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


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

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

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If you enjoy this site, please consider downloading a Layaways track or album from iTunes, Amazon MP3, Bandcamp, or eMusic. CDs are available from CD Baby and Amazon.

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May 15, 2012

Tuesday Odds and Ends: Long Tail Content, Occupy This Album
by David Harrell
As noted in a comment by Glenn Peoples, the 90% figure is too high. Still, this analysis by Mark Mulligan suggests that a huge percentage of the iTunes catalog is made up of cover/tribute songs:
...I looked at the available tracks on iTunes for 10, randomly selected, top tier artists (see figure). The startling key takeaway is that on average just 10% of the tracks listed for an artist is actually music by that artist. And bear in mind that many of those tracks are duplicates. The average U2 song for example, is listed multiple times ranging from original albums, remastered albums, EPs, greatest hits, compilations etc.
Over at the Atlantic, Alexis Madrigal looks at Shutterstock. It's another example of how "Long Tail" content can be lucrative to firms that aggregate and sell it, though generally not for the individual content creators:
It's an interesting game that Shutterstock is playing. Individual customers pay an average of about $3 per image. That's dirt cheap, but they make up for it on volume, bringing in $120 million of revenue in 2011. On the producer side, my read of their SEC filing is that they paid out $39.3 million in royalties to 35,000 contributors. So the mean contributor is making something like $1,100 a year by posting their work on the site. (I don't know exactly what the distribution looks like; we only know that no entity received more than 10 percent of the royalties paid out.)
David Lowery, of Camper Van Beethoven and Cracker, is blogging about music economics and artists rights at the Trichordist. The full version of his "Meet the New Boss, Worse Than the Old Boss?" presentation is here.

Occupy This Album cover art
Finally, "Occupy This Album" was released today by Razor & Tie records. The compilation benefit album features tracks by well-known artists such as Jackson Browne, Yo La Tengo, Deborah Harry, Patti Smith, Yoko Ono, and Loudon Wainwright III. It also includes some songs from lesser-known acts like my band the Layaways. Just $9.99 for 100 tracks -- available now from iTunes and Amazon MP3.

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May 01, 2012

Tuesday Odds and Ends
by David Harrell
Chris Randall of Analog Industries calls out Albumcredits.com:
What they've done is create a site that is a separate front end for AMG's database, where you can pay for the opportunity to correct it.
And, as noted in the comments to the post, here's the best part -- if you ever cancel your subscription, all of your corrections disappear:
If you stop paying, your Professional Profile will revert to a Basic Profile and the updates and corrections you entered will no longer be included in your profile.
A documentary about the "Wrecking Crew" studio musicians is in limbo because of the cost and logistics of negotiating rights to use clips of the music:
Some members of the ensemble, most notably the guitarist Glen Campbell and the pianist Leon Russell, later became stars in their own right. But as hired hands the musicians had no ownership stake in or legal claim to the songs they recorded, and record company executives who may have felt a debt of gratitude for their contributions at the time have long since departed. As a believer in copyright Mr. Tedesco is philosophical about his situation.

"The reality is that I want to pay," he said. “But the problem is this business. There are just so many people involved, so much turnover, and so many licenses and contracts, at least two different parties for every song, the label and the publisher." He said there were more than 400 different rights holders to be dealt with.
From Evgeny Morozov's The New Republic review of Walter Isaacson's Steve Jobs biography:
The design philosophy of Dieter Rams, Braun's legendary designer, has shaped the feel and the look of Apple's latest products more than any other body of ideas. Since joining Braun in 1955, Rams--who likes to describe his approach to design as "less, but better"--began collaborating with the faculty at the Ulm School of Design, which tried to revive the creative spirit of Bauhaus with a modicum of cybernetics and systems theory. Eventually Rams produced his own manifesto for what good design should accomplish. His "ten principles of good design" encouraged budding designers to embrace innovation and make products that were useful but environmentally friendly, thorough but simple, easy to understand but long-lasting, honest but unobtrusive. Rams wanted his products to be like English butlers: always available, but invisible and discreet.
Rams's principles, and photos of some of his incredibly modern-looking late '50s to early '70s designs for Braun, are here.

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April 27, 2012

Diving Into Amazon's Music Trade-In Service
by David Harrell
The prices of used CDs might seem somewhat tangential to the price of music purchased as digital downloads. Yet I've long maintained that the amount consumers can receive for their used CDs is extremely relevant to any discussion of the prices of digital content relative to physical products. Even if you never choose to sell a purchased CD, the potential value of such a sale can be factored into the purchase price. Purchasers of digital music, however, don't have that option, unless ReDigi is able withstand the legal challenges from record labels and establish a thriving market for "used" digital content.

Amazon's trade-in service, which was recently expanded to include music CDs, provides an extremely efficient (though not particularly lucrative) way for music consumers to extract value from their unwanted CDs. Given that the quoted trade-in offers are probably based on an algorithm that considers the current prices for used copies of individual CDs and the number of copies available to buy, you could argue that the new service doesn't provide any additional insight into prices for used CDs.

Yet it's still fascinating to see how much Amazon (or its third-party buyer, to be precise) is offering for a disc. And unlike the prices for new music, here you'll see a great deal of variation, based on the supply and demand for each individual release.

If you're looking to sell your discs, the prices Amazon offers are all less than the prices set by individual sellers. In other words, you'd probably do better selling any individual CD directly to an Amazon.com customer. That method is also preferable if want cash for your discs -- the trade-in service only gives you an Amazon store credit. But selling to Amazon eliminates most of the hassle factor -- instead of listing your discs individually, waiting for someone to buy them, and then having to mail them off to each buyer, you can put them all in a box and print a pre-paid shipping label. (There's also the option of trying your luck at a local record store that buys used discs, though it's difficult to make large-scale pricing comparisons, as an individual store's inventory needs will affect the prices offered for specific discs.)

I did a quick survey last week of the current top-selling CDs on Amazon.com, which I had to expand to the top-13 discs, as three of the top-10 sellers hadn't been released yet, so there was no trade-in option for them. And, somewhat surprisingly, Amazon wasn't making a trade-in offer for four of the other top-selling releases.


prices Amazon.com is paying for CD trade-ins
all prices as of 4/18/2012


Of the remaining six CDs, Amazon's current price for the new CD ranged from $7.99 to $11.99, with an average of $10.24. The trade-in offers ranged from $2.00 (Adele's "21") to $3.70 (Lionel Richie's "Tuskegee"), with an average of $2.83. These numbers are all "up to" amounts, however, and assume that the disc and the jewel case are in "like new" condition.

The interface also makes it easy to see the range of prices Amazon's third-party buyer is willing to pay for different releases in an artist's catalog. Again, unlike the prices for new music, here you'll see a great deal of variation. In general, Amazon offers the largest trade-in amount for an artist's most-recent release. And an act's earliest albums, even if they're considered classics, often have the lowest trade-in value. For example, Amazon is offering up to $3.95 for Van Halen's comeback album "A Different Kind of Truth," but just 65 and 95 cents respectively for the band's first and second releases. But that variation just reflects the supply and demand of existing CDs -- the fan base of any given artist is both more likely to already own the act's earliest releases and have more copies of those CDs to sell, depressing the price.

Another obvious trend is that the release of new re-mastered CD decimates the trade-in value of the previous version. Amazon is offering up to $4.80 for the 2009 version of the Beatles "Blue" collection but only $1.50 for the original CD release.

As for those one-cent used CDs you see on Amazon (the sellers actually make their money on a cut of the shipping charges), don't bother -- Amazon doesn't want them. But just because a portion of the artist's catalog is in the one-cent category, it doesn't mean that Amazon won't purchase other releases -- it's offering up to $4.05 for a live Hootie & the Blowfish album, even though it won't purchase the band's best-selling studio albums.

Finally, on a relative basis, Amazon's quoted trade-in amount is the least generous for out-of-print CDs that are commanding high prices in the used market. For example, when checking the trade-in value of Lionel Richie's current best-selling disc, I discovered that Amazon is will to pay up to $5.50 for the soundtrack to the 1981 film Endless Love, featuring Lionel Richie. But the lowest price for the used CD from individual sellers is a whopping $69.39, though who knows how long it'd take to sell the disc at that price!

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February 21, 2012

Tuesday Odds and Ends
by David Harrell
Is France's "three strikes" law resulting in more digital music purchases?
Studies show that the appeal of piracy has waned in France since the so-called three-strikes law, hailed by the music and movie industries and hated by advocates of an open Internet, went into effect. Digital sales, which were slow to get started in France, are growing. Music industry revenues are starting to stabilize.
Apple's size and success has a huge effect on the S&P 500 index:
For all the companies in the Standard & Poor's 500-stock index, earnings are on track to post a 6.6% year-on-year rise in the fourth quarter. Once Apple's earnings are factored out, the expected fourth-quarter gain shrivels to just 2.8%, according to UBS.
Fractals and music rhythms -- identifying composers by their rhythm signatures.

And two great bits from some WSJ book reviews: How Henry Mancini learned the value of writing your own songs:
It was a Vegas choreographer who clued him in to the importance of writing his own songs: Arrange someone else's composition and you get paid once; write the original song and every time it is performed or a record is sold you get a royalty.
Legendary jazz producer Norman Granz had no problem with "niche" artists:
When a distributor of one of Granz's labels complained that one of his artists sold too few copies, Granz roared that if just 1,500 people wanted to hear the musician, that was enough -- and he fired the distributor.

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February 10, 2012

Friday Flashback Fun: Debating Music Sharing in 1978
by David Harrell
Long before the advent of music filing sharing, there was the "home taping is killing the music industry" debate. While the head of the European Tape Industry Association was hardly a neutral party, in this 1978 Billboard Magazine piece, Henry Pattinson frames the issue with some quotes that sound very similar to modern arguments about file sharing:
"The British Phonographic Industry has said that $135 million is lost each year through home taping. Now that figure is absolutely hypothetical. It is money that was never spent and there is no way of knowing if it ever would have been."

"In fact, the indications are that home taping is most prevalent among age-groups who share records and tape them simply because they can't afford to go out and spend money frequently on new albums."

"Music is one of those things that the more you know about it, the more you want. But if you kill off the interest of young people, you will lose a future generation of adult record-buyers."

"It is clearly demonstrable that the blank tape business, illegally used or otherwise, has improved awareness of music, increased demand and directly stimulated the expansion the industry has enjoyed in the last five years."
That last bit is a key difference, of course, as music sales were actually growing at the time.

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February 06, 2012

Buy It, Cherry Pick It, Stream It, or Steal It?
by David Harrell
Randall Roberts's review of the new Van Halen album in the L.A. Times does a great job of summing up the choices today's music listeners have:
Now the dilemma isn't just, should you spend money on the CD ($14.99 list price) or a digital copy (also -- frustratingly -- $14.99). It's also, how much are you willing to commit to buying in? Will a few dropped bucks on a handful of the best individual tracks suffice? Or will "A Different Kind of Truth" be the perfect Spotify streaming album, not good enough to pay hard money for but worth a mouse-click when you've got a spare few minutes? Or should you just ask your computery friend to Sendspace you a pirated copy?
I'm still working on my in-depth post on Spotify economics, but the above description of Spotify being a "good enough" option for some albums will be a central component.

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January 27, 2012

The Right to Re-Sell Purchased Digital Content
by David Harrell
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.

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January 19, 2012

One Quick SOPA Thought
by David Harrell
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!)

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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