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.

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 31, 2006

Politics and Playlists
by David Harrell
Politics and Playlists
Last week, Slate's Jacob Weisberg analyzed the reported iPod contents and favorite songs of Hillary Clinton, Condoleezza Rice, and George Bush. He also ran them through Pandora for additional analysis and music recommendations for each of them:
Hillary, it seems, likes "basic rock song structures," "repetitive melodic phrasing," and "extensive vamping." Pandora predicts she would enjoy various '60s girl groups and '70s soul singers: Gladys Knight and the Pips, Carla Thomas, and the Velvelettes. The service can be a bit uncanny. One of its first recommendations on the Hillary station I created was "Girls Can't Do What the Guys Do," by Betty Wright, a feminist-minded '70s soul artist. This was followed by Barbra Streisand's rendition of David Bowie's "Life on Mars," a deeply unfortunate recording, but one somehow indicative of the present predicament of the Democratic Party.

In point of fact, I doubt that the relentlessly driven Hillary Clinton spends much time listening to music of any kind. Condoleezza Rice, by contrast, who recently revealed her musical Top 10 to Bono when he guest-edited The Independent newspaper in Britain for a day, clearly loves many kinds of music. For Condi, who was trained as a classical pianist, the playlist is an opportunity to show that she is not as uptight as she sometimes seems. In addition to Brahms, Mozart, and Mussorgsky, she reveals that she likes to work out to Cream's "Sunshine of Your Love" and loves "anything by U2." Aretha Franklin's "Respect" gets another vote, along with Kool and the Gang's "Celebration," and Elton John's "Rocket Man," which the secretary of state says reminds her of her first boyfriend. Hmmm. Pandora doesn't do classical, but based on her pop choices, Secretary Rice responds to "disco influences," "a busy horn section," and "groove-based composition." Radio Condi is a lot more fun than Radio Hillary.

Last year, the president also revealed part of the playlist of his iPod, which he listens to while mountain biking. It includes "My Sharona" by the Knack, "Centerfield" by John Fogerty, "Brown-Eyed Girl" by Van Morrison, and music by the honky-tonk singer George Jones. Unlike Hillary and Condi, this all sounds pretty uncalculated. Bush doesn't worry about being politically correct or care what other people think of him. He likes to listen to white guys singing country and rock and doesn't care if Jerry Falwell objects to some of the lyrics. According to Pandora, Bush likes "mixed acoustic and electric instrumentation," "meandering melodic phrasing," "major key tonality" and "a smooth male lead vocalist." It is recommended that he try Van Halen and Jimi Hendrix as well as Billy Ray Cyrus and Conway Twitty. You could wait a long time for Morrissey or Neil Young to surface on his radio station, and Pandora was wise enough not to suggest the Dixie Chicks.
Thanks to Porter for the link.


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May 25, 2006

The Rise of eMusic
by David Harrell
The Rise of eMusic
ARS Technica has an in-depth story on eMusic, with quotes from president David Pakman and some details on the subscription base:
As a private firm, eMusic doesn't break out its financial information, but it's clear that its subscription model is working. In the 18 months since the relaunch, the company has clawed its way to the #2 position among digital download services (this does not include streaming music). Pakman claims that eMusic has 12 percent of the market compared to Apple's 61 percent, and that his company has now sold more than 60 million songs. Since eMusic does not sell individual downloads but only monthly subscriptions, its members download a lot of music when compared to iTunes, for instance. As Pakman puts it, "An iTunes customer downloads one song a month, on average; an eMusic customer downloads 20 songs a month, on average."

The subscriber base has also grown from "the low five figures" to 175,000, and has an average age of 39. That's unusual in a music business that generally caters to a young audience, and eMusic sees its willingness to appeal to the 25+ demographic as one key to its success.
Thanks to Joseph B. for the link.


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May 18, 2006

Hi-Fi iPod?
by David Harrell
Hi-Fi iPod?
This Wired story gives the lowdown on how to boost the audio quality from an iPod, with a link to this 2003 Stereophile piece that compares audio quality for various bit rates:
The iPod offers such an embarrassment of choices regarding file storage and playback that I had to begin by discarding quite a few of them as irrelevant to a discussion of its fidelity. That's not to say that 96kbps MP3 and AAC, for example, aren't useful space-saving options; simply that they represent sonic compromises most readers of this magazine wouldn't tolerate even while jogging...

Things are somewhat better at 128kbps in both MP3 and AAC, but neither cuts the mustard for critical listening at home. MP3 robbed Steve Swallow's pulsing bass lines of dynamics and punch on the Carla Bley album, while blunting the shimmer of the brass overtones. AAC fared slightly better, offering better bass response (although it was still pretty lightweight compared to the original CD) and slightly more extended HF (again, shelved down in comparison to the CD).

Surprisingly, upping the bit rate to 160kbps did not result in major improvements for either format. Bass impact remained MIA in MP3, and the upper frequencies sounded strident, with that unmistakable "too much compression" punchiness. AAC again sounded marginally better, although Bley's big band still seemed flattened and lacking in dynamic variation.

The audiophile in me began to pay attention at 192kbps. Both MP3 and AAC began to exhibit a small degree of soundstaging, albeit not with great amounts of front-to-back dimensionality or layering. MP3's highs began to lose their stridence, and AAC sounded fairly detailed and revealing.

The compressed formats began to show some real promise at 320kbps. Definition, detail, and soundstaging were all impressive, and high-frequency response was almost liquid in its lack of edge effects. At this rate, differences between the two formats jumped into sharper focus: MP3 made transients "splashy," while AAC just sounded anemic compared to the original. With both formats, dynamic variation was considerably reduced compared to the CD.

Best of all -- and, to my ears, completely indistinguishable from the original CD -- was AIFF. Dynamics were impressive, imaging was nuanced and detailed, and the frequency extremes sounded extended and natural. On my reference rig, I could listen with immense pleasure for hours on end to files ripped in AIFF. In fact, I did.

Ah, some of you are saying, but what about VBR? Variable bit-rate formats seem to offer extremely satisfying sound and show a great deal of potential, but those options deserve greater exploration in a dedicated comparison.
My prediction: As storage capicity on the iPod and other players increases, don't be surprised if the record companies try to get consumers to once again upgrade their music collections, this time with a second generation of digital downloads.


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May 16, 2006

Chris Isaak Bonus Tracks
by David Harrell
Chris Isaak Bonus Tracks
Last month, I noticed that quite a few iTunes customers weren't happy about the $12.99 version of the new Flaming Lips disc. It has three bonus tracks not available on the $9.99 version, though -- as shown by the customer reviews -- many folks didn't see the cheaper version.

There's also an iTunes "bonus version" of the new Chris Isaak "Best of" collection, with a 20-track version going for $13.99 and an 18-track version selling for $11.99. As with the Flaming Lips album, the bonus tracks are "album only" purchases and NOT available on the CD release, so the only way to legally obtain them is to buy the pricier iTunes version of the album.

As one customer points out, this tactic seems to punish the artist's most-loyal fans:
...for we fans who already own all the songs that were on previous albums, it's kind of mean to make two of the special acoustic tracks available as Album Only, meaning we have to buy the whole $13.99 album (not the old $9.99 standard, nor the cheaper $11.99 version of this record just to get them. The other new songs we can buy for 99 cents so no biggie there. Hey, at least the old songs are remastered (like it makes a difference on the lower-fi 128kb-encoded AAC tracks that iTMS sells anyway). The CD is cheaper at $12.99, but doesn't have the last two acoustic tracks. It might be appropriate to say Arrrgh!
-- iTunes review of Best of Chris Isaak by "luc..."

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May 15, 2006

Download Arbitrage with eMusic
by David Harrell
Download Arbitrage with eMusic
There's an arbitrage opportunity available to eMusic subscribers, albeit one that violates the subscription agreement (and is probably illegal to boot). After a lunchtime conversation with co-workers that concluded with memories of a bad cover band with a repertoire of exactly three songs, my friend Randy remarked that he would like to download one third of the band's set -- "The Girl From Ipanema" as sung by Astrud Gilberto on the Getz/Gilberto album.

I told him the track was probably available from eMusic. Randy, who just canceled his eMusic subscription, then speculated that I probably had a few unused downloads for the month that I might be willing to, uh, share. No problem, I said, provided he was willing to pay a slight markup over my cost...

In theory, a 40-downloads-a-month eMusic subscriber is paying just under 25 cents a track, so selling one of those downloads to a non-subscriber for 75 cents yields a healthy return. For the buyer, it's cheaper than a single download from iTunes, plus the eMusic download is an mp3 that can be played on virtually any portable player, with no DRM to hamper the file. And you can get your eMusic cost-per-track down to around 22 cents by opting for a 90-a-month plan or pre-paying for a year with eMusic.

I'd bet there are at least a few folks out there who are informally "sharing" an eMusic subscription with a friend, though I doubt anyone's gone so far as to follow the plan outlined above. If you want really cheap downloads you've always got the option of the different file sharing systems and it seems like a lot of hassle to make a half a buck a song by setting up your own download service to sell tracks to your friends.

Still, this scheme would give artists and record companies the same revenue they're currently receiving via eMusic sales and it would provide customers who might want the occasional eMusic track access to service without having to pay for an ongoing subscription. And unlike an all-you-can-eat restaurant, where the restaurant's bottom line would be destroyed by diners "sharing" a meal, from an accounting standpoint eMusic is indifferent to whether or not a subscriber maxes out each month. That's because eMusic pays a set percentage of its subscription revenue each month, so the amount paid to record companies artists is the same no matter now many tracks each subscriber downloads in a given month. (More details here.) Though it would hurt the bottom line of everyone involved if it ultimately resulted in fewer eMusic subscriptions.


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May 12, 2006

The Good Old Days of CDs?
by David Harrell
The Good Old Days of CDs?
Kelefa Sanneh's NY Times piece on the new Tool album has lots of comments on the listening experience for CDs vs. mp3s and single-song downloads:
CD's and films both rely on captive audiences; you've paid your money, so you'll sit still until the end. By contrast MP3's are more like television shows than films: they have to keep you entertained, or you'll click over to something else. If the last track on "10,000 Days" -- it's called "Viginti Tres," and it's essentially five minutes of digital groans and sighs -- were available as a free download on the Tool site, even hard-core fans probably wouldn't bother with it. Sometimes it's easier to pay attention once you've paid money.


Flat-fee downloading works best when an album's tracks are roughly equal in length and importance. The Red Hot Chili Peppers, who only recently signed a deal with iTunes, have a new double-CD, "Stadium Arcadium" (Warner Brothers), consisting of discs named "Mars" and "Jupiter." (Sounds as if someone narrowly avoided a lawsuit from John Gray.) Maybe it's a coincidence, but the album is surprisingly iTunes friendly: the structure is loose and the songs are pretty evenly weighted; few grand epics or wispy interludes. Fans can pick and choose, downloading the album piecemeal or compiling favorites to turn the album into a playlist.

...that's one of the pleasures of CD's: imperfect control. Sure, you could program your CD player to skip your least favorite tracks, or rip the whole thing to MP3's. But sometimes it's easier just to put it in and press play, even if that means you end up hearing some tracks more than you might want to. In one online review of "10,000 Days," a blogger dismissed the final track: "Listened to it once, and that'll probably be the last time." Wanna bet?

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May 11, 2006

The Economics of the Music Industry Lecture
by David Harrell
The Economics of the Music Industry Lecture
Terry Fisher, Harvard Law professor and the director of the Berkman Center for Internet & Society, spoke at the Economics of Open Content Symposium at MIT back in February.

You can download an mp3 of his lecture here. It starts slow (with the inevitable PowerPoint problems at the beginning of the talk...) but it's definitely worth a listen. Fisher covers material from his book Promises to Keep: Technology, Law, and the Future of Entertainment, including his proposed Alternative Compensation System (link to a PDF of the book chapter).

There are, however, a few things that I think Fisher is overlooking, which I'll try to support with some hard data in an upcoming post.

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May 04, 2006

Bargains at eMusic and a Royalty Quandary
by David Harrell
One quirk at eMusic, as covered in a previous post, is the lack of an "album price." All individual songs count the same toward a subscriber's monthly allotment, regardless of the number of tracks on an album or song length.

This business model leads to some interesting pricing trends and anomalies. One is example is jazz. As a genre, it's relatively cheap, because many classic, full-length albums consist of only four to six separate tracks. My bandmate Porter is an enthusiastic eMusic subscriber and often forwards the outrageous eMusic "bargains" he finds to me. He recently spotted a couple of the best non-jazz examples yet:

Lift Your Skinny Fists Like Antennas to Heaven -- godspeed you! black emperor
This is a double-album of just four songs, with a total time of 87 minutes and 23 seconds, yet it counts as only four downloads. (The album is currently #3 on eMusic's monthly download chart, no doubt helped by its super-low price.)

Absolutego - Special Low Frequency Version -- Boris
Here you have a two-track album that lasts 73 minutes and 25 seconds, with the bulk of that coming from a single, hour+ track.

You can't "buy" these albums from eMusic -- you can only download the tracks via a monthly subscription. But assuming that a 40-a-month-for-$9.99 subscriber uses all of his or her monthly allotment, you can create a table of "album prices" for various releases on eMusic. The eMusic download prices are all lower than the cost of the corresponding new CD, but they certainly don't correlate with the prices for a new disc, as the cheapest eMusic album on this list has the highest price:

Album "Price" for $9.99 a Month eMusic Subscriber, New CD at
ArtistAlbum/# of Tracks
BorisAbsolutego.../2 $0.50$13.99
Sonny Rollins Saxophone Colossus/5$1.25$10.98
Miles DavisRelaxin'/6$1.50 $11.98
Belle & Sebastian The Life Pursuit/13$3.25 $11.96
The KinksCome Dancing/18 $4.50 $9.99
Guided By Voices Alien Lanes/28 $7.00 $10.98

(The Kinks disc isn't currently stocked by, though the site does list a "club price" of $9.99 for a new disc. There's also a "new" copy listed by an individual for $8.99 with the comment "New, Only Transferred To My MP3 Player...")

What I don't know is how eMusic treats these album-length songs in terms of payments to labels and artists. The eMusic per-song payout rate varies each month (more details here). But as far as I can tell, there's no allowance for song length -- we've received eMusic payments for our two discs within the same month for songs ranging from 52 seconds to 5:18 in length and the payout amount has been the same for each.

If eMusic is indeed paying the same per-song rate for these album-length tracks, I have no idea how major labels are then handling the payments of mechanical royalties to publishers and songwriters and artist royalties to performers.

According to the latest required rates for mechanical royalties, Boris's single 65 minute song would require a mechanical royalty payment of $1.14 to the composer/publisher, in addition to any artist royalties paid. Which is six times the latest eMusic payout that I've seen (19 cents per download).

So something else must be going on -- no label is going to pay out more than it receives from eMusic to artists and publishers. It's not uncommon for a recording contract to stipulate a cap the maximum amount of mechanical royalties paid for a specific album, though the examples I've seen our based on a maximum number of songs for mechanical royalties, not a total per song.

Another possibility is that unlike iTunes sales, where the label pays the standard mechanical royalty rate and a reduced artist royalty, perhaps labels are treating eMusic income differently. Because eMusic revenue is technically coming from subscriptions, not per-song or per-album sales, maybe this distinction allows for different treatment of subsequent payments for mechanical and artist royalties.

If anyone reading has any specific knowledge about how the major labels treat mechanical and artist royalties for downloads from eMusic of these super-long tracks (or even just in general), please post a comment or send me an e-mail. I'd love to solve this little mystery.


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

    <a href="">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

    album cover art from The Space Between

    <a href="">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 or Napster.

    album cover art from We've Been Lost

    <a href="">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

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    The Long Night - free mp3

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

    More Layaways downloads:

    download the Layaways at eMusic download the Layaways at iTunes

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