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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August 28, 2012

Updated Spotify Artist/Label Per-Stream Payments
by David Harrell
Spotify Banner
My 2011 post on Spotify payouts has received a ton of hits from a link in this NY Times piece on the royalties paid by Spotify and Pandora. So I thought it was time for some updated numbers, based on our most recent payouts from CD Baby.

For streams from August, 2009 to June, 2012, we've received an average per-stream payout of $.0046623 or .46623 cents, before CD Baby's 9% commission. The highest per-stream payout we've seen was $.011926 or 1.1926 cents and the lowest payout was $.0000237253 or .00237253 cents. (That's ignoring a handful of early "payouts" that rounded out to 0.0000000000 in CD Baby's accounting system!) My guess is that payout rates vary because of different Spotify plans (free and premium), differences in subscription prices for each region, and currency exchange rates.
Spotify Per-Stream Payments
August 2009 to June 2012

average: $.0046623
high: $.011926
low: $.0000237253
Keep in mind that these payouts are for self-released artists (or small labels) with digital distribution via CD Baby. The payout rates for the major label groups, which have an ownership stake in Spotify, may well be different.

It's difficult to discern a general trend in the payout rates over time, though, in most cases, the lowest rates were in 2009 and early 2010. The all-time high rate of $.011926 was for streams in November, 2011 and our most-recent payouts, for June, 2012, were $.008246668 per stream.

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August 24, 2012

Friday Flashback Fun: "Break It Up" by Carl Lewis
by David Harrell
I meant to post this during the Olympics, but better later than never! The best (worst?) music/athlete combination ever -- "Break It Up" by Carl Lewis:


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June 29, 2012

Quick Thoughts on the NPR Blog Post, David Lowery, Etc.
by David Harrell
If you're a reader of this blog, then you probably saw last week's NPR blog post, David Lowery's response, and Bob Lefsetz's response to Lowery.

A few (belated) quick thoughts:

1. Lowery and Lefsetz are both right -- it's a shame that more people don't pay for their music and that everyone else in the food chain, except for the artist, is making money, yet we're never going to put the free music genie back in the bottle. I'm not saying Spotify is the solution, but the compensation model/trend will never revert to what we saw in previous decades.

2. I don't get Lefsetz's contention that Lowery just needs to make better music. Whether or not you like the guy and his music, it's safe to say that Lowery has had more commercial and critical success than 99.9% of the folks who have every picked up an instrument.

3. But what I found most interesting about the NPR post was that the author makes a big deal about that fact that she didn't "illegally download" most of her music, but then lists all of the ways she has acquired free music, none of which resulted in compensation to artists.

That's not to pick on Emily White -- I've made the same "no P2P" claim myself, though I've paid for the majority of my music. What's fascinating to me is how we (music fans, myself included) often condemn file sharing sites, yet generally have fewer qualms with other methods of non-compensated music acquisition such as ripping music from promo CDs, discs borrowed from a friend or public library, etc.

There's obviously a difference in scale -- there's no limit to the amount of times a file can be downloaded online, while swapping hard drives with friends or making mix CDs and playlists have inherent practical limitations. And who wants to be a complete hardass and say that making a mixtape/playlist for a friend or two is a crime? I doubt that many artists complain because fans like their music so much that they feel compelled to share it with their friends in that manner.

Still, in the end, should there be a moral distinction -- is all non-compensated music ownership equally wrong or does scale matter, making these other methods misdemeanors relative to the evil of file sharing?

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June 11, 2012

A Gentle Nudge from Amazon
by David Harrell
Amazon.com is using free Amazon MP3 credits to encourage Amazon Prime customers to opt for slower shipping -- I placed an Amazon order on Friday and was given the following shipping options:

shipping options for Amazon Prime

It's a clever move, as a dollar in Amazon MP3 credit only costs Amazon 70 cents and the firm surely saves more than that amount when a customer downgrades from two-day shipping. And there's the possibility that the $1 credit will be used toward a full album, not just a free song download.

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June 07, 2012

Match Game 2012: First Artist Payments from iTunes Match
by David Harrell


Compensation for labels and musicians for music sales from Apple's iTunes store is straightforward: Apple takes a 30% cut and passes the remaining 70% to the label or digital distributer. For Apple's iTunes Match service, compensation is a little more complicated. There's the same 70/30 split, as Apple shares 70% of the $24.99 annual subscription fee, but the per-track payout is variable, as explained in the FAQs of digital distributor CD Baby:
iTunes will issue payment for every play that takes place through iTunes Match. The per-play rate varies based on subscription revenue, exchange rates, and total number of plays. Pay rates should look similar to streaming services such as Spotify.
Over the past week, our first iTunes Match payouts showed up in our CD Baby account. For November 2011, we received .012767 cents per play (before CD Baby's 9% commission). For December 2011, we received considerably more: .12083 cents per play, before commission. That positive trend continued with per-play payments of .20231 cents for January 2012 and .25946 cents for February. UPDATE 6/8/2012: The above numbers are all for "iTunes Match - Americas." Some payments for iTunes Match - UK were just added to our CD Baby account. For February 2012, we received .13723 cents per play.

The best explanation I can think of for the increasing payout amounts is that iTunes Match keeps adding new subscribers who are making minimal use of the service to stream their tracks using different devices. That is, if an individual iTunes Match subscriber only listens to music on the device where her music was originally stored, no income is generated for labels and artists, thereby increasing the payout rate for tracks played by other subscribers.

As for the Spotify comparison, keep in mind that Spotify rates also vary, based on the subscriber's plan (free or one of two premium options), prices for different regions, and exchange rates. Last year, I posted that we had received per-play payouts ranging from a low of .02056 cents to a high of 1.1456 cents, with an average of .2865 cents. Since then, our average Spotify payment has increased to .41792 cents per play, so the current trend will have to continue for iTunes Match payouts to approach the average Spotify rate.

In theory, however, payouts from iTunes Match are a truly supplemental income stream, as unlike Spotify, there isn't the possibility of cannibalizing music sales with lower-paying streams. If iTunes Match becomes a popular service, it will provide some sort of an additional income stream to large labels, though how much of that revenue will make its way to the biggest artists is another question, as it is with the payouts from Spotify and other streaming services. But for smaller acts and labels, it's less likely that iTunes Match will be a significant source of new income.

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June 01, 2012

Friday Flashback Fun: 1970 Music Club and Cigarette Ads from Life Magazine
by David Harrell
The Life Magazine archive at Google Books is the gift that keeps on giving. Here are two gems from the January 23, 1970 issue -- click on the image to see it the magazine.

I love the juxtaposition of the artists in this RCA music club ad, obviously created for a diverse audience -- Jimi Hendrix next to Glenn Miller, Frank Sinatra next to the Monkees, Conway Twitty next to Booker T. & the M.G.'s, etc:

music club ad in Life Magazine, 1970
And no one told DJs not to smoke in the studio in 1970:

cigarette ad in Life Magazine, 1970

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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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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