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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September 29, 2009

Tuesday Odds and Ends
by David Harrell
Slate's Farhad Manjoo on the hypocrisy of Apple's stance on iTunes for non-Apple devices.

The WSJ on Warner Music's new agreement with YouTube.

And an economist wonders why rap albums are so long, relative to other genres.


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September 25, 2009

eMusic's Per-Song Payout for Q2 2009
by David Harrell
eMusic banner

The eMusic payout for the second quarter of 2009 is significant one, as it's the last payout for subscriber downloads that mostly occurred before two major changes to subscription music service: the addition of older Sony material to the catalog and the restructuring of subscription plans that reduced the number of downloads allotted each month.

Our second quarter 2009 eMusic sales just showed up in our CD Baby account and we received 33.4 cents (before CD Baby's 9% commission) per download, almost exactly the same as the 33.5 cent payout for the previous quarter.

Because eMusic pays labels a percentage of subscriber revenue, there is no set per-download payout. Instead, the payout can vary based on the overall download activity of subscribers. Digital breakage, which occurs when subscribers don't use all of their allotted downloads, results in a larger payout, when calculated on a per-download basis.

In theory, the restructuring of the subscription plans should increase the per-download payout, as subscribers now receive fewer downloads, paying more on a per-track basis. However, after the introduction of the Sony material and re-working of the subscription plans, I wondered if there would be much change. Historically, the average breakage rate at eMusic has been quite high. Based on the subscription prices and the payouts I've received for my own music, I'm guessing it has been in the 40% to 50% range. But if the availability of the Sony material -- coupled with the fact that subscribers have fewer downloads to use each month or quarter -- results in significantly less breakage, it might mean little or no increase in the payout rate to labels.

I'll report back as soon as I see our eMusic payouts for the third quarter of the year!

related: Sony and eMusic: Why the Per-Track Label Payout Might Not Change, eMusic's Per-Song Payout for Q1 2009


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September 21, 2009

Sounds Like the Billboard Hot 100
by David Harrell
If you're old enough, you might remember "sound alike" albums. They were cover versions of popular releases, cut with studio musicians and sold below the cost of the original artist version. (Cut-out copies of "Sounds Like the Bee Gees" still populated the sale rack at local discount store when I was kid.)

A few years ago, I noticed some modern sound-alike albums in the eMusic catalog. In most cases, these releases were copies of artists that weren't available from eMusic. While it seemed far-fetched that this R.E.M. collection was a suitable substitute for the real thing, it sort of made sense within the context of the eMusic catalog. If you searched for a specific artist and couldn't find them in eMusic, maybe you'd be willing to spend a few expiring downloads on the sound-alike tracks.

Marc Cohen, of the Ad-Supported Music Central blog, recently announced a new online music store that will update the concept --
The store will offer covers of all the popular tracks at any given time. The catalog will be small at first focusing on the Billboard Hot 100. The store will carry sound-alike and interpretive covers.

Sure most people who want to buy a track will want it by the original artist. I understand that and those people can buy it for a buck or so at iTunes or or dozens of other stores. Some people will just want to pay less for the music they like and some people will enjoy exploring different covers of music they like -- that is the market I am aiming for.
I think he might have more success with latter audience than the former -- if music consumers aren't willing to pay 89 or 99 cents for an iTunes or Amazon MP3 download, they always have the option of obtaining the song for no cost online. The audience for pure "sound alike" tracks seems limited to those music fans not willing to pay for the original track, but unwilling or unable to obtain the readily available free content from P2P and files sharing sites. On the other hand, when it comes to music discovery, people seem more willing to listen to covers of well-known songs than original material. Derek Sivers (the founder of CD Baby) and others have often advised unknown acts to include a cover song on an album of otherwise original material to increase the likelihood of it being discovered in the iTunes store. The downside here is that the tracks won't be listed in the iTunes store, you'll need to visit the to find them.

Still, it's a novel concept for a download store and it'll be interesting to see what happens when it launches in November. The basic math, as explained here, is that will handle the payment of the statutory mechanical royalty for each download (9.7 cents) to the song publisher and split the remaining money with the artist who recorded the cover version.

related: The Return of the Sound Alike Album, More Sound Alike, Even More Sound Alike Albums


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September 11, 2009

Friday Odds and Ends
by David Harrell
Digital sales now account for half of the revenue for Chicago's Bloodshot Records. From Greg Kot's interview with label founders Rob Miller and Nan Warshaw:
We're making half our money digitally, but that doesn't replace all the lost sales from physical goods, dovetailing perfectly with the worldwide economic collapse in November. That's usually our busiest time, shipping goods to accounts for the holidays. But sales didn't just slow down, they stopped.
Bandcamp is ditching 128k mp3 files. From an e-mail sent earlier in the week to Bandcamp artists:
In an effort to further streamline our user interface, pave the way for some new features, and solidify our reputation as the go-to spot for high-quality music, we're dropping support for 128k downloads in about a week. After this change we will only support "best quality" (320k mp3 and more) downloads.
While this change won't allow the option of giving away a 128k file and charging for the higher quality versions (Bandcamp also supports ACC, Ogg Vorbis, Flac, and Apple Lossless files), the e-mail noted:
...if you have a track or album set up as both a free, normal quality download, and a paid, best quality download (an approach that sounded great in theory but wasn't particularly effective in practice): It will switch to being available as a paid, best quality download only. If you still want to make payment for that track or album optional, we recommend you switch it to a name-your-price download with a zero minimum.
And one quick thought on the lack of a Beatles announcement at Wednesday's Apple event: I would've seemed far more prescient if I actually posted this earlier in the week, but I wasn't surprised. The Beatles/EMI have always done a good job of timing releases for the holiday shopping season. Unless they made all of the Beatles content "album only," adding the material to the iTunes catalog probably would have diminished sales of the new remastered CDs, as purchasers cherry picked their favorite tracks. My guess is that an iTunes announcement will come in early 2010, after a gazillion of the new CDs are purchased as Christmas gifts.


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September 08, 2009

Sony and eMusic: What I Missed
by David Harrell
eMusic banner

In last week's post about the popularity of Sony material in the eMusic catalog, I observed that virtually no individual Sony albums were topping the download charts. While I raised the possibility that subscribers were downloading a ton of Sony tracks from across the catalog (such that individual albums didn't rise to the top of the charts), in my focus on the album download charts, I completely missed the fact that eMusic charts can be ranked by label. An anonymous comment to the post clued me in!

As of this morning, here are the top-download albums for the past month at eMusic -- Sony-distributed labels occupy the top five spots and three more Sony-affiliated labels are in the top 15:
1. Columbia
2. Columbia/Legacy
3. Epic
4. RCA Records Label
5. Epic/Legacy
6. Matador
7. SST Records/The Orchard
8. Merge Records
9. XL/Beggars Group
10. 4AD/Beggars Group
11. Sony Classical
12. Naxos
13. Arista
14. Jive
15. French Kiss Records/The Orchard
So despite some of the vocal "I don't download Sony" protests that you'll see on the eMusic message boards, the current subscriber base is clearly embracing the Sony catalog, if not specific albums. (I definitely viewed the changes as a mixed blessing -- I was unhappy to have my download allotment cut. But my eMusic choices over the past two months include Sony releases by the Zombies, the Clash, Cheap Trick, the Psychedelic Furs, the Church, and -- please don't laugh -- A Flock Of Seagulls.)

Attracting new subscribers as a result of the addition of the Sony catalog is another question, but we'll have to wait for an announcement from eMusic for any news there.

related: Post-Sony Chart Watching at eMusic, Chart Watching at eMusic, Album Pricing at eMusic, More Thoughts on the Changes at eMusic, Sony and eMusic: Why the Per-Track Label Payout Might Not Change


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September 03, 2009

Radiohead Doubles the Quality
by David Harrell
No, that's not my opinion of the band's latest song. When Radiohead conducted its "name your own price" experiment for the direct download of the "In Rainbows" album, there was some grumbling about bit rate of the mp3 files -- just 160k. But the band's new track "These Are My Twisted Words," which they're giving away here as a free mp3, is encoded at 320k.

Update: Radiohead's Jonny Greenwood discusses mp3 audio quality in this interview from yesterday with Sasha Frera-Jones. Thanks to Aaron for the tip!

related: Radiohead Says 160k Is Good Enough


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September 02, 2009

Post-Sony Chart Watching at eMusic
by David Harrell
eMusic banner

Back in July -- approximately two weeks after the addition of Sony back-catalog material to the eMusic catalog -- I observed that with exception of Michael Jackson, the major-label content wasn't rocketing up the eMusic charts. At that point, however, because of the rolling refresh periods for eMusic subscribers, some of them might not have had a chance to download any of the Sony material.

As of yesterday, it's been nine weeks since the introduction of the Sony material, meaning that all monthly subscribers have the opportunity to use at least two months of their downloads on the Sony catalog. But the current top-download charts remain as smaller-label (and indie rock) focused as ever. The only Sony release showing up in the "top 15" charts for the day, past week, and past month is this Kenny Chesney collection.

The top download charts at eMusic have always been dominated by recent releases, so perhaps it's not surprising that older Sony material isn't being snatched up. And, as I noted in the previous post, absent something like the death of MJ, it's unlikely that everyone will gravitate toward the same Sony releases. That is, if individual subscribers are downloading a wide range of Sony material, specific releases aren't likely to rise the top of the charts. So it's possible that a ton of Sony material has been downloaded, but the downloads have been spread across the catalog.

Yet when offered certain classic indie releases for the first time, eMusic subscribers will push them to the top of the download charts, something they've failed to do with non-Michael Jackson Sony material. Husker Du's SST catalog was added on 8/24/09 and currently accounts for 4 of the top 15 spots in the weekly download chart. While the Husker Du releases are offered as "album-only" downloads, the fact that some of them are relative bargains -- it will cost you just 12 downloads for the 23-track Zen Arcade -- no doubt adds to their appeal. Still, the contrast with the Sony catalog is striking.

Of course, the reason eMusic added the Sony material to its catalog was to increase its appeal to future subscribers, not the current subscriber base that was content with the all-indie lineup. So the real question is, will potential subscribers be lured by a Sony catalog that costs -- as a result of the new subscription plans and the "12-download album pricing" for many releases -- $5.00 to $6.00 an album? That's a healthy discount from the $9.99 default iTunes album price, but I'm not sure if it's enough to entice fans of older Sony material to start an ongoing subscription.

related: Chart Watching at eMusic, Album Pricing at eMusic, More Thoughts on the Changes at eMusic, Sony and eMusic: Why the Per-Track Label Payout Might Not Change


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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

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    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

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    Where The Conversation Ends - free mp3
    January - free mp3
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    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

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    album cover art from More Than Happy

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

    More Layaways downloads:

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