Digital Audio Insider -- the economics of music and other digital content


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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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

As an Amazon Associate I earn from qualifying purchases.

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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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October 30, 2008

One More Day
by David Harrell

Last.fm banner

No, I'm not counting down the hours to Halloween, but tomorrow is the day that Last.fm will release the first accounting reports for its artist royalty program.

I'm certainly not expecting a big payday, as we just recently passed the 2,000 listener mark in our Last.fm stats. Also, the per-song minimums spelled out in Last.fm's FAQ about the program are quite low:
- If your track is played on our free radio service you will accrue a 10% of the Share of Last.fm's Net Revenue (see the definition of "Share" and "Net Revenue" in the terms and conditions) from the free radio service.

- If your track is played on our personalised premium radio service, you will accrue the greater of either 10% of the Share of Last.fm's Net Revenue from the personalised radio service, or US $0.0005 for each complete transmission on the personalised radio service.

- If your track is played on our free on-demand service, you will accrue 30% of the Share of Last.fm's Net Revenue from the on-demand radio service.

- If your track is played on our premium on-demand service, you will accrue the greater of either 30% of the Share of Last.fm's Net Revenue from the premium on-demand service, or US $0.005 for each complete transmission on the prepaid or subscription on-demand service.
The minimum rates above are obviously less than the penny-per-stream rates that some services have been paying for free streams. However, in Last.fm's defense, a penny-per-stream isn't a viable business model for ad-supported music (at least not banner ads). As Lucas Gonze noted back in June, you'd need a ten-fold increase in current CPM ad rates to support a penny-per-stream payout.

Look for follow-up post next week, after I've had a chance to digest the first report.

tags:

link 0 comments e-mail listen to the Layaways on Spotify


October 28, 2008

Napster -- the Best Digital Payout?
by David Harrell
A few Napster mp3 sales just showed up in our CD Baby account. What's interesting is that we received 85.8 cents a track. And that's AFTER CD Baby took its 9% cut, which suggests that Napster is paying out 94.3 cents a track.

Perhaps it's an accounting mistake -- it seems unlikely that Napster can come close to breaking even on a 99-cent sale! (Apple's iTunes and the Amazon.com MP3 store both pay distributors and labels 70 cents for 99-cent downloads...)

UPDATE: It just occurred to me that these may be international sales, for more than 99 cents in U.S. dollars. CD Baby doesn't indicate where each digital sale is coming from, unless it's from a specific iTunes store.

tags:

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October 17, 2008

Trading CDs for iPods, Literally
by David Harrell
I found an interesting ad in the current issue of the Big Takeover: NYC-based iPodMeister trades new iPods for used CDs and DVDs. And, in exchange for additional CDs, iPodMeister will rip the discs, load the tracks onto the iPod, and send back-up DVDs:

iPodMeister exchange chart

The back-up option probably violates a strict "fair use" interpretation of copyright law (that is, you're not supposed to retain copies of CDs you no longer own...), so I'm wondering how long it can continue before the RIAA sends a letter of some sort.

Also, the per-disc cash equivelent is relatively low. For example, a new 8 GB iPod Nano currently sells for $139.94 at Amazon.com, which means iPodMeister is essentially paying 93 cents for each used disc with its current iPod Nano offer (or 70 cents per disc if you opt for file back-up and loading). You might do better taking a box of discs down to the local used CD shop.

However, it's still an enticing offer, and it's pretty much hassle free -- iPodMeister will even pay for UPS shipping. We moved two years ago and the bulk of my CD collection is still languishing in boxes in the basement, so I can see the appeal of directly converting something that's sitting unused into a shiny new iPod.

Unfortunately, it's not a way for self-released musicians to turn unsold stock into a new iPod:
We usually only accept one CD per title, i.e. we do NOT accept a dozen unsold, shrink wrapped CDs of a local bar band.
tags:

link 3 comments e-mail listen to the Layaways on Spotify


October 15, 2008

The MP3 Debate
by David Harrell
My apologies for a post that is completely off-topic, though it is somewhat topical...

Terry Teachout's piece in Saturday's Wall Street Journal about the release of some 1908 recordings by presidential candidates William Jennings Bryan and William Howard Taft (and tonight's presidential debate) got me thinking about one of the first things I ever listened to on my iPod -- the four 1960 Kennedy-Nixon debates. They're available for free download as mp3 files at Archive.org and are definitely worth a listen for anyone with a passing interest in politics or U.S. history.

While much of the content of the 1960 debates seems completely modern, there are some interesting anachronisms. For example, I never knew that the number of hydro-electric damns in the United States, relative to the number in the Soviet Union, was such a hot political topic. And though it's been a couple years since I listened to all four debates, I'm pretty certain that Kennedy made at least one reference to "colored" children when discussing public education.

The Wikipedia entry for the 1960 election expands on the conventional wisdom about the debates (Kennedy looked good on television and Nixon didn't, so television viewers thought Kennedy won, while radio listeners thought it a draw or a win for Nixon), noting that political observers gave Kennedy the nod for the first debate, Nixon the edge for the second and third debates, and the fourth debate was considered a tie.

When I listened to them, I didn't perceive a significant advantage for either candidate -- certainly no knock-out blows. Regardless, they're a fascinating listen and not a bad way to fill your morning commute for a week or so.

UPDATE: If you arrived at this page looking for an mp3 of the third Obama-McCain debate, you can download it here from NPR.

tags:

link 0 comments e-mail listen to the Layaways on Spotify


September 23, 2008

While I Was Out
by David Harrell
A couple things that didn't get posted during my recent blogging hiatus:

Amazon.com MP3: We had previously sold some individual tracks, but our first "full album" sales recently showed up in our CD Baby account. The albums are priced at $8.99 and Amazon paid out $6.50. (We received 70 cents for individual tracks that sold for 99 cents.)

Lala.com: In August, our first two albums were delivered to Lala from CD Baby and one of them is now up and running on the site:



In addition to offering free streams and mp3 sales, Lala sells 10-cent "web songs," that allow you to stream the track an unlimited number of times. I'm curious to find out what the payout rate is for them, so I purchased the web songs for a couple of our tracks.

As I noted in an earlier post about the new Lala.com, whatever the payout rate, the dime songs appear to be a worse deal for labels than the payouts from the traditional (Napster, Rhapsody) subscription/streaming services. That is, even if Lala pays the entire dime to the label, once you get beyond 10 plays, it's a worse deal for the labels than the Napster/Rhapsody rates, which pay at least a penny a stream. Then again, it's not an either/or proposition -- the number of subscribers to the streaming services is still relatively small, so there's a good chance that sales of the dime songs are to music fans that don't subscribe to either Napster or Rhapsody.

My other thought here is that -- as much as possible -- it makes sense for musicians to try to steer listeners to free streams that offer some compensation (even if it's only a fraction of a cent per listen). For example, rather including your own Flash-based music player on a band site, why not embed an album or playlist using a Last.fm or Lala.com widget? Unless you're averse to having a branded player on your on site, it at least gives you the chance to capture some revenue for the free streams. And I can't help wonder how much some of the more popular MySpace acts would've earned if there was any sort of per-stream payout for the current MySpace music player. (I believe there'll be some sort of ad-revenue share for the new MySpace Music...)

related: The New Dime Store, Part 2

tags:

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September 18, 2008

Checking Out Bandcamp
by David Harrell

Bandcamp banner

David Rose of Know the Music Biz recently made the case for musicians selling downloads directly from their own websites, instead of sending listeners off to iTunes, Amazon.com, etc. While my guess is that most consumers prefer to buy from a download store -- if I want to buy something I've discovered, my first impulse is to check eMusic, then Amazon.com MP3 if eMusic doesn't have it -- there's certainly no downside to doing so. Without direct sales, maybe you're missing out on some impulse purchases.

The new Layaways album is tentatively scheduled for an October 28th release. And while we're planning to offer free digital tracks (in addition to selling CDs and digital downloads in the usual places), given that "it can't hurt," I've been thinking about ways to offer direct sales. Bandcamp, which got a very positive mention from Hypebot yesterday (also see this Waxy.org interview with founder Ethan Diamond), seems like it might be an easy way to facilitate online sales.

I spent some time with it yesterday -- here's my quick take:

There's a lot to like about Bandcamp, as well as a couple things that are somewhat disappointing, though the Bandcamp folks can't be faulted for one of them.

Pro:

Great design and interface -- it's definitely one of the better looking music download sites. And the musician has complete control over the details on the album and track pages -- credits, images, lyrics, etc.

Fast -- your tracks are available for sale almost immediately after uploading. If you wanted to, you could be selling live tracks just minutes after finishing a gig.

Very flexible download/file options. Users just upload a single WAV or AIFF file for each song, Bandcamp then handles all conversions to various file formats -- 128k mp3, 320k mp3, AAC, Ogg Vorbis, FLAC, etc., and takes care of all of the ID tagging. You can decide what to offer as a free download and set the selling price for paid downloads.

East viral sharing -- anyone can create code for adding a track/album widget to social networking sites or web pages:

<a href="http://thelayaways.bandcamp.mu/album/weve-been-lost">Silence by the layaways</a>

Responsive team -- the site was a little sluggish and I was having trouble uploading a music file. But I received an e-mail response to my help request within half an hour.

Con:

A small quibble, but as far as I can tell, there's no option for setting different prices for different file formats, other than giving away 128k mp3s and charging for other file formats. That is, you can't set one price for mp3 downloads and a higher price for lossless files.

It's not on your site! One thing that Bandcamp touts is search engine optimization -- that your Bandcamp pages will show up as the first result when a music fan does a band name/song title search. But it seems like you're essentially handing your Google ranking over to Bandcamp. My strong preference would be the ability to have the entire Bandcamp sales platform on my own site, as opposed to linking. Though that might not work with the...

...business model, which isn't finalized yet. For now, Bandcamp is free (hard to complain about that!), but there's no guarantee as to what future fees might be, though the FAQ says that any cut of digital sales would be limited to 15%. If all of the Bandcamp functionality worked within an embedded widget or was completely "behind the scenes," it would obviously limit the possible revenue models.

But what really dampened my initial enthusiasm for Bandcamp are the PayPal fees for each transaction. One of the first things I noticed when setting up a track is that the minimum price for an individual track is 50 cents, which pretty much rules out "eMusic prices" for individual tracks. I soon learned why -- the PayPal transaction fees are 30 cents per transaction plus 1.9% to 2.9% of the purchase price. At standard iTunes pricing (99-cent tracks, $9.99 albums), that works out to around 33 cents for a track and 60 cents per album.

Hence, there's not much of a financial advantage to selling a 99-cent download via Bandcamp versus a 99-cent sale via iTunes or Amazon.com. However, for album sales, a $9.99 sale would net a self-released artist a couple bucks more than an iTunes or Amazon.com MP3 transaction.

Despite the above misgivings, my initial impression is that Bandcamp mostly got everything right, and the PayPal fees aren't something they can control. I just wish there was a workaround of some sort to keep the transaction fees low enough to offer more flexibility for single-song prices.

tags:

link 1 comments e-mail listen to the Layaways on Spotify


September 15, 2008

Future of Music Coalition Appearance
by David Harrell

Future of Music banner

I'll be attending the Future of Music Coalition's Chicago seminar next Monday, September 22nd -- and appearing on the "Music 2.0: How musicians can use technologies to promote and distribute their work" panel. Complete details and the full schedule for the day are here.

My apologies for the month-long posting drought. We mastered the new album last week and while we're making a few small changes, it's essentially finished! Next up -- insert design, CD manufacturing, a website redesign, booking some gigs, etc...

tags:

link 0 comments e-mail listen to the Layaways on Spotify


August 18, 2008

Busy, Busy, Busy
by David Harrell
Sorry for the recent lack of posts. We're in the final stretch for the new Layaways album, trying to finish up the last few overdubs and mixes before mastering the record. So things here will be quiet until September. Thanks!

link 1 comments e-mail listen to the Layaways on Spotify


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The Digital Pricing Conundrum series:
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THE LAYAWAYS

Out Now -- "Maybe Next Year" -- The New Holiday Album:

<a href="http://thelayaways.bandcamp.com/album/maybe-next-year">Joy To The World by The Layaways</a>

"This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

"Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs

O Christmas Tree - free mp3 lyrics and song details
Away In A Manger - free mp3

Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.


album cover art from The Space Between

 <a href="http://thelayaways.bandcamp.com/album/the-space-between">Keep It To Yourself by The Layaways</a>

"...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

"Their laid-back, '60s era sounds are absolutely delightening." -- 3hive

"...melodic, garage-influenced shoegaze." -- RCRD LBL

 Where The Conversation Ends - free mp3
January - free mp3
Keep It To Yourself - free mp3

Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.


album cover art from We've Been Lost

 <a href="http://thelayaways.bandcamp.com/album/weve-been-lost">Silence by The Layaways</a>

"The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

"Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio

Silence - free mp3 lyrics and song details
The Long Night - free mp3

Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.


album cover art from More Than Happy

 "These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover

 Let Me In - free mp3
Ocean Blue - free mp3

Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

More Layaways downloads:

download the Layaways at eMusic download the Layaways at iTunes

the layaways website