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

  digital audio insider


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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January 27, 2010

Some Quick Thoughts About The iPad and Digital Content
by David Harrell
I don't have time to put together a coherent essay, but I did want to post some quick random thoughts about the iPad and digital content in general:

- The name -- I'm not sure what else Apple could have called it, but does it make sense to have two product names that are only one vowel apart?

- The pricing -- I've held off on the purchase of a Kindle or other e-readers, but I might jump at the $499 base model iPad.

- Differences between digital music and digital books. Back when the Kindle launched, I observed that one major difference between the iPod and the Kindle is that most consumers already own a ton of content (in the form of CDs) that could be easily transferred to the device. Whereas the only way to fill a Kindle is with new digital files, as few consumers already own hundreds of digital books. However, while free digital music is readily available, most of it isn't legal. For digital books, there are hundreds of thousands of public domain works available (via Google Books, Project Gutenberg, freebies in the Kindle store, etc.), more free content than paid, I believe.

- The digital device/digital content paradox -- consumers are happy to pay for hardware devices to consume digital content, but they don't seem as willing to purchase the content itself.

- Does a "price elasticity of demand" exist for digital books? That is, does a lower purchase price increase sales enough to offset lower per-unit margins? Amazon is pushing a $9.99 or lower price for digital books, while publishers and Apple have settled on $12.99 or $14.99 for most best-selling books for the Apple iBookstore. The revenue split is similar to that for digital music -- publishers get 70% and Apple keeps 30%.

- Just as with the iPod and iPhone, it won't bother Apple if you never buy content via the iTunes store, there's a decent profit built into the price of the device.

- In the end, we're left with the same Malthusian equation: there is simply far more digital content available (much of it free) than there are hours/consumers to take it all in. Some content providers will reach new audiences and make new sales because of the iPad, but it will never be a rising tide that lifts all boats.


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January 26, 2010

Tuesday Odds and Ends
by David Harrell
Glenn from Billboard notes that most of the current top-downloaded labels at eMusic are WMG or Sony affiliates. The major lable dominance began over the summer, soon after the Sony back catalog was first added to the eMusic catalog.

Derek Sivers interviews Seth Godin:
...I want to challenge the notion of "great music." Sure, some music that's great is great for the ages and it's okay that's it's not being heard, but so much of what people call great art (whether it's a book or a song or a way of doing customer service) isn't actually great, it's merely "very good." Very good music is unheard every day, because very good music is not in short supply. There's a huge surplus of it.

I'm not equating "great" with "commercial." I have no doubt that there's great art that doesn't sell. But most musicians you and I know are TRYING to be commercial, if commercial means successful, heard, lots of stuff sold, lots of people at the concerts. And in the rush to be successful, sometimes great gets pushed out the window. I've sampled hundreds of songs on CDBaby and I can say that almost all of it is very good. And virtually none of it is great, if we define great to mean music I need to buy, to give away, to talk about to everyone I know.
A post at Analog Industries on how laborious the re-mixing process was prior to DAW (digital audio workstations) sparked some good comments about the ease of vs. the results of the creative process.

The Future of Music Coalition breaks down the Nation/Ticketmaster merger.

And the New Yorker's James Surowiecki on why bundling of content continues to makes sense for cable operators. Bob Lefsetz argues that music labels need to bundle as well.


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January 20, 2010

Tuesday Odds and Ends
by David Harrell
Last year I noted, with some dismay, that the revenue share that was offering bloggers for making their content available for the Kindle was the exact opposite of that established for digital music. While labels (and self-released musicians) receive approximately 70% of the price of digital music downloads in the iTunes store and Amazon MP3, Amazon was only passing 30% along to bloggers for Kindle purchases. But according to this press release, Amazon will now offer self-published authors 70% of the retail price for Kindle books, minus a small delivery fee based on the size of the digital file.

On a related note, I was surprised that this recent WSJ piece on the end of the slush pile (unsolicited manuscripts) at publishing houses didn't mention the idea of self-published authors starting a career via digital books. That is, gaining attention and reviews for self-published ebooks and then signing a contract for traditional print books, the same way some musicians signed record contracts after successful DIY releases. Authors have, of course, long had the "vanity press" option of printing their own books, but it's an expensive proposition. Not so with digital books. Widespread adoption of the Kindle and other digital readers could create opportunities for authors analogous to those that already exists for musicians.

And when reading Atlantic's James Fallows's list of reasons for going to the "cloud" with his e-mail archive, it struck me that many of them also apply to storing a digital music collection.


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January 19, 2010

WMG vs. Sony Pricing in the eMusic Catalog
by David Harrell
eMusic banner

I'll be writing more about the addition of WMG material to the eMusic catalog, but here are a couple quick thoughts:

With the caveat that these observations are based on some quick browsing, not an in-depth study, it appears that the "album only" pricing and download options are invoked less frequently with WMG material than with Sony material. For example, older Aerosmith releases are only available as full-albums, and you'll pay 12 downloads for an album with just nine tracks. And even on many Sony releases that don't require a full album download, cherry picking is prevented by making the most popular tracks unavailable as individual downloads. If want an mp3 of Journey's "Don't Stop Believin'," you'll need to download an entire album. But with WMG releases such as Van Halen's 1984, these restrictions aren't applied. The nine-track album can be had for just nine downloads and you can cherry pick your favorite tracks from it.

However, while the eMusic pricing for WMG material is often more subscriber friendly than that of Sony material, the catalogs of individual artists are often less complete. The Van Halen albums available from eMusic include the band's debut and 1984, which I'm guessing are the most popular albums of the David Lee Roth version of the band. Yet DLR-era albums such as Van Halen II, Women and Children First, and Fair Warning aren't available. Nor are any of the "Van Hagar" albums, which were also released by WMG, available.

According to a Digital Music News piece from last week (archived, but posted here), the decisions about album availability were made -- as I suspected -- by WMG, not eMusic. The question is why WMG opted to include the most popular albums from some of its artists in the eMusic catalog while holding back on others. Could it be that WMG wants to see how availability within eMusic affects the more-lucrative sales in the iTunes store and other digital channels before adding an artist's entire catalog to the subscription service?


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