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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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 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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