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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April 26, 2011

Stop the Presses: Most Self-Released Artists Earn Very Little from Digital Music Sales
by David Harrell
Paul Resnikoff of Digital Music News seems surprised that the average TuneCore artist is earning just $179 a year from digital music sales, and cites a similar figure ($174) for CD Baby artists.

As a self-released musician who uses both services, I'm not. I'd also point out that these averages are probably boosted by the sales of the top-selling artists in both catalogs. The median annual sales figure -- the dollar amount that divides the artists into two equal groups, one earning more than the median and one earning less -- might be even smaller. (Though it's also mathematically possible for the median to be more than the mean, which would occur if large numbers of self-released artists are selling just a few dollars worth of digital music each year.)

I'm working on an in-depth post about the economics and pricing of both services, but I really have nothing negative to say about either company -- both provide access to worldwide distribution that was unthinkable for a self-released musician a decade ago. Yet while the total sales for TuneCore and CD Baby artists add up to some impressive numbers, the actual market for most individual self-released (and self-promoted) artists is minimal.


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April 25, 2011

Would 99-Cent Albums Find the Same Success as 99-Cent Books?
by David Harrell
There was a fascinating story in the Wall Street Journal last week about self-published authors who are selling a ton of bargain-priced digital books at
Mr. Locke, who published his first paperback two years ago at age 58, says he decided to jump into digital publishing in March 2010 after studying e-book pricing.

"When I saw that highly successful authors were charging $9.99 for an e-book, I thought that if I can make a profit at 99 cents, I no longer have to prove I'm as good as them," says Mr. Locke. "Rather, they have to prove they are ten times better than me."

Mr. Locke earns 35 cents for every title he sells at 99 cents. Altogether, he says his publishing revenue amounted to $126,000 from Amazon in March alone. It costs him about $1,000 to have his book published digitally, complete with an original dust jacket image. He also hires an editor to work with him at additional expense.

In March, he sold 369,000 downloads on Amazon, up from about 75,000 in January and just 1,300 in November. His titles are also sold by digital bookstores operated by Kobo Inc., Barnes & Noble Inc., and Apple.
The article doesn't specify if these ultra-cheap books are crowding out sales of higher-priced digital books or if it's an example of the price elasticity of demand, where the cheap goods are causing consumers of digital books to purchase more than they would at traditional prices.

My immediate question -- would 99-cent digital albums from unknown musicians find similar chart success at Amazon MP3 (and iTunes), or are book fans more likely than music fans to accept low-cost substitutes for name brand content?

One anecdotal example is the daily digital special at Amazon MP3, which invariably tops Amazon MP3's download chart (or at least lands in the top five), even when the artist is relatively unknown. Yet with thousands of musicians already trying to give away free music, music fans have almost endless choices for free downloads, even without turning to P2P networks. And while free digital books are available for thousands of out-of-copyright works, readers looking to fill their Kindles have fewer options than music fans for finding free versions of recent works.

Then again, free mp3s on artist websites, music blogs, MySpace, Facebook, etc., are a different matter than bargain-priced material sold within the dominant digital marketplace. If promoted on the homepages of iTunes and Amazon MP3, it seems likely that the highest-quality bargain albums (as determined by customer reviews) might climb the download charts.


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April 08, 2011

Cloudy Logic
by David Harrell
After last week's announcement of Amazon's Cloud Drive and Cloud Player, several digital music commentators wrote that storing music in the cloud might hamper subscriptions to music streaming services -- and maybe even result in an increase in illegal downloads from P2P platforms. While it's not an unreasonable conclusion that some consumers will prefer streaming their own music collections from the cloud over paying for subscription services (and that some of those online collections will include music that was illegally downloaded), I doubt that cloud storage is a cause for alarm when it comes to music subscriptions.

Music subscription services are, without a doubt, an incredible value proposition. They provide access to literally millions of tracks for as little as $5 a month (That's what I'm paying for my "computer only" MOG subscription, mobile phone access brings the price to $10 a month). Yet music fans have yet to embrace them, on a large scale, as a substitute for owning music. From what I've read, their appeal (so far) is mostly to voracious listeners who want easy access to the immense music catalogs they offer.

While many of these current subscribers have large music collections, it seems unlikely that having access to their libraries via the cloud would diminish the appeal of a music subscription. Even the largest private digital music collection pales in comparison to the catalogs of Rhapsody, Napster, MOG, and Spotify.

And commercial cloud storage won't be free -- my iTunes library would cost $100 a year to store on Amazon's Cloud Drive and I've ripped just half of my CD collection to mp3. Indeed, for these music fans, it seems more likely that a music subscription would discourage cloud storage, not the other way around. (Though I personally want both -- all of my digital music in the cloud AND access to the entire catalog of a subscription service.)

It remains to be seen if music subscriptions will ever take off -- maybe the U.S. launch of Spotify will be the best test of the viability of the subscription model. But if the public continues to snub subscriptions, I won't be blaming music lockers.

What do you think -- does the prospect of cloud storage make subscription services less appealing?


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

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