Amazon MP3 iTunes price elasticity of demand digital content pricing

Cloudy Logic

2011-04-08T17:00:00.003-05:00

After last week's announcement of Amazon's Cloud Drive and Cloud Player, several digital music commentators wrote that storing music in the cloud might hamper subscriptions to music streaming services -- and maybe even result in an increase in illegal downloads from P2P platforms. While it's not an unreasonable conclusion that some consumers will prefer streaming their own music collections from the cloud over paying for subscription services (and that some of those online collections will include music that was illegally downloaded), I doubt that cloud storage is a cause for alarm when it comes to music subscriptions.

Music subscription services are, without a doubt, an incredible value proposition. They provide access to literally millions of tracks for as little as $5 a month (That's what I'm paying for my "computer only" MOG subscription, mobile phone access brings the price to $10 a month). Yet music fans have yet to embrace them, on a large scale, as a substitute for owning music. From what I've read, their appeal (so far) is mostly to voracious listeners who want easy access to the immense music catalogs they offer.

While many of these current subscribers have large music collections, it seems unlikely that having access to their libraries via the cloud would diminish the appeal of a music subscription. Even the largest private digital music collection pales in comparison to the catalogs of Rhapsody, Napster, MOG, and Spotify.

And commercial cloud storage won't be free -- my iTunes library would cost $100 a year to store on Amazon's Cloud Drive and I've ripped just half of my CD collection to mp3. Indeed, for these music fans, it seems more likely that a music subscription would discourage cloud storage, not the other way around. (Though I personally want both -- all of my digital music in the cloud AND access to the entire catalog of a subscription service.)

It remains to be seen if music subscriptions will ever take off -- maybe the U.S. launch of Spotify will be the best test of the viability of the subscription model. But if the public continues to snub subscriptions, I won't be blaming music lockers.

What do you think -- does the prospect of cloud storage make subscription services less appealing?

tags: digital music music subscriptions Spotify Napster Rhapsody MOG Amazon Cloud Drive Amazon Cloud Player AMZN

What Will the PROs Think of the Cloud?

2011-03-31T13:35:00.002-05:00

Personally, I'm in complete agreement with Amazon's assertion that it doesn't need permission from the music labels to allow consumers to store (and stream) their personal music files online. The major label groups obviously think differently, so I hope any court decisions will give the legal blessing to what seems like commonsense.

One thing I haven't seen this week is any reaction from the performance rights organizations -- ASCAP, BMI (I'm a member as a songwriter), and SESAC. Given that ASCAP made the unsuccessful legal claim that purchasing and downloading a music file also constitutes a public performance, which should result in payment to the song's publisher and writer, I wouldn't be surprised to see a similar claim that streaming a purchased song from an online locker also counts as a performance.

tags: digital music Amazon Cloud Drive Amazon Cloud Player AMZN BMI ASCAP performance royalties

Like It's 1998: Some Quick Thoughts on the NY Times Paywall

2011-03-30T04:00:00.003-05:00

The NY Times has flipped the switch, activating its new paywall/digital subscription model and I can't help thinking of 1998, the year that Slate began what turned out to be a short-lived experiment with a subscription model.

At the time, I was part of the small editorial team for Morningstar.com, which had launched the previous year. While that site was (and still is) an investment research and portfolio tracking destination, as opposed to a news/opinion magazine, Slate often came up as an example when we first planned the format and design of our longer articles.

So when Slate first announced its plan to move to a subscription model, it set off hours of discussion with my co-workers about the ethics of sharing your Slate login (keep in mind, this was before the launch of Napster and the large-scale P2P exchange of digital music files). As best as I can recall, we hit upon many of the main arguments, pro and con, that would soon arise with the advent of P2P music sharing: Is it truly theft when it doesn't result in the loss of a sale?, the fact that consumers can easily share physical content such as magazines, books, and CDs (though obviously not concurrently and only with people who are nearby), the challenge of charging for online content when there are numerous free alternatives, and so on.

I held out for a month or so before I finally succumbed and paid -- there was obviously no Twitter workaround and, believe it or not, back then Slate articles frequently came up in conversations with friends. Besides, the annual subscription was only $19.95 and Slate threw in a free umbrella. Then, before my subscription ran out, Slate abandoned the pay model and refunded my balance for the year by sending me a few issues of a now-defunct Web 2.0 magazine.

Thirteen years later, the NY Times is obviously trying to thread several needles at once with its subscription plan by setting a price point that maximizes its subscription revenue while it maintains its search engine rankings by allowing a minimum number of free page views each month. And unlike Slate, the Times serves at least two distinct audiences -- those in the NYC region who would read the paper even if there were no online version, and those of us outside the region who probably wouldn't pay for a daily print subscription if that were our only option. Its digital pricing strategy has to account for the possibility of cannibalizing print subscriptions. (Assuming that those subscriptions are indeed more profitable.)

I truly have no problem with the NY Times charging for access to its website (it'd be hypocritical of me if I did, as my employer derives a fair amount of revenue from the folks who are paying $185 a year for subscriptions to the premium version of Morningstar.com). Yet the cheapest digital-only NY Times subscription, $195 a year, still strikes me as too high.

You can, of course, make a very valid argument that $195 is a relative bargain, especially when compared to a daily print subscription. And I remain somewhat amazed by how eager media consumers are to pay for their hardware (iPods, iPads, and smart phones) yet so reluctant to purchase the content they consume on those devices. But given the ready availability of other quality online news sources (The Washington Post, the BBC, etc.) and the fact that the NY Times paywall appears to be easy enough to get around, I wonder if a subscription price at the premium magazine level (the New Yorker's $40, for example) would generate more total revenue.

For now, I'm going to make do with my 20 free articles each month, plus those I can read via FB and Twitter links. But if the price drops below $50 a year and the Times tosses in a free umbrella, count me in.

tags: economics of digital content NY Times Paywall

How NOT to Win a New Fan

2011-03-24T11:12:00.001-05:00

I clicked a link on Facebook today to visit the band website of a friend of a friend. And that's as far as I got, as I was sent to rather snotty redirect page, telling me to go download Firefox and then come back. (You can't even get past the redirect page using IE.)

If you want to optimize your website for certain browsers, that's fine. Yet to not let a potential fan in the door is just shooting yourself in the foot. I happened to have IE open and I could have easily fired up Firefox. But at that point I wasn't going to bother...

tags: digital music band websites

The Downside of eMusic's Currency Pricing

2011-03-22T02:30:00.000-05:00

Even after last year's subscription changes, average album prices at eMusic are no doubt less than the average prices at iTunes, Amazon MP3, and other digital music stores. Yet I believe that eMusic's switch from a credits system to currency pricing, in combination with Amazon MP3's $5 album deals and daily specials, presents a real challenge to eMusic's subscription-based business model.

Here's why: With eMusic's old credit-based system, direct comparisons to prices in other digital stores weren't straightforward. The math certainly wasn't difficult, but "12 credits" was an entirely different animal than "$5.99," which is now the default eMusic price for many new releases. Your credit card was charged every 30 days, credits showed up in your account, and you used them to download albums and tracks. Any price considerations you made were likely based on the number of credits required for an individual album -- that is, based on the number of tracks and credits required, was it relatively expensive or a relative bargain? You might have done the math to figure out the dollar amount for either extreme, but in general, you were probably more likely to think in credits than in dollars and cents.

Now, you see the price of each album spelled in dollars and cents, which has a two-fold effect: 1. It reminds you again of what you're actually paying for the album (something you were less likely to think about under the credit system), and 2. It invites direct price comparisons with other digital stores, namely the daily specials and $5 album deals at Amazon MP3. (It's slightly more complicated than that, because some existing subscribers received monthly bonuses when currency pricing was implemented. For example, I currently pay $11.99 every 30 days, but my account is credited with $13.99, making my true cost of a $5.99 album just $5.13.)

Chances are, the price of any individual album is still less at eMusic than at Amazon MP3. Yet when you think about how a subscription actually works, the eMusic advantage become less apparent. That's because no one is ever buying the entire eMusic catalog. With an $11.99 eMusic subscription, you can download approximately two albums every 30 days. You have tens of thousands of albums to choose from, but you have to decide on two to download. (We'll get to individual track downloads in a minute.)

At Amazon MP3, the total catalog is the same size, if not larger, but your bargain pool of $5 monthly specials (as well as whatever shows up as the daily deal, which is most frequently priced at $3.99) is a relatively small one. Yet as long as you can find just two albums you'd like to each month for $5 a piece, you can probably equal your total eMusic album downloads for a lower price. And you're not locked into an ongoing subscription where, if you lose track of the expiration date, you can lose most of the money you paid for the most-recent period.

I've heard from at least two friends that the $5 Amazon specials are making them re-think their eMusic subscriptions. Granted, that's a tiny sample size, and perhaps it's an anomaly, but I can't help wondering if a larger number of eMusic subscribers (and potential subscribers) are thinking the same way. Over at eMusic's message board, subscribers will often point out the availability of albums for less at Amazon MP3 or other stores.

The switch to currency pricing was made, of course, to accommodate variable track/album pricing within the eMusic catalog. Another option would have been to allow fractional pricing -- charging one credit for some tracks and one-and-a-half for others -- but that approach just seems messy. Another possibility would've have been to "deflate" the credits. That is, give more credits for each subscription price point, say 100 for $11.99 instead of 30, and then charge more credits for each track -- some songs would be two credits, some would be three, and so on. My guess is that eMusic considered these options and others, and decided that straight currency pricing, if not an ideal solution, was its best option.

For myself, the bargain appeal of eMusic is more now obvious for individual songs than with full albums, at least for new releases. Individual tracks are priced at 49 cents, 79 cents, or 89 cents. With my $2 bonus each 30 days, that makes my cost for individual track 42, 68, or 76 cents, prices you won't find at Amazon MP3 or iTunes, where prices for individual songs top out at $1.29.

tags: digital music eMusic Amazon MP3 iTunes

The Ethics of Downloading Music You've Already Paid For

2011-03-14T15:14:00.002-05:00

An eMusic subscriber loses $200 worth of his downloads and posts this question to eMusic's message board: Is it ethical to download those same tracks from illegal sources (such as P2P sites)?

I was somewhat surprised by the responses -- by more than a 3 to 1 ratio, his fellow subscribers voted "no," most of them rather emphatically. Then again, maybe that's not surprising, as eMusic subscribers are a self-selected group of music fans who are willingly paying for digital content that they could probably download elsewhere free.

Personally, as both a music fan and a self-released musician (albeit at the hobby level -- I'm not depending on my music sales to pay my mortgage every month!), the above scenario doesn't bother me at all. Perhaps I'm wrong to think there are varying degrees of wrongdoing when it comes to "illegal" music acquisition, but replacing lost tracks seems less of an ethical lapse than acquiring content that you've never paid for in any form.

What do you think? Is acquiring music without paying for it always wrong, no matter the circumstances? Or are situations like the one above, or, say, upgrading from a previous release of an album to a new remastered version, less of a moral offense? That's not to say it's "right," but simply less wrong, landing somewhere on the left-hand portion of the continuum from parking infraction to misdemeanor to felony. (While I've avoided P2P sites, there are plenty of tracks in my music collection that came to me in a way that didn't compensate artists and labels -- namely promo CDs, used CDs I've purchased, and the occasional CD-R from a friend.)

tags: digital music eMusic

Re-ReDigi: More Details Emerge About the Used Digital Music Marketplace

2011-03-10T10:58:00.005-06:00

ReDigi, the used digital music marketplace that is planning to launch this summer, has released more details about how the platform will work. I might be misreading it, but this part of the press release makes it sound as if only fingerprinted music files (Amazon MP3 and iTunes now individually watermark all of their downloads) will be eligible for sale:

The ReDigi Music Agent uses a sophisticated method of analyzing many aspects of the music file to determine its base eligibility, including identifying the song's digital thumbprint (a proprietary, patent pending, forensic analysis of key details associated with each specific file) and confirming whether the file has been properly acquired from an eligible commercial site. A music file determined to be "unverifiable" or "ineligible for resale" is not necessarily an illegally obtained file; it only means that the origin can't be identified or the source does not qualify.

And ReDigi will actually zap the song files from your hard drive and any synced devices:

...acceptable files are then added to the ReDigi music marketplace for re-sale and deleted from the original owner's computer. The files are also removed from any synced devices. ReDigi manages this process for users, so even devices synced over time will be updated with tracks that have posted for sale and sold tracks will be removed. Just like anything else you physically own, once you sell a music file, you no longer have the right to use it. By doing this, ReDigi provides even stronger copyright protection to labels and artists as it proactively removes these files to protect the owner and the appropriate parties.

The workarounds to this feature are obvious -- burning tracks to a CD-R before selling them, using a dedicated computer for selling tracks while maintaining the files on another machine, etc. -- though the same can be said for keeping copies of physical CDs that you sell, which also violates a strict "fair use" interpretation of copyright law.

The big question here is how music labels (and, perhaps, book publishers and software companies, as there are obvious implications for those industries as well) are going to react to ReDigi's effort to apply the first-sale doctrine to digital content:

"The technological development of the ReDigi Music Agent passes copyright and first-sale doctrine tests that have stopped other companies from legally being able to do this previously," says Larry Rudolph, CTO of ReDigi. "If you have bought it, you are allowed to sell it. Also, you are allowed to buy something that someone else legally can sell. ReDigi is the technology used for this transaction. It verifies the legal origin, a seller's right under the first sale doctrine and allows a user to resell a file that is verifiably his or hers to sell."

As Rudolph alludes to in the above quote, ReDigi isn't the first attempt at a used digital music marketplace. This 2008 Ars Technica article provides background on the first-sale doctrine and discusses Bopaboo, a previous attempt to give consumers a platform for selling their mp3s. While Bopaboo sought a licensing deal of some sort from music labels, it required the upload of a copy of each music file to its platform, something that legal interpretations of the first-sale doctrine don't provide for. And while the ReDigi approach seeks to ensure that only one version of a music file exists at a time, it can be argued that the version that ends up on ReDigi's servers is indeed a copy of the original purchased file.

Personally, I'm all for the application of the first-sale doctrine to digital media. But given that at least one major label group has been extremely litigious over digital music lockers (as in seeking the personal assets of a music locker company CEO), I'll be shocked if the major labels and industry groups don't mount a serious legal challenge. If so, I'd love to see the courts find for ReDigi and extend first-sale protection to digital goods.

One final thought: Assuming ReDegi overcomes any legal hurdles or harassment, the platform could actually give music fans an arbitrage opportunity of sorts -- the ability turn a profit on some digital files. That is, if you legally obtain "daily special" albums from Amazon MP3 (or the various freebie mp3s that Amazon offers), you might be able to sell them later for a higher price after the promotion is over and the tracks revert to their standard prices.

Related: A Marketplace for Used Digital Music?

tags: digital music ReDigi used digital music first-sale doctrine copyright

Wednesday Odds and Ends: Radiohead and More

2011-02-23T11:27:00.003-06:00

I have no idea how many downloads of "The King of Limbs" Radiohead has sold. But Last.fm listeners bought (and listened) enough that the album's eight songs dominated Last.fm's track chart for the week ending Sunday, February 20th -- less than three days after the album's release.

Billboard's Glenn Peoples wonders if some Radiohead fans would've passed on the pre-order if they had known the album had just eight tracks, noting that "these days it's hard to find an album that doesn't have at least ten songs." That true, but I'd argue that longer-album trend (as measured by number of songs and total playing time) that coincided with the rise of the CD format might not be a permanent one. While the CD format remains the biggest seller, as digital album sales increase, maybe artists will feel more free to release shorter works that don't take full advantage of the storage limits of the delivery device. Besides, at nearly 38 minutes, the album certainly isn't skimpy by vinyl standards -- some early Van Halen albums barely broke the 30-minute mark and Springsteen's "Born to Run" is an eight-song classic. Still, I'll admit that eight years of the iTunes store has conditioned me to think individual tracks costs 99 cents (despite the $1.29 pricing for some of them), enough so that I did a quick double take at the "eight songs for nine dollars" price.

And the latest copyright/Internet/music debate: the International Music Score Library Project is posting free classical music scores online:

He shows publishers little sympathy.

"In many cases these publishers are basically getting the revenue off of composers who are dead for a very long time," Mr. Guo said. "The Internet has become the dominant form of communication. Copyright law needs to change with it. We want people to have access to this material to foster creativity. Personally I don’t feel pity for these publishers."

Those who "cling to their old business model," he added, will simply fade away.

But publishers point out that users of the site can miss the benefit of some modern editions that may be entitled to copyright protection -- and thus not part of the public domain -- because of significant changes to the music, such as corrections and editing marks based on years of scholarship about the composer's intention.

tags: digital music Radiohead The King of Limbs digital music pricing

A Marketplace for Used Digital Music?

2011-02-18T10:54:00.002-06:00

This is going to be interesting. From a press release for ReDigi:

This summer, music lovers everywhere will finally be able to do the impossible: legally sell their digital music files and buy other people's used music at a fraction of the price. A group of MIT and Cambridge-based geniuses has solved the most pressing problem of the digital music age and will soon extend invitations to experience the limited early release of ReDigi, the world's first online marketplace to legally recycle, buy and sell, used digital music files.

As I've written here before, the loss of resale value is too often overlooked in discussions about the pricing of digital content. A few years back, I did an analysis of CD and digital album prices relative to used CD values and came to the conclusion that, in general, "digital albums need to be priced approximately three to five dollars below the total cost of the equivalent CD to compensate for the loss of a resale value."

While I'm all for applying the right of first sale to digital content, I have to think that music labels and publishers are going to fight this concept tooth and nail. The user agreements for Amazon MP3 and eMusic, for example, all prohibit the transfer of purchased music files to other parties. (Surprisingly, I can't find explicit language in the iTunes user agreement forbidding the transfer of files to another party, but I assume it's in there somewhere.) ReDigi, however, claims to have come up with a way to make it legal, and is also promising a revenue share of some sort with labels and artists:

Along with giving users the power to recycle their digital music files, the ReDigi's Marketplace also aims to help strengthen the music industry through the ReDigi Foundation program, which grants a share of proceeds from all music sales to both artists and record labels each and every time a track resells.

Lala.com had a similar proposal for sharing 20% of its revenue from CD trades with artists, but never implemented it before the service was sold to Apple and shuttered.

related: The Digital Pricing Conundrum Part IV: The Loss of Resale, Lala.com Owes Me Sixty Cents

tags: digital music ReDigi used digital music iTunes Apple AAPL Amazon MP3 eMusic

A Feature Request for iTunes 11

2011-02-17T11:31:00.002-06:00

Being a cheapskate, I hate to pay for digital downloads of tracks that I already own. That is, it seems silly to buy an entire album if -- thanks to a compilation album or label/band giveaways -- a couple tracks from it are already sitting in my iTunes library. I realize this attitude seems less than generous to the artists I like, but in the case of my eMusic subscription, it means I'll use the money for other songs/albums.

The workaround, assuming the "album price" is less than the cost of the remaining songs, is to purchase the rest of the album and then fiddle with the track info for the tracks I already owned to create a version of the full album. This can be a tricky process, as a discrepancy for a single piece of information (a different genre for one song, for example) will cause the album to play out of order. And if you have to spend much time on it, it's just not worth the fuss to save 79 cents.

So I'd love to see an "add track to album" feature in iTunes that would: 1. automatically match the song/album info and tags for all of the tracks on the album, and, 2. match the relative volumes of songs coming from sources that were mastered at different levels. (Yes, iTunes already has its "Sound Check" feature, but it doesn't completely correct the latter issue, at least not for me.)

tags: digital music iTunes Apple AAPL eMusic

Follow Friday Fun: @discographies

2011-02-11T12:54:00.007-06:00

I'm late to the party on this one, but @discographies is hilarious. The Twitter feed assesses an act's entire studio output in 140 characters.

A few favorites:

Van Halen: 1-6 Sean Connery; 7-10 Roger Moore; 11 George Lazenby.

Eric Clapton: 1-8, 11-18 displays of "chops," uninspired blues shuffles, mid-tempo choogle, shitty songwriting; 9-10 and Phil Collins, too!

Jane's Addiction: 1 Drugs won't make you Lou Reed. 2 Big-ass riffing won't make you Led Zeppelin. 3 Persistence won't make you interesting.

The Police: "Suspects were arraigned & charged with [1-3] attempted reggae, impersonating a punk, [4] aggravated pomposity & [5] stalking."

More here.

tags: digital music discographies

For One Artist, Bandcamp Is Better Than iTunes

2011-01-13T14:55:00.003-06:00

It's silly to suggest that the experience of any single musician is applicable to the entire industry or represents a new trend. Each artist is unique -- as is each release.

But at least one musician is finding Bandcamp a greater source of revenue than Apple's iTunes or other digital download stores. Chris Randall (from the Analog Industries blog and Audio Damage software) responds to a question about the availability of his new Micronaut release from iTunes:

Yeah, it'll be on iTunes/Amazon/Napster/Whatever in a couple days.

Although, honestly, I'm not sure why I bother. The income from Bandcamp _smokes_ any ducats from the other services.

You can stream/download the EP here.

tags: digital music iTunes Bandcamp Micronaut

The Christmas Club

2010-12-15T12:59:00.005-06:00

I used to be amazed by holiday releases from what I thought were the most unlikely artists to embrace Christmas music. Examples from last year include holiday-themed albums by Bob Dylan, Sting, and Rob Halford from Judas Priest!

But at this point, it seems like almost every mainstream music artist has released a holiday album. (You can play "Christmas Roulette" by setting your iTunes library on shuffle and checking to whether or not each artist has released a holiday song or album.) And while it seems less of trend among younger/indie acts, Sufjan Stevens, Weezer, the Killers, Low, and the Raveonettes have all joined the Christmas club. This year's big-name holiday releases include albums from Indigo Girls, Shelby Lynne, Pink Martini, the cast of Glee, Annie Lennox, Brian Setzer (his THIRD holiday album, believe it or not), and -- this one was inevitable -- Susan Boyle.

My own band the Layaways jumped onto the holiday bandwagon back in 2006 with a Christmas EP, and expanded it last year for the "Maybe Next Year" album. While it hasn't brought us fame and fortune, it was fun to re-arrange some holiday classics and we get a spike in Last.fm listeners at the end of each year.

We have some unused free download credits from Bandcamp, so until they run out, you download the entire album free in your choice of file formats -- 320k mp3, AAC, FLAC, Apple Lossless, etc. And there's no need to give e-mail address or register, just click through to Bandcamp to download.

tags: digital music free Christmas music free holiday music the Layaways

A Major Indie Loss for eMusic

2010-11-17T13:57:00.002-06:00

The upcoming addition of Universal content may mean a larger overall catalog for eMusic, but tomorrow's departure of Merge, Matador, XL, and others will leave a huge hole: As of today, four of eMusic's top 10 album downloads for the past month were released by the departing labels.

That number might be somewhat skewed, though, as eMusic sent out an e-mail last night encouraging subscribers to download albums from those labels before the November 18 deadline. Still, after today, some (if not all) of the releases from many of the biggest names in indie rock -- Arcade Fire, Belle and Sebastian, The National, Spoon, Vampire Weekend, Yo La Tengo, etc. -- will no longer be available from eMusic.

As of the first quarter of 2010, eMusic was paying labels 40 cents for an individual download, approximately 57% of what a label receives for a 99-cent iTunes download. (That amount varied each quarter, however, as eMusic pays labels a percentage of its subscription revenue, rather than a static wholesale price.) I don't have any information yet as to how eMusic's imminent switch from credits to currency-base pricing is going to affect label compensation. But the wording of this statement from Beggars Group seems to imply that relatively recent changes in label relations/compensation are the reason for its departure.

tags: digital music eMusic Merge Records Matador Records iTunes

Some Free Beatles/iTunes Headlines

2010-11-16T12:06:00.001-06:00

You won't find a bigger Beatles fan than this blogger (as a kid, I even named the family dog "Rickenbacker" after John Lennon's preferred brand of electric guitar), but I found today's iTunes announcement a little underwhelming. Not quite the, uh, revolution (perhaps a streaming music service or cloud-based iTunes libraries) I was hoping for.

While I wasn't on the record with a prediction for today's news, I wasn't surprised. In their early days, the Beatles generally released an album and/or single late in the year -- Beatles manager Brian Epstein had overseen his family's chain of record shops and was obviously well aware of seasonal buying patterns. Last year's release of the re-mastered Beatles CDs continued that tradition, as does today's announcement.

I'll be writing more about the Beatles in iTunes soon. In the meantime, here's a quick list of "free" headlines for any blogger or music/tech writer in need of something that incorporates a Beatles song title. :)

The Ballad of Jobs and Yoko:
How Apple Finally Landed the Beatles

Now for Your Shuffle, it's Savoy Truffle
Beatles Music Now Available in iTunes

Got to Get You Into My iPod:
The Beatles, Now Available in iTunes

There's an Apple in Strawberry Fields:
The Beatles Finally Come to iTunes

Do Let Me Download:
The Beatles, in iTunes at Last

The Beatles on CD?
That's So Yesterday

Back in the ACC:
The Beatles, Now Available in iTunes

Being For The Benefit Of Mr. Jobs
The Beatles, in iTunes at Last

All Together Now:
The Beatles and iTunes

Fixing a Hole in Your iTunes Library:
The Beatles Now Available for Digital Download

Download the Beatles?
You Can Do That

There's a Place in iTunes for the Beatles

It's Been a Long, Long, Long Time
The Beatles, Finally Available in iTunes

I'm Happy Just to Download You:
The Beatles Are Now Available in iTunes

Please Please Download Me:
Beatles Music in iTunes at Last

Buy the Beatles, Any Time at All:
The Beatles Are Finally Available in iTunes

What Goes On Your iPod?
The Beatles, Now Available in iTunes

tags: digital music iTunes the Beatles Apple AAPL

Thursday Odds and Ends: iTunes Selling Free Songs for 69 Cents

2010-10-28T13:09:00.009-05:00

The homepage of Apple's iTunes store has an "Indie Spotlight," a playlist of nine songs selling for 69 cents each. Some quick Google searches revealed that the first five tracks are all songs the respective artists and record companies are already giving away online. The Sufjan Stevens track is a freebie at his Bandcamp page, songs from Wild Nothing and Deerhunter are authorized free downloads at Pitchfork, a Blonde Redhead track was given to Fader, and a Kitten song appears to be another label-authorized music blog giveaway. I stopped searching there, but that's a five-for-five for the first five songs.

Update: I realize, of course, that iTunes, Amazon MP3, eMusic, and other digital retailers all sell tracks that artists/labels are giving away. And even when artists offer a free mp3, they still might hope that fans will support them by buying the same song. But what struck me here was the fact that Apple is promoting a "discounted" playlist (on the first page of the iTunes store!) that is mostly composed of promo/giveaway tracks.

Do people use a minor third to convey sadness when speaking? (Thanks Laura!)

An eMusic subscriber also wonders about the psychology of song credits versus dollars and cents. (My recent post about it.)

Finally, if you only know the Church from their 1988 hit "Under the Milky Way," check out "The Unguarded Moment," a classic early 80s single from the band. It's currently available as a free download from Amazon MP3.

tags: digital music iTunes Apple AAPL selling free music eMusic the Church the Unguarded Moment 1981

MySpace Still Rules Google Search Results for Music Acts

2010-10-18T13:00:00.002-05:00

Facebook and Twitter are both more popular than MySpace, but based on my informal study, MySpace still rules when it comes to Google search results for music acts. Last.fm is also favored by Google searches.

Given that it's pretty much dormant (and we never did much with it in the first place), I'm always surprised to see our MySpace page show up as one of the top three results whenever I do a vanity Google search for my band. I was curious to see the Google rank for the MySpace pages of well-known artists and conducted a quick search experiment last week. It wasn't exhaustive -- I just started with some of the bigger "indie rock" names of the past decade and threw in a handful of classic rock acts as well. Also, for band names of more than one word, I didn't put quote marks around the full name, I just typed the band name and hit return, figuring that's what most people would do when conducting a search.

For most of the acts, the Google Music Search player appears at the top of the results (no surprise there). And in almost every case, the band's MySpace page was one of the top five search results. Of the 10 other artists I conducted searches for, Led Zeppelin was the only one where a MySpace page wasn't one of the top 10 search results. Facebook only made two top-10 appearances (one of which was a search for my own band), though it was in the 11th or 12th spot for several acts. Last.fm made a surprisingly strong appearance and was a top-10 result for almost every artist.

Some artists (or their labels) are very active on MySpace, of course, so you'd expect to see their respective MySpace pages as top search results. But MySpace also has the substantial advantage of having been around longer than Facebook, Twitter, etc., and online articles and blogs posts have linked to MySpace pages for years. Incoming links figure highly into Google's PageRank calculations, so even if some artists are transitioning their social networking efforts to other sites, MySpace seems likely to remain at the top of Google search results for the foreseeable future. And Apple's new Ping network (I'll be writing more about it soon), seems unlikely to become a top search result, unless iTunes is transitioned to a browser-based platform.

Below are the top 10 search results as of Friday, October 15, 2010. Click on the artist names to see the full search results:

Arcade Fire

official site
MySpace page
Wikipedia page
Google news results
fan page
Google video results
Last.fm page
label page (Merge Records)
Amazon.com album page
Twitter page

Band of Horses

Google Music Search player
official site
MySpace page
Wikipedia page
Google video results
Last.fm page
label page (Sub Pop Records)
Amazon.com album page
artist site (album streaming page)
Facebook page

Broken Bells

Google Music Search player
official site
official site (home page)
MySpace page
Wikipedia page
Google video results
Amazon.com album page
Last.fm page
NPR story
iTunes album link

The Layaways (my band)

Google Music Search player
official site
MySpace page
eMusic artist page
Amazon.com page
Facebook page
CD Baby album page
unrelated site
post at this blog
unrelated site

LCD Soundsystem

official site
official site (album page)
MySpace page
Google news results
Wikipedia page
Google video results
Last.fm page
Vimeo page
Pitchfork interview
Discogs artist page

Led Zeppelin

Google Music Search player
official site
Wikipedia page
Google video results
fan site
Google news results
Last.fm page
Amazon.com album page
fan site
MTV artist page

The National

official site
MySpace page
Wikipedia page
unrelated site
unrelated site
Last.fm page
unrelated site
unrelated site
Google video results
unrelated site

The Rolling Stones

Google Music Search player
official site
Wikipedia page
Google video results
unrelated site (Rolling Stone magazine!)
Google news results
Last.fm page
MySpace page
Artist Direct page (dead link)
fan club page

Google Music Search player
official site
Wikipedia page
fan site
MySpace page
Google video results
Last.fm page
fan site
fan site
MTV artist page

Vampire Weekend

Google Music Search player
official site
official site (music page)
MySpace page
Google news results
Google video results
Wikipedia page
Amazon.com page
Last.fm page
Google image results

The Walkmen

Google Music Search player
MySpace page
official site
official site (news page)
Google news results
Wikipedia page
Last.fm page
Google image results
Google video results
NPR story

tags: digital music Google search results MySpace Google PageRank Last.fm Facebook Twitter music artist websites

The New eMusic: The Psychology of Dollars vs. Credits

2010-10-13T13:30:00.003-05:00

Until the eMusic changes go live next month, it's difficult to speculate exactly what the addition of the Universal catalog and a shift from credits to dollar amounts for purchases will mean. And at this point, I have no idea if eMusic's current business model of sharing 60% of subscriber revenue will persist, or if the company is switching to the iTunes/Amazon model, where it pays labels a wholesale price for each track sold and pockets the mark-up.

As I've written here before, under the current model, labels and artists benefit from the digital breakage that occurs when eMusic subscribers let their credits expire unused. (Subscription plans are "use it or lose it," there is no carryover feature.) In the past, the per-track payout from eMusic to labels has often approached or exceeded the nominal per-track price that the subscription plans suggest. That is, because eMusic subscribers collectively fail to use all of their allotted downloads, when the 60% of revenue amount is divided by the total number of downloaded tracks within a payout period, the resulting payout amount is much larger than the subscription plan packages would suggest. Based on previous payouts that I've seen for my own music in the eMusic catalog, it appears that breakage rates are as high as 40% to 50%.

But with a switch to per-track pricing, I'm wondering if those rates will decline. It's one thing to let your "credits" expire each month. (I've certainly done so, consoling myself that in--a very small way--I'm helping to boost the payout rate I'll see for my music.) The new eMusic interface, however, won't display your remaining credits, it'll show your remaining dollars for the period. And my guess is that subscribers will be more reluctant to lose their money than their credits, even if it means the exact same thing in practice. While the new system will feature a "loose change" component where small amounts (less than the price of single download) will roll over, if you have a balance of $12.99 at the end of the month, you'll lose it all. It seems likely that eMusic subscribers will find dollar amounts more dear than credits.

related: More On eMusic Payouts, eMusic's Per-Song Payout for Q1 2010

tags: digital music eMusic music subscriptions

Jeff Bezos Was Right

2010-09-29T13:39:00.005-05:00

Back in July, when announcing the new Kindle lineup, Amazon.com CEO Jeff Bezos said, "At $139, you’re going to have multiple Kindles, not just one."

I'm now living in a two-Kindle house -- my wife and I purchased them as early birthday presents for each other. Previously, we had zero interest in purchasing an e-reader but the price cuts finally made us jump.

However, while I was quick to buy the hardware, I'm not so quick to spring for content for it. My main reason for purchasing a Kindle was all of the public domain material available for it. I was a biology major in college, but I'm somewhat embarrassed to say that I've never read the original versions of Darwin's The Voyage of the Beagle, The Origin of Species, and The Descent of Man, all available in the Kindle format from Archive.org. And if you're anything of a history buff, there's a virtually endless supply of original works. I loved River of Doubt, the story of Teddy Roosevelt's ill-fated 1913-1914 Brazilian journey, so I was thrilled to find a freebie version of Roosevelt's own account of the adventure.

The Kindle also functions as an extremely rudimentary mp3 player. You can play, pause, and skip songs, but that's about it -- we're talking a sub-iPod Shuffle functionality. It seems like the Kindle could easily provide a more robust music experience, but I'm guessing the minimalist approach was a strategic decision by Amazon to avoid direct comparisons to the iPod. The mp3 function is listed in the "Experimental" portion of the Kindle menu, so maybe there are plans for future improvements...

tags: Kindle Amazon.com AMZN e-reader digital books Jeff Bezos

Digital Downloads: Not Just Competing With Free

2010-09-03T12:30:00.004-05:00

In general, the standard iTunes and Amazon MP3 album prices are less than what you'd pay for physical CDs at most retailers, with the exception of "loss leader" pricing at big box stores. And eMusic prices are even lower. But as many have noted, your best bet for picking up cheap digital music is used CDs.

I was reminded of this when my friend Michael posted a picture and list on Facebook of his sweet haul from Reckless Records in Chicago:

The Assembly - Paranoia Will Destroy Ya $.49
Catherine Wheel - Chrome $.49
Jimi Hendrix - The Ultimate Experience $1.99
Blur - Think Tank $.99
The Juliana Hatfield Three - Become What You Are $.49
S.O.D. - Speak English Or Die $1.99
The Smoking Popes - Get Fired $1.99
The Patsy Cline Story - $1.99
Van Halen - Best of Volume 1 $.99
Black Sabbath - Paranoid $1.99
Kiss - Destroyer $1.99
The White Stripes - Elephant $1.99
Bloc Party - Silent Alarm $1.99
Beck - Sea Change $1.99
Mellow - Another Mellow Spring $.49
Office - A Night At the Ritz - $.99
Go Go's - Greatest $.49
Fleetwood Mac - Greatest Hits $1.99
R.E.M. - Dead Letter Office $.99
Hole - Live Through This $.99
Primal Scream - Give Out But Don't Give Up $.99
Blur - 13 $.99
Matthew Sweet - In Reverse $.99

Sure, it's crapshoot as to what you'll discover on any given visit to a used CD store (though you can always find this Jesus Jones release), but my guess is that almost all of these titles would reach the top of the Amazon MP3 chart if offered as daily specials at the above prices.

tags: digital music used CDs iTunes eMusic Amazon MP3

Words and Music: Why Are Digital Books Already More Popular Than Digital Music Downloads?

2010-07-22T16:45:00.006-05:00

Amazon.com, of course, doesn't represent the entire book market. Yet Monday's Amazon press release, which revealed that the company now sells 143 Kindle books for every 100 hardcover books sold, makes it clear that consumers are embracing digital books at a much faster rate than digital music.

So why has a book format introduced years after commercial digital music downloads already gained greater commercial acceptance? Some quick thoughts about the possible reasons why:

1. Existing Content
If you buy an iPod, you need something to put on it. Most music fans already own CDs that can be easily converted to mp3s. (We'll get to free/pirated music in a bit.) But you can't readily transfer your existing books to an e-reader. And even if you could, most people don't re-read their favorite books in the same way they listen to their favorite music over and over again. Frequent readers always need fresh content.

2. The Flexibility of CDs
When it comes to purchasing new music, the main advantage to buying digital downloads is the immediate delivery. However, if you're not in a hurry, purchasing a physical CD gives you much more flexibility. It delivers higher-quality sound files that can be converted into the file format of your choice, you can play the disc itself, and it serves as a back-up copy of the original WAV files.

3. The Unbundling Effect
The introduction of commercial digital downloads was more than a new medium/delivery format. It also meant that consumers were no longer forced to purchase an entire album if they only wanted one or two songs from that album. Perhaps the cherry picking of favorite tracks has contributed to modest growth of digital music sales relative to the total amount of music purchased on CD. With e-books, consumers don't have the option of cherry picking, and it seems unlikely that they'd do so, even if e-books could be purchased by the chapter. (With the exception of textbooks, as a comment to this post noted.)

4. Digital Books Are Relatively Cheaper Than Digital Albums?
Scratch that one. I started to write that unlike the prices of digital albums relative to CDs, digital books are almost always considerably cheaper than physical books. But a quick glance at Amazon's Kindle chart reveals that many of the bestselling digital books (like this one) are actually more expensive than the paperback or even hardback versions. This, however, might be a recent change -- before Amazon was forced to accept the agency model, it was selling many digital books as $9.99 loss leaders.

5. More Options for Free Music/Demographics
Two thoughts here: While there are hundreds of thousands of free, legal e-book titles, new releases are probably harder on P2P networks than new music.

There's also a demographic angle to consider. My guess is that, on average, the biggest consumers of music are younger than the biggest consumers of books. And, on average, younger consumers have less money, are more tech savvy, and are less likely to have qualms about not paying for copyrighted material. Older consumers, on the other hand, have more disposable income, are less tech savvy, and might be uncomfortable downloading pirated e-books, even if they were as readily available as music. Please don't get me wrong -- these are all broad generalizations. I'm not saying that all young people refuse to pay for music or that anyone over 40 doesn't have the know-how to download from a P2P network (or that young people don't read and older people don't listen to a lot of music). But if these general trends are true, they might have contributed to the faster growth of the digital book market.

What did I miss? If you have any other ideas or thoughts about why the switch to digital books is progressing faster than the changeover from CDs to music downloads, please leave a comment.

related: Digital Books vs. Digital Music

tags: digital music digital books e-books Amazon.com AMZN Kindle

Friday Fun: The Layaways and The Man From U.N.C.L.E.

2010-07-09T15:02:00.004-05:00

My band the Layaways has never released a video, but thanks to Rumblefish music licensing, which provides content for YouTube's AudioSwap functionality, there are currently several dozen videos with our music on YouTube. We receive a fraction of a cent for each play, though it hasn't been much of a moneymaker so far. Our quarterly royalty checks have all been for less than $10, but you never know...

This is my favorite of the lot: Someone edited together a bunch of scenes from The Man From U.N.C.L.E. to highlight the, uh, romantic tension between the two leads, Robert Vaughn and David McCallum. He used "I Got You Babe" by Sonny and Cher as the soundtrack, but after receiving a take-down notice from Warner Music, substituted "Silence" by the Layaways. It's somewhat random, but in quite a few places the lyrics actually seem to work with the video:

tags: digital music YouTube The Man From U.N.C.L.E The Layaways

Monday Odds and Ends

2010-06-28T12:55:00.001-05:00

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.

tags: digital music free music

C'est Lala Vie

2010-06-17T13:24:00.002-05:00

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!

tags: digital music Apple AAPL streaming music iTunes Lala Spotify

eMusic's Per-Song Payout for Q1 2010

2010-06-03T12:58:00.005-05:00

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

tags: digital music eMusic eMusic royalty iTunes

Jane Siberry Ditches "Pay What You Want" for "Pay It Forward"

2010-05-20T13:59:00.004-05:00

A few years ago, Jane Siberry was averaging $1.14 a track for direct downloads to fans using a "pay what you want" model. But citing frustrations with PayPal, she has switched to a "pay it forward" approach (with an option to mail in a check, if you really want to):

i have let paypal go. old-fashioned wheezy paranoid beast. and i can't find a simple enough new solution. so, all music is pay-it-forward. see 'music' link at top right of this page.

Her entire catalog is now available as free mp3 or AIFF downloads. (Via Unclutterer.)

tags: digital music Jane Siberry free music

Google Music Search Not Waiting for 5/31

2010-05-10T10:09:00.006-05:00

Apple will shutter the Lala streaming service on 5/31, but Google's music search feature has already replaced Lala with iLike/MySpace Music for streaming an act's top songs:

One major difference -- the Lala embeds usually featured the full track (for the first listen, at least), while the iLike application doesn't always stream the complete song. In some cases, you'll only hear the first 30 seconds or 1:30 of the song. A link to Lala remains, along with links to Rhapsody and Pandora.

tags: digital music Google music search GOOG Lala Apple AAPL Rhapsody Pandora

Bye Bye Lala

2010-04-30T06:55:00.002-05:00

Apple will pull the plug on the Lala music streaming service on May 31st. From an e-mail sent this morning to Lala members:

The Lala service will be shut down on May 31st.

In appreciation of your support over the last five years, you will receive a credit in the amount of your Lala web song purchases for use on Apple's iTunes Store. If you purchased and downloaded mp3 songs from Lala, those songs will continue to play as part of your local music library.

Remaining wallet balances and unredeemed gift cards will be converted to iTunes Store credit (or can be refunded upon request). Gift cards can be redeemed on Lala until May 31st.

tags: digital music Apple AAPL Lala

Some Quick Thoughts on the Quirk Presentation

2010-04-28T15:47:00.001-05:00

Tim Quirk's presentation on the Walkman to the iPod and how portability and infinite storage changed the way we listen to music is a great read. And I completely agree that it's a shame that traditional radio formats are so narrow. It's hard to discover great new music if everything you listen to comes from the same genre or subgenre.

That said, I can't help thinking that his interpretation of the musical open-mindedness of Guns N' Roses fans is a little too generous. Quirk notes that Big Champagne data on P2P traffic reveals some surprising diversity in the music libraries of GNR fans -- more than a third of those listeners also have tracks from Tim McGraw, Kenny Chesney, and Garth Brooks. Quirk asks the rhetorical question, how many radio stations play all four of these artists?

After reading Quirk's post, Glenn Peoples at Billboard conducted a quick experiment and reported that the first three subsequent artists played on a Pandora Guns N' Roses station were Bon Jovi, AC/DC, and Metallica, even though, based on the Big Champagne data, Eminem and Black Eyed Peas had much higher GNR correlations those rock artists (and the three country acts above). Earlier today, I did the same thing on Last.fm and the first five subsequent artists were Aerosmith, Izzy Stradlin, Skid Row, Sebastian Bach, and Gilby Clarke.

So are GNR fans ill served by Pandora and Last.fm? The underlying methodologies for these two services are a very different, but it's probably safe to say that neither is likely to serve up tracks by Tim McGraw or Black Eyed Peas on a Guns N' Roses station. Yet even though it'd be wonderful if streaming services pushed the boundaries more on musical genres, I'd argue that the majority of those GNR listeners might not want to hear those artists.

Please don't get me wrong -- I'm not arguing for musical conservatism, I think almost every music fan could stand to expand his or her listening range. But a listener who likes Guns N' Roses enough to launch a GNR station on Pandora or Last.fm is no doubt a completely different listener than someone who just happens to have a GNR track in his or her library. (Especially when you consider that the tracks arrived there via a P2P service.) The former listener is a somewhat dedicated fan, the latter might just be someone who has fond memories of "Sweet Child O' Mine" and other 80s music and nabbed the track from a P2P service, but doesn't have much interest in the rest of the band's catalog.

Despite the correlations reported by Big Champagne, none of Last.fm's top 250 similar artists to Guns N' Roses (as determined by actual tracks played by listeners) are outside of the hard rock, metal, or rock genres. While I truly believe that fans of one genre like and appreciate great songs from completely different genres, unless the Big Champagne data shows a similar overlap in the number of listens, as opposed to a mere shared presence on a hard drive, it doesn't indicate that any given Guns N' Roses fan is open to hearing Black Eyed Peas, Eminem, or Kenny Chesney.

tags: digital music Big Champagne Pandora Last.fm Tim Quirk

Monday Odds and Ends

2010-04-26T09:31:00.004-05:00

CD Baby will now distribute a digital single for $9, with no ongoing annual fee. No specific mention was made of an ongoing commission, but I'm assuming it's the same 9% charged for digital sales of digital albums and individual songs from those albums.

Last week's New Yorker had a great piece on the iPad and the Kindle, and the economics of digital books. Also from that issue, Least Common Complaints About the New iPad.

From Sunday's NY Times Magazine piece on the National:

"The corporate model has collapsed, but small-label bands playing to 200 people a night can pay the bills and raise a family on it. That's why we’ll have better and more interesting innovations."

You can stream the band's new album from the NY Times article and a free download of "Bloodbuzz Ohio" is available here.

Senzoo is a new widget for soliciting online donations.

The transcript of Apple's earnings call from last week.

And BusinessWeek (or "Bloomberg Businessweek" as it's now billed) has a piece on Apple's app strategy:

For Apple, it's a Wintel-like cycle in which new Apple hardware drives the creation and purchase of new apps. Except it's better than Wintel; the combination of Intel processor running Microsoft's Windows operating system never really managed to leap from PCs to other devices. Apple has constructed its empire so that almost anything you buy on iTunes -- and Apple has your credit-card information with your first purchase -- can run on any future iProduct. "The laws of nature say that [Apple is] making too much damn money, that this has to be unsustainable," says David J. Eiswert, who runs T. Rowe Price's (TROW) $312 million Global Technology Fund (PRGTX). "But who is going to stop them?"

tags: digital music CD Baby Apple AAPL

Our First Spotify Payouts

2010-04-21T12:27:00.004-05:00

As the old saying goes, if you lose money on each sale, you can make up for it with volume. I thought of it when the first payouts for Spotify streams showed up in our CD Baby account last week. (CD Baby began delivering content to Spotify in early 2009.)

The payments, of course, aren't negative amounts. Yet the amounts for individual streams are small enough that it will take an extremely large volume to add up to any significant amount.

For August and September of 2009, we received per-stream payouts of .02 cents, .03 cents, .06 cents, and -- my favorite -- an amount so small that it apparently rounds to .000000 cents! These numbers are all after CD Baby's 9% commission, so the actual payouts from Spotify were approximately .022 cents, .033 cents, and .066 cents per stream. I'm assuming that the different amounts represent streams by different Spotify user types (free, day pass, and premium) and/or regions.

A couple years ago, Glenn Peoples discussed the disparity between per-stream payouts and those for actual digital downloads, noting that it takes 70 plays at a one-cent payout to equal the revenue generated by a single paid download. At the .022 cent rate, the disparity is much greater -- it would require 3,500 Spotify plays to generate the same payout as that from a 99-cent iTunes download.

So when Spotify listeners (both free and subscription) use the service as a direct substitute for the purchase of music, then it likely has negative consequences for music labels. On the other hand, when services like Spotify steer some listeners away from P2P downloads, it's a positive for labels, even if the amounts are small.

Finally, you can make an argument in favor of the streaming services when they're used to stream music that the listener already owns. That is, once you buy a song (on CD or as a digital download) that's the end of the revenue stream for the label and artist, no matter how many times you listen to it. But if you listen to a track or album you already own via a streaming service, you make an additional micro-payment to the artist and label with each play.

tags: digital music Spotify streaming royalties

A Long Tail Experiment

2010-04-19T14:59:00.005-05:00

Last spring, some research by Will Page (PDF), the in-house economist for PRS (the U.K. equivalent of BMI and ASCAP), received a ton of coverage. Page believed his numbers refuted the "Long Tail" theory, at least for music consumption. The sales figures for the U.K. iTunes store revealed that -- unlike the trends observed by Chris Anderson of the listening habits of Rhapsody subscribers -- the majority of tracks in the iTunes catalog had never been purchased. At the time, arguments were made about the shape of the sales curve and whether or not Page was using the same definitions as Anderson. (Page seemed to imply that the theory predicted that 80% of sales would come from the tail, while Anderson gave a much smaller percentage.) These details aside, the fact remains that Page's research revealed that most digital tracks weren't purchased, a seeming contradiction of the main music example in Anderson's original 2004 Wired article and his subsequent book.

Yet it's not difficult to reconcile these results -- Page and Anderson might both be right. Keep in mind that the music example Anderson gave in the original 2004 Wired article was based on data from a Rhapsody catalog that included less than 1 million tracks. Page examined sales from a catalog of more than 10 million tracks, so it's really no surprise that he saw a much larger number of "dormant" tracks.

The other thing to consider is that there's probably a huge difference in usage within a subscription service vs. sales within a download store. If you're a subscriber to Rhapsody, Napster, or Netflix, there's no additional cost associated with any individual song or film you choose to consume. Indeed, Anderson suggests so in a response to the initial reports of the Page research:

It could be that the pay-per-track model discourages risk-taking and exploration of new music, which is not an issue with Rhapsody, which uses an all-you-can-eat subscription model.

While eMusic phased out the "all you can eat" component of its subscription service years ago, the behavior its subscribers seems closer to that described by Anderson than that observed by Page. An early 2009 press release, which referred to the PRS study, touted the fact that approximately 75% of the eMusic catalog was downloaded at least once in the prior year.

Although tangential to the dormant track conundrum, another issue with the "Long Tail" theory for music sales is that it has too frequently been misinterpreted to imply that artists could somehow expect to earn money from "Long Tail" sales. Anderson, of course, never made that claim -- he suggested that aggregators of content (retailers and service providers such as Amazon.com, iTunes, eMusic, Netflix, etc.) were the ones who would profit from the Long Tail phenomenon, not the individual creators of that content. As I've noted here before, a single play by a Rhapsody subscriber might be enough to include the track in the Long Tail of music consumption, but that single play results in a payment of approximately one cent, hardly enough to think of as actual income.

Back in August, I started a Long Tail experiment of sorts. My current band, the Layaways, is something of a Long Tail act, in that while relatively unknown, we've consistently sold something, if only a few downloads, every month for the past five years. But I was curious to see what might happen with a music act without any Internet footprint, a defunct band with no website and no material currently for sale in any form -- CD, mp3, etc.

So I uploaded a single song from one of my very first bands to Last.fm, making it available for streaming and free download. This group existed in the dark ages before mp3s and music blogs, and we released three "cassette only" albums (we were too broke to release anything on CD or vinyl!). While we sold a few hundred cassettes at gigs and local record stores, as far I could tell, nothing from them had ever made it online in any form. I tagged the track a few times with appropriate descriptions and waited to see what happened.

Nearly eight months later, 30 listeners have heard the song 50 times. The most-frequent listener of the song has played it 10 times and it has been added to one playlist. (I'm not disclosing any details about the song or linking to here because I'd like to keep the experiment running.) Last.fm doesn't supply stats on how many times a free track has been downloaded, so I don't know how many of those listeners liked the song enough to acquire a free mp3 version of it.

I'm not sure if this result proves anything about the Long Tail -- the only thing I can safely say is that if something is uploaded to Last.fm and tagged, someone will hear it. Perhaps this is simply a testament to the popularity of Last.fm and how its tag-based streaming radio service works. The song I uploaded isn't available for sale anywhere, so I don't know if anyone would have actually paid for it. Besides, given how subjective musical tastes are, it's difficult to read that much into what happened with a single song. If an equally unknown song were deemed an undiscovered classic by the first few people to hear it, perhaps it might have taken off somehow, if those listeners were inspired to share or promote it.

But despite the relative "success" of my mystery song, one thing seems certain: The amount of available digital music has increased enormously since the original Long Tail article, and it will continue to expand each year. Unless the number of music listeners and their aggregate listening hours increase at a similar rate (I doubt they will), it seems likely that the both the number and percentage of dormant/unpurchased tracks will continue to increase as digital music catalogs grow.

tags: digital music the Long Tail Chris Anderson Will Page Rhapsody Last.fm iTunes eMusic

Feeling Cheap

2010-04-16T16:40:00.007-05:00

As a fan of the Cars, I was happy to see the addition of the group's entire catalog to eMusic this week. (The Led Zeppelin catalog was another major addition.) I own the band's first two albums but there are several tracks from their later releases that I wanted to pick up.

But my enthusiasm cooled somewhat when I saw that the Cars' catalog is only available as "album only." Given that my iTunes library is now more than 10,000 tracks (and I've barely ripped half of my CD collection to mp3), I've started to cherry pick, especially for older material. And even though it'd only cost me $4 to download the entire "Panorama" album from eMusic, I can nab the one song I really wanted, "Touch and Go," for 99 cents from Amazon MP3.

Don't get me wrong -- as an eMusic subscriber, I'm glad for the additions to the catalog. And if major labels opt to make some of their releases "album only," that's OK with me. I'd rather have them there with restrictions than not at all. Yet I'm now more likely to download new releases as full albums. For older material that I'm already familiar with, I'd rather just get my favorite tracks.

UPDATE: In this particular case, there's a workaround -- while the album it's from is "album only," the track is available from eMusic a la carte on this greatest hits collection.

tags: digital music the Cars eMusic

Monday Odds and Ends: Peter Gabriel's Filter and Apple's Moat

2010-04-12T11:29:00.002-05:00

BusinessWeek has a piece on the Filter, the recommendation technology company fronted by musician Peter Gabriel. Unfortunately, it provides very few details on how the recommendation engine actually works.

Has the introduction of the iPad made Apple a "wide moat" company? Morningstar analyst Toan Tran:

What Apple is doing, is that they are building a dominant mobile platform. Basically, they're recreating Windows in the mobile space with the iPhone.

Video and a full transcript are here.

And an interview with "In Pursuit of Silence: Listening for Meaning in a World of Noise" author George Prochnik:

There's a reason people are turning their iPod volume too high. People are responding to several generations of mounting infrastructure noise. We are so loud in part because we have to create our own personal noise so that we don't feel like we're being held hostage to the grind and clash of the environment. I went to Florida, where these people were using their cars to blast super-loud music. But the places where these people live is horrifically noisy. When you're dealing with that kind of environment, I can really see the temptation to blast something that at least you like.

tags: digital music The Filter Peter Gabriel Apple AAPL

Friday Odds and Ends: Minimum Wage Downloads, Free Music, and Live Nation

2010-04-09T12:15:00.000-05:00

This is fun: I've long joked with friends that -- if you add up all the hours spent practicing, performing, writing songs, recording, mixing, etc. -- many professional musicians are actually earning less then minimum wage for their efforts. Fazo, at the Cynical Musician blog, calculates how many downloads/streams you'd need from various digital stores/music services to earn the equivalent of a minimum-wage salary:

- In the case of Amazon and iTunes single-track downloads, 1,813 units must be sold monthly; 21,750 units a year.

- For CD Baby full album downloads (under the new commission rates), the numbers are: 155 units a month; 1,859 units a year.

- For eMusic single-track downloads, at the rates reported for Q3 2009: 3,392 downloads a month; 40,941 a year.

- With Rhapsody streams, you’ll need 127,473 streams a month; 1,529,670 a year (yep, that’s over one-and-a-half million).

- Finally, Last.fm rates mean you’ll need 7,733,333 plays monthly; 92,800,000 plays a year.

Chris Randall at Analog Industries wonders if he should give away the next Micronaut release.

And Morningstar equities strategist Paul Larson on why he recently dumped the stock of Live Nation Entertainment from one of the portfolios he manages for Morningstar's StockInvestor newsletter. (I work for Morningstar as well, though in a marketing capacity.) It's not available online, so I'm posting the best bits here:

I've always liked Ticketmaster's ticketing business; I figured that any business that could frustrate its customers but still keep them coming back is a business with a competitive advantage. Unfortunately, the merger with Live Nation greatly diluted the attractiveness of the overall company.

First, to get the merger past the antitrust hurdles, the company had to agree to license its ticketing software, providing a potential bridge across the moat of the ticketing business. Yet even if the ticketing business retains its moat (something with decent odds of happening, in my view), Live Nation's other operations are quite unattractive. It owns several concert venues, a business with a high degree of rivalry and modest barriers to entry. (This is almost the polar opposite of International Speedway ISCA, which essentially has mini-monopolies in any given city.) Live Nation is also involved in promoting concerts and managing artists, businesses for which I fail to see a moat. The old Live Nation generated an operating loss in four of the past six years, and the combined entity will also have to deal with roughly $1.5 billion in debt.

In sum, Live Nation is a financially levered firm with a declining moat and a management team that have done a good job destroying value. No thank you!

(Morningstar uses the term "economic moat" to describe how well a company can hold off its competitors.)

tags: digital music free music Live Nation

Variable Digital Pricing at Rhino Records

2010-04-08T16:59:00.003-05:00

This is somewhat old news, but I just noticed that Rhino Records, a division of Warner Music Group, is now selling digital downloads directly from its site:

Pricing is variable, with 99-cent and $1.29 320k mp3 tracks, and $1.49 and $1.94 "Hi-Def" (Apple Lossless, WMA, or FLAC) tracks. There's a range of album prices, though the standard price appears to be $9.99 for mp3 albums and 50% more for the Hi-Def versions.

Will higher-quality files lure music fans away from iTunes and other digital retailers? And will they pay up to $14.99 for a lossless digital album?

While the appeal to labels is obvious -- no 30% cut to Apple -- I've never thought that "direct from the label" downloads were that compelling for buyers, unless coupled with lower prices and/or higher audio quality. With its 320k mp3s, Rhino is offering higher-resolution downloads than those available from eMusic, Amazon MP3, and iTunes. (I've heard the argument that the 256k AAC files Apple sells in the iTunes store offer higher sound quality than a 256k mp3, though I've never done a serious A/B comparison.) As far as I know, Amie Street is the only well-known digital store currently selling 320k mp3s.

My guess is that within five years, as the capacity of portable devices increases, lossless files will become the new standard for digital downloads. (Higher quality files for streaming music will no doubt come much later.)

tags: digital music Rhino Records digital downloads iTunes

Of Course the Demand for Music is Elastic: The P2P Numbers Prove It

2010-04-01T16:26:00.004-05:00

In a recent blog post, former eMusic CEO David Pakman notes that the new CD pricing strategy from Universal Music means that the music industry (or at least one major label group), is finally acknowledging that the demand for music is elastic. That is, lower prices will increase unit sales enough to boost the total amount spent on music.

Pakman has long believed that music is elastic, and I tend to agree. In previous blog posts he has cited eMusic sales figures as evidence of the price elasticity of demand for music, but I believe there's another set of data that also makes a strong, albeit incomplete, case for elasticity: peer-to-peer file sharing.

According to the International Federation of the Phonographic Industry, for every track that is purchased from a legal download service, 19 are acquired via file sharing networks. No doubt a percentage of illegal download activity comes at the expense of legal sales, and P2P sharing and other forms of piracy are generally blamed for the decline of music sales over the past decade. (Check out the most recent IFPI Digital Music Report.) But a larger portion of this activity simply represents the increased demand for music when the price is zero. We know this because the sheer volume of music acquired outweighs the amount that was purchased before the advent of P2P sharing.

Think of it this way -- if all of the tracks now acquired via P2P sharing were instead purchased legally via iTunes or other download stores, it'd represent an annual digital music market of approximately $84 billion, 20X the total digital sales of $4.2 billion in 2009. Yet the total market for recorded music peaked in 1999 with worldwide sales of $38.6 billion and U.S. sales of $14.6 billion. And when you consider that the P2P crowd only represents a subset of music listeners -- those with both the basic technical skills to acquire music this way and no qualms about the legality/ethics of doing so -- the total demand for recorded music is obviously much greater than that reflected by total music purchases under traditional pricing models.

So it's undeniable that the demand for music is extremely elastic, at least as the price approaches zero. But you can't make money from $0 per unit, no matter how many are moved. What we don't know for certain is the shape and slope of the demand curve. Does demand only skyrocket as the price approaches zero, or is there some point between zero and current music prices where demand will increase to a level that produces total revenues that exceed the current dwindling numbers?

Keep in mind that -- because of fixed costs such as mechanical royalties -- the increase in demand must be significantly greater than the decrease in prices. Double the sales at half the price is a net loss for music labels. That is, due to mechanical royalties totaling 91 cents, if you drop the retail price of a 10-track album from $10 to $5, you need to sell 2.22 units at $5 to equal the revenue from 1 unit sold at $10, ignoring all other costs. (Physical CDs, of course, have manufacturing costs and shipping costs as well, but even digital albums have additional costs such as credit card transaction fees, though those tend to be percentage amounts.) The demand for music has to be elastic enough to offset the fixed costs that increase as a percentage amount as the selling price decreases.

I've long been convinced that Amazon.com, with its daily and monthly mp3 album deals, has been conducting an ongoing experiment in music pricing and demand, and that it will eventually use (or is already using) its sales data to try to convince labels to agree to a permanent restructuring of the pricing of digital albums. I'd love to see those sales figures, as well as those for Universal CDs under its new pricing model.

Can the music industry somehow adjust its prices to increase the sales of recorded music? Given the trend over the last decade, it seems like it'd be silly not to try. If nothing else, just halting or slowing the ongoing decline would be something of a victory.

tags: digital music price elasticity

Your Choice

2010-03-26T11:10:00.002-05:00

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.

tags: digital music the National Bloodbuzz Ohio

Thursday Odds and Ends

2010-03-25T13:32:00.002-05:00

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.

tags: digital music playlists re-recorded music Youtube

Thirteen

2010-03-24T15:04:00.002-05:00

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

tags: Big Star Thirteen Big Star cover The Layaways

Alex Chilton

2010-03-19T12:35:00.004-05:00

"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:

#1 Record/Radio City - Big Sta...

tags: Alex Chilton Chris Bell Big Star

Pandora's Seventy Percent

2010-03-15T12:38:00.002-05:00

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.

tags: digital music Pandora Soundexchange Apple AAPL iTunes Amazon AMZN streaming royalties

EMI vs. Pink Floyd

2010-03-12T16:36:00.004-06:00

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.

tags: digital music EMI Pink Floyd iTunes Amazon MP3 cherry picking

Soundexchange Makes Some Calls

2010-03-10T12:23:00.008-06:00

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!

tags: digital music Soundexchange streaming royalties Pandora

An Interview with Jonathan Segel of Camper Van Beethoven

2010-03-08T04:00:00.002-06:00

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?

tags: digital music music economics Jonathan Segel Camper Van Beethoven fan patronage SXSW

Egg, Chicken, Sony, and eMusic

2010-03-04T16:43:00.005-06:00

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

tags: digital music eMusic eMusic royalty Sony

More On Buddy, Can You Spare A Hundred Dollars?

2010-03-02T14:37:00.007-06:00

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.

tags: digital music Camper Van Beethoven sxsw fan patronage

eMusic's Per-Song Payout for Q4 2009

2010-02-26T13:40:00.012-06:00

Back in December, I reported that eMusic's per-song payout rate for the third quarter of 2009 increased only slightly from the previous quarter, despite a major price increase, via the reduction of the number downloads allotted for various subscription plans. (Rather than a fixed per-song payout, eMusic shares 60% of its subscriber revenue, minus certain deductions, with the labels in its catalog. That shared revenue then translates into a per-track amount, based on total subscriber download activity for the quarter. In theory, reducing the number of downloads available to subscribers should increase the payout rate, but that rate is also directly affected by whether or not subscribers use all of their allotted downloads.)

For the fourth quarter of 2009, however, the per-song eMusic payout rate increased more than 10%, from 34.2 to 39 cents for single song downloads. This amount is the largest payout rate we've received in the five+ years that we've been in the eMusic catalog. For comparison, here are the eMusic per-song payout rates for the past four quarters:

Q1 2009 30.5 cents
Q2 2009 33.4 cents
Q3 2009 34.2 cents
Q4 2009 39 cents

While the eMusic rate is significantly less than the payout for 99-cent iTunes downloads, it has increased steadily over the past year and is now 56% of the standard iTunes payout of 70 cents. Given that new eMusic subscribers pay more for their downloads than older subscribers (while eMusic adjusted the plans for all subscribers last year, most existing subscribers were given plans that were more generous than those available to new subscribers), it's likely that the payout rate will continue to rise somewhat as eMusic adds new subscribers and/or loses older ones. Given that per-download eMusic prices are lower than those in the iTunes store, the subsequent label payout rates will, of course, always be less.

related: 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

tags: digital music eMusic eMusic royalty iTunes

Buddy, Can You Spare A Hundred Dollars?

2010-02-24T12:52:00.009-06:00

Given that I've written positively about fan-funded recordings, I'm not sure why Camper Van Beethoven's plan to raise money from fans to pay for its trip to SXSW (you can sponsor a song at one of the band's SXSW shows for $100) rubbed me the wrong way.

My first thought was that the members of this relatively well-known act could surely foot the bill themselves, but there's no telling what their personal financial situations are. Yet even if the band is capable of funding the trip, it'd be no different than sports teams asking for municipal support for stadiums, even when the teams are capable of paying for the projects. It doesn't hurt to ask, and -- unlike sports teams that claim they'll relocate if they don't get municipal funding -- Camper Van Beethoven is just asking for donations, not making a threat. My guess is that the band will go to SXSW even if the fund-raising effort is a bust.

I suppose the idea of fan-funded albums doesn't bother me because the result is something tangible, a recording, as opposed to an ephemeral live performance. But that's just my personal preference -- perhaps some CVB fans would rather sponsor a song at a concert appearance than help the band pay for its next album. (And part of me wonders "why stop there?" A band could just as easily ask for fans to finance the purchase of a new tour van, a bass amp, or a new set of cymbals for the drummer...)

The real question here is will these new ways to raise cash from fans expand the total amount of money they're willing to spend, or do they just cause fans to re-allocate the money they usually spend on recorded music and concerts? In the short term, there's probably a novelty effect, and I bet it increases the total amount of money an individual fan spends in a year. Longer term, as more acts try these approaches and the novelty factor fades, I'm guessing it won't.

UPDATE: A follow-up post is here.

UPDATE 2: My interview with Jonathan Segel of Camper Van Beethoven.

tags: digital music Camper Van Beethoven sxsw fan patronage

Why eMusic is Like Costco

2010-02-19T15:14:00.005-06:00

I've written frequently about the health club component to eMusic's business model. For subscribers, there's the "use it or lose it" aspect--you pay for your downloads each month or quarter, whether or not you actually use them. For labels and artists, subscriber activity directly affects the per-download payout amount they receive. Because eMusic shares a set percentage of its subscriber revenue with labels, subscribers who don't use all of their allotted downloads help boost the subsequent per-track payout amount.

But there's another club comparison that seems appropriate: For music consumers, eMusic is also something of a warehouse club. That is, in exchange for buying in bulk, eMusic offers individual tracks at a per-unit cost that is less than the standard prices at iTunes and Amazon MP3, which range from 79 cents to $1.29 a track. And though the eMusic catalog has expanded in the past year to include content from Sony and the Warner Music Group, as with the warehouse clubs, the total selection is less than that available from standard retailers.

In addition, while the average track price at eMusic is less than the single-track prices at iTunes and Amazon MP3, you can often find better album prices at those digital stores, just as the sale prices at your local supermarket might undercut the warehouse club price. (I missed out on Amazon MP3's one-day special price of $3.99 for the new Spoon release and paid a higher price for it when I used 11 of my eMusic downloads for the album.) There's also the occasional release where eMusic doesn't offer "album pricing" and the required number of downloads results in an eMusic price that exceeds the iTunes or Amazon MP3 price, as well as the cost of the physical version. As is the case with Paul McCartney's Good Evening New York City album, as one eMusic subscriber observes:

2 CD set + DVD costs 13.99 on Amazon, or just downloading the MP3 costs 9.49. My emusic plan is 35 downloads for 15.89...so it costs more to download the tracks here than to buy the actual discs, rip them myself, keep the cd as backup and in addition have the DVD?

This warehouse club comparison is probably something to keep in mind when considering how eMusic competes with iTunes and other digital music stores. Few -- if any -- consumers shop exclusively at warehouse clubs. Though the discount pricing is nice, you'll still need to go other retailers to find specific items. And while an eMusic subscription is a relatively small expenditure, it's also more than some music consumers are willing to spend month in and month out. But for those who regularly purchase digital music, it can make sense to buy some of it in bulk. Rather than convincing these consumers to reject iTunes and the other stores, eMusic needs to make the case for joining the club to receive bulk-rate prices, albeit for a more-limited selection.

related: Sony and eMusic: Why the Per-Track Label Payout Might Not Change, Why Music Subscriptions Are Like Health Clubs, Welcome to the Club

tags: digital music eMusic iTunes Amazon MP3

Follow-Up on the Dead as Business Gurus

2010-02-11T13:26:00.003-06:00

A reader (who seems to know far about the Grateful Dead than I do) wrote to say that while the band was ultimately successful, it wasn't exactly prescient:

...to hear the Dead tell the story, it's true that they did all of those things, but they really had no idea what they were doing when they started doing all that; that "the musicians who constituted the Dead were anything but naive about their business" is a stretch. They blew gobs of the money they earned on all kinds of crap early on, including playing the goddamn pyramids in Egypt, starting a record label (I think), and the "R and D" of putting their "wall of sound" stage audio together. In fact, if I remember right, they HAD to tour for a couple of years in the early seventies or they were going to go broke. They didn't become enormously profitable until the 1990s.

tags: digital music The Grateful Dead

Wednesday Odds and Ends

2010-02-10T11:00:00.003-06:00

Will Warner Music pull the plug on its streaming content at Last.fm, Spotify, Lala.com, etc? In other Warner news, Edgar Bronfman Jr. blames the iTunes price increase for at least some of the slowdown in the growth of digital sales, but still considers the price change a "net positive." Too bad one of the major label groups didn't forgo the $1.29 pricing -- that would have allowed us to quantify how much of the slowdown was due to the poor economy and how much was because of the higher track price. UPDATE: here's the transcript of the WMG earnings call.

I'm not a fan of their music, but this Atlantic article makes the case for the Grateful Dead as music biz gurus:

As Barnes and other scholars note, the musicians who constituted the Dead were anything but naive about their business. They incorporated early on, and established a board of directors (with a rotating CEO position) consisting of the band, road crew, and other members of the Dead organization. They founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales. According to Barnes, the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. The Dead became one of the most profitable bands of all time.

And if you're reading this in Northern California, a friend is hosting a Tom Freund house concert on Friday evening in Davis, CA. Shoot me an e-mail if you'd like the details.

tags: digital music Warner Music Group iTunes the Grateful Dead Tom Freund

Monday Odds and Ends

2010-02-08T13:38:00.003-06:00

Amazon.com and Macmillan officially make up.

From the L.A. Times technology blog:

One could argue that publishers aren't affected by Amazon's pricing. They continue to receive 50% of the cover price for each digital copy Amazon sells, the same as physical books sold at a local bookshop. (Astute observers will correctly point out that Amazon is actually losing money on bestsellers under this arrangement.)

What irks publishers is a concern that Amazon is conditioning readers to believe that digital books are worth less, about 60% less, than the physical copy. Such a steep price cut could have a dramatic impact on the book business in the future, when digital sales become a bigger portion of overall industry revenue. (They currently account for less than 5% of retail book sales.)

While I'm on my e-book tangent, I'd just add that there's a factor that has been ignored in the digital vs. physical pricing debate for books: Loss of resale value. As I noted a couple of years ago, even if you don't plan to sell your CDs, the option to do so has real economic value. And the loss of that value is something that deserves consideration in the pricing of digital goods.

Finally, it's off topic, but definitely worth a listen: I enjoyed Terry Teachout's "Pops: A Life of Louis Armstrong." Christopher Lydon of NPR had an hour-long discussion with Teachout about the book -- click hear for the mp3.

tags: digital music digital books Amazon.com AMZN

Digital Books vs. Digital Music

2010-02-04T14:34:00.001-06:00

I can't help thinking that some major label music executives are feeling a little envious of their publishing counterparts these days. As you've no doubt heard, book publishers were able to establish higher list prices for Apple's upcoming iBookstore while Macmillan did away with $9.99 e-book pricing at Amazon.com. While some in the music industry might be thinking "why couldn't we control pricing in the same way?" there are some major differences between the two industries, and their relative bargaining power:

When the iTunes store launched, it was the only game in town for major label content. (There might have been other digital stores at the time, but none had gained any real traction for selling major label material.)

Pirated digital music was easily available before the launch of any digital music store. Hence, a legal download store was something of a lifeline for the major labels, even if the initial pricing wasn't to their liking. As far as I know, pirated e-book content isn't yet widely traded yet, though there is a huge supply of free public-domain material.

Steve Jobs was able to dictate the initial pricing for legal digital music market, but he obviously had less leverage with digital books. And once publishers were able to dictate terms with Apple, they had the leverage to force changes at Amazon.com, which had established the original market for digital books.

Yet, as former eMusic CEO David Pakman explains, it appears that publishers are more concerned with maintaining the status quo than with finding the optimal price for digital books. While I know very little about the book industry, the idea that publishers would be able to maintain the same price for a digital book as that of a hardcover print book is simply ludicrous. Without printing and distribution costs, digital books can be as profitable as print books at a much lower price point. And if demand is indeed elastic, then publishers could maintain or even increase revenue while earning much less per unit sold.

Two final thoughts:

1. Unlike the music industry, the publishing industry doesn't have the "cherry picking" concern -- books aren't sold by the chapter, and even if they were, it seems unlikely that readers would go for a few favorite chapters from a novel the way music buyers opt for single-song downloads of their favorite tracks.

2. It remains a question of when, not if, a "Napster for digital books" arises. As Pakman observed last October, the best bet for publishers is to have a convenient legal market (with attractive prices) well established before the P2P platforms for digital books inevitably emerge.

tags: digital music digital books iTunes Apple AAPL Amazon.com AMZN

Some Quick Thoughts About The iPad and Digital Content

2010-01-27T13:41:00.002-06:00

I don't have time to put together a coherent essay, but I did want to post some quick random thoughts about the iPad and digital content in general:

- The name -- I'm not sure what else Apple could have called it, but does it make sense to have two product names that are only one vowel apart?

- The pricing -- I've held off on the purchase of a Kindle or other e-readers, but I might jump at the $499 base model iPad.

- Differences between digital music and digital books. Back when the Kindle launched, I observed that one major difference between the iPod and the Kindle is that most consumers already own a ton of content (in the form of CDs) that could be easily transferred to the device. Whereas the only way to fill a Kindle is with new digital files, as few consumers already own hundreds of digital books. However, while free digital music is readily available, most of it isn't legal. For digital books, there are hundreds of thousands of public domain works available (via Google Books, Project Gutenberg, freebies in the Kindle store, etc.), more free content than paid, I believe.

- The digital device/digital content paradox -- consumers are happy to pay for hardware devices to consume digital content, but they don't seem as willing to purchase the content itself.

- Does a "price elasticity of demand" exist for digital books? That is, does a lower purchase price increase sales enough to offset lower per-unit margins? Amazon is pushing a $9.99 or lower price for digital books, while publishers and Apple have settled on $12.99 or $14.99 for most best-selling books for the Apple iBookstore. The revenue split is similar to that for digital music -- publishers get 70% and Apple keeps 30%.

- Just as with the iPod and iPhone, it won't bother Apple if you never buy content via the iTunes store, there's a decent profit built into the price of the device.

- In the end, we're left with the same Malthusian equation: there is simply far more digital content available (much of it free) than there are hours/consumers to take it all in. Some content providers will reach new audiences and make new sales because of the iPad, but it will never be a rising tide that lifts all boats.

tags: digital music digital books Apple AAPL iPad iPod iTunes Amazon

Tuesday Odds and Ends

2010-01-26T11:39:00.005-06:00

Glenn from Billboard notes that most of the current top-downloaded labels at eMusic are WMG or Sony affiliates. The major lable dominance began over the summer, soon after the Sony back catalog was first added to the eMusic catalog.

Derek Sivers interviews Seth Godin:

...I want to challenge the notion of "great music." Sure, some music that's great is great for the ages and it's okay that's it's not being heard, but so much of what people call great art (whether it's a book or a song or a way of doing customer service) isn't actually great, it's merely "very good." Very good music is unheard every day, because very good music is not in short supply. There's a huge surplus of it.

I'm not equating "great" with "commercial." I have no doubt that there's great art that doesn't sell. But most musicians you and I know are TRYING to be commercial, if commercial means successful, heard, lots of stuff sold, lots of people at the concerts. And in the rush to be successful, sometimes great gets pushed out the window. I've sampled hundreds of songs on CDBaby and I can say that almost all of it is very good. And virtually none of it is great, if we define great to mean music I need to buy, to give away, to talk about to everyone I know.

A post at Analog Industries on how laborious the re-mixing process was prior to DAW (digital audio workstations) sparked some good comments about the ease of vs. the results of the creative process.

The Future of Music Coalition breaks down the Nation/Ticketmaster merger.

And the New Yorker's James Surowiecki on why bundling of content continues to makes sense for cable operators. Bob Lefsetz argues that music labels need to bundle as well.

tags: digital music eMusic