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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.
My personal website has links to my LinkedIn and Google+ pages and you can send e-mail to david [at] thelayaways [dot] com.
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If you enjoy this site, please consider downloading a Layaways track or album from iTunes, Amazon MP3, Bandcamp, or eMusic. CDs are available from CD Baby and Amazon.
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April 03, 2008
The Stones and eMusicby David Harrell
Holy cr@p -- eMusic now has the ABKCO portion of the Rolling Stones' catalog -- 25 albums! Quite a coup for eMusic...
tags: digital music The Rolling Stones eMusic
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April 01, 2008
The Four Dollar Insertby David Harrell
Is an iTunes "Digital Booklet" worth four bucks? That's the only difference between the $13.99 iTunes version of the new R.E.M. album and the $9.99 bonus track version from Amazon.com. (Interestingly, Amazon's also selling a non-bonus-track version for $9.99.)
Update: It's now a $5 digital booklet -- Amazon lowered its album price to $8.99 at some point during the day.
No time for it today, but I'm working on another iTunes/Amazon.com pricing comparison -- look for something later in the week.
tags: digital music iTunes Amazon.com mp3 digital album prices
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March 25, 2008
Tuesday Odds and Endsby David Harrell
Merge Records now sells digital downloads from its online store. It looks like the standard album rates are $8.99 for 320k mp3 files and $11.49 for FLAC, vs. $13.00 for CDs. Individual tracks are also available as 99-cent mp3 files.
Some eMusic subscribers discuss the relative merits of used CDs vs. mp3 files -- loss of resale, convenience of digital files, etc.
And economist Tyler Cowen on the rumored Apple music service:
If the marginal cost of a song is free, people will sample lots more and they will give fewer songs a second listen (higher opportunity cost); of course the opening bits of a song are already free in many cases but this will make sampling even easier.tags: digital music Merge Records mp3
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March 24, 2008
Amazon.com Digital Payout Same As iTunes'by David Harrell
Our first download sales from Amazon.com just showed up in our CD Baby account. We received 63.7 cents per download, after CD Baby's 9% cut. Which means that Amazon.com is paying out 70 cents per single-song download to CD Baby, which is the same as the standard payout for U.S. iTunes sales of 99-cent downloads.
No full-album download sales from Amazon.com have shown up yet, so I don't know what we'll receive for an $8.99 digital album. (That's the price for the Amazon.com mp3 versions of our two albums.)
Also, I don't know if that 70 cents is the standard rate for all labels and digital distributors, or if Amazon.com pays a different rate for tracks priced for less than 99 cents. (Most of Amazon's top 100 mp3 tracks are selling for 89 cents.)
My assumption is that it's a standard rate. Given that Amazon tracks are sold without DRM, I can't see the major label groups agreeing to a lower payout than what they're receiving from Apple for individual songs, particularly the best-selling tracks.
This FAQ at digital distributor TuneCore, however, notes that the Amazon.com mp3 store currently has four pricing tiers:
Amazon MP3 sells individual songs and albums at various price levels:While the range of mp3 album prices is easy to observe in the Amazon.com mp3 store, it takes a bit of searching around to find individual tracks priced for less than 89 cents. But they are there, starting at 45 cents for some sub-two-minute tracks, and prices top out at $1.99 for extra-long tracks.
Front Line: The highest retail price in the store (good for new releases)
Mid Line: Slightly lower than Front Line (good for new releases and other current releases)
Catalog: Slightly lower than Mid Line (good for older or lower selling releases)
Special: The lowest retail price in the store (good for promotions, old and/or low selling catalog)
So there's obviously a lower payout rate for those bargain tracks and presumably a higher one for the pricier downloads. And while Amazon.com is competing with iTunes on price, it seems likely that those 89-cent tracks are profitable. Even assuming the same 70-cent "wholesale" cost, 89 cents still represents a 27% markup for a digital good.
tags: digital music mp3 digital downloads Amazon.com AMZN iTunes Apple AAPL
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March 20, 2008
The Big Switch: Will It Happen for Music?by David Harrell
I'm a big fan of Nick Carr's Rough Type blog and I'm about halfway through his new book, The Big Switch: Rewiring the World, from Edison to Google.
Carr begins with the history of power and the transition from water- and steam-based systems to electricity. The pre-electrical systems were, of course, all based on local production of power. And Thomas Edison originally thought electricity (at least for industrial usage) would be local as well -- that the business of electric power would be built around selling generators and dynamos to industrial users, who would them use to create their own energy. However, the grid model quickly supplanted this model, as it turned out that electrical power could be generated less expensively and with greater reliability by a remote supplier, and then delivered via a network of power lines.
The new "big switch" that's the thesis of the book is how businesses (and individuals) are now abandoning the idea of local-installed software in favor of Web-based applications. The same goes for storage and general computing, with the example of Amazon's S3 and EC2 services.
Carr doesn't directly address music consumption trends, but the idea clearly extends itself to digital music. Today, the majority of music listeners are still doing the equivalent of "generating their own power" by listening to digital files (either via CDs or purchased downloads) served up locally -- on home computers or portable devices. Although online music subscription services have existed for nearly seven years, they have so far failed to catch on with the general public.
Why the lack of success? In the big switch examples given by Carr, it appears that the network/grid versions needed to be both economically competitive AND as convenient and reliable as the older products/services they replaced.
On the surface, music subscriptions definitely have economics in their favor. A relatively low monthly fee gives listeners access to an amount of music that might -- literally -- cost millions of dollars to purchase outright. (Though the subscription services' line about "thousands of dollars to fill an iPod" line was always somewhat disingenuous, as it ignored the fact that most iPod purchasers can readily fill their devices with the thousands of songs they already own on CD.)
Yet Steve Jobs famously dismissed this appeal for subscription services, opining that listeners want to own their music instead of renting. The psychology of ownership -- the fear of "losing" your music should you ever stop your subscription -- no doubt influences consumer decisions. But I'd argue that the larger reason for the lack of enthusiasm for subscriptions is that they haven't yet sufficiently matched the "local" listening experience. My own experience with the paid subscription services is that even with an incredibly fast Internet connection, you still have to contend with buffering times, latency issues, system crashes, annoying forced software updates, etc. It's just not the same as skipping around your iTunes library on a PC or listening to an iPod. (To be fair, I've never tried the mobile devices such as the Sansa Connect, which can store files from Yahoo's Music Unlimited service and allows on-the-go updates.)
But just as the early power grid improved, we're seeing continual improvements in available bandwidth, streaming rates, and the storage capacities of mobile devices. Imagine a world in which streaming is instantaneous, updates take place behind the scenes, and there's no perceptible performance difference between streamed music and that stored on your device or hard drive.
I doubt Apple's rumored subscription service will do all (if any) of that just yet. But whatever Apple rolls out, I'm betting the user experience will be a step up over previous systems. And even without any improvements over the current services and devices, just having the manufacturer of the most-popular portable device embrace the concept is bound increase public acceptance of the idea of networked music. (The lack of iPod compatibility, along with P2P piracy, is often cited as the major reason for the relative failure of the subscription services.)
Assuming that the economics can also work for artists, labels, and publishers (Glenn at Coolfer recently noted some of the business challenges here, $20 per iPod probably isn't going to cut it) an eventual switch to networked music of some sort seems inevitable, at least for the generation of music consumers who are sufficiently wired.
tags: digital music music subscriptions Apple AAPL iPod
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March 14, 2008
Friday Fun: Sweet Jane with a Moustacheby David Harrell
It's definitely NOT my favorite performance of the Velvet Underground classic, but this 1974 Lou Reed solo version is worth a look, if just to see Lou's "all moustache" band:
tags: digital music Lou Reed Sweet Jane
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March 13, 2008
Not Too Badby David Harrell
Trent Reznor's gross sales for the first week of the self-released Ghosts I-IV album exceeded $1.5 million:
Trent Reznor has gone public with the sum total of all the money he made in first week sales after self-releasing his instrumental album Ghosts I-IV: $1,619,420. The album, released on March 2nd in a multitude of different formats at nin.com, "immediately sold out" of its run of 2,500 "Ultra-Deluxe Limited Edition" versions (complete with vinyl, deluxe packaging and a Reznor autograph), each with a $300 price tag. In all, 781,917 transactions were made for the album, with people either downloading a quarter of the album for free, downloading the entire album for $5, purchasing a physical copy for $10 or getting the non-ultra-deluxe limited edition version for $75.tags: digital music self-released music Trent Reznor
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March 12, 2008
Wednesday Odds and Endsby David Harrell
From Saturday's Wall Street Journal: Music supervisors and ad agencies are attending SXSW to find new bands for music licensing. Earlier in the week, Coolfer noted that most of the acts mentioned in this AdAge article about licensing "indie artists" were actually signed to major labels.
And this week's issue of Fortune magazine is an Apple fest: Steve Jobs is the cover star and there's an interview with him, in conjunction with Fortune's naming of Apple as the #1 "most admired company. There's also a somewhat unflattering article (options backdating, failure to disclose his health issues) titled The Trouble with Steve Jobs.
tags: digital music music licensing Apple AAPL Steve Jobs
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Popular Posts
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The Digital Pricing Conundrum series:
Part One Part Two Part Three Part Four
THE LAYAWAYS
Out Now -- "Maybe Next Year" -- The New Holiday Album:
"This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium
"Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs
O Christmas Tree - free mp3 lyrics and song details
Away In A Manger - free mp3
Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.
"...about as melodic and hooky as indie pop can get." -- Absolute Powerpop
"Their laid-back, '60s era sounds are absolutely delightening." -- 3hive
"...melodic, garage-influenced shoegaze." -- RCRD LBL
Where The Conversation Ends - free mp3
January - free mp3
Keep It To Yourself - free mp3
Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.
"The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music
"Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio
Silence - free mp3 lyrics and song details
The Long Night - free mp3
Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.
"These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover
Let Me In - free mp3
Ocean Blue - free mp3
Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.
More Layaways downloads:
the layaways website