Copyright © 2010 by David C. Coleman

Considering the fact that my company deals exclusively with independent artists and labels, we tend to hear about all the “latest and greatest” opportunities available for artists/labels to market, promote and sell their music. TuneCore burst onto the scene with what, at first glance, appears to be an incredible offer: the artist/label gets to keep 100% of the revenue received from digital retail sales. This, of course, is great news for artists/labels that have a solid following and are able to generate sales on their own behalf. But there is definitely a downside to the TuneCore model (there’s always a downside, right?).

An in-depth study of the digital retail phenomenon recently discovered that approximately 85% (correction – 77% is the accurate figure) of the content available on digital retail sites is NEVER purchased – not even once! This is a very alarming discovery for all the do-it-yourselfers out there. Considering the nature of the TuneCore model, the initial set-up fees and annual “maintenance and service” fee can cost more than many artists accumulate in a full year’s worth of sales. For instance, the initial set-up fee for an album containing 12 tracks delivered to 16 separate stores (iTunes, Napster, etc.) would cost $47.70. Boosting the track count on an album up to 20 tracks delivered to those same 16 stores would cost $55.62. Each year thereafter, a recurring $19.98 charge is assessed to “store” the content in the TuneCore database. As you can see, this can become quite cost-intensive, particularly as the law of diminishing returns begins to affect the sales of an album. Over the course of time, an album will typically begin to generate fewer and fewer sales per month. The various international iTunes stores are all counted separately so if you wish to deliver content to the domestic and five additional international iTunes destinations (Canada, Australia, Japan, etc.), you’ll pay $5.94 to deliver content to the 6 separate iTunes destinations.

CLG/JesusWired deals with many digitally distributed titles. Some sell very well but, honestly, a good portion of the titles never accumulate $19.98 in sales for an entire year, let alone the approximate $50 necessary to list a title through TuneCore for the first year. So, as you can see, the TuneCore model can actually be an expense rather than a source of income for artists/labels that aren’t generating a respectable amount of sales. Once the model is dissected, it is a little less attractive than the tagline “get 100% of the royalties” might suggest. Nothing is ever free but the air we breathe! Effective marketing can often disguise the true nature of an opportunity. For those just starting out, a risk-free digital distributor is a safer bet. Besides, TuneCore and virtually every other digital distributor do nothing to address the issue of marketing your title to the various sites.

3 Responses

  1. Peter

    David, can you tell me where you saw this?

    “An in-depth study of the digital retail phenomenon recently discovered that approximately 85% of the content available on digital retail sites is NEVER purchased – not even once!”

    Because I can tell you flat out it’s wrong. I see the sales data from our artists, and way, WAY more is selling, and way WAY more of our tens of thousands of artists are making money–real money. I urge you to see the problem as one of TRACKING. Whoever came up with that 85% statistic is almost certainly looking at things through a bad lens.

    Jeff Price, our CEO, wrote compellingly about how these stats are off (if you don’t mind me putting a link in here):

    http://blog.tunecore.com/2010/01/how-people-use-neilsen-to-hurt-musicians.html

    I also have to wonder where you learned we do “virtually nothing” to market our artists titles: we’ve had more than 1000 of them featured or otherwise promoted on iTunes alone. We just don’t PROMISE to, or CHARGE people for it, because both would be unfair.

    Finally, our yearly isn’t mandatory. If someone’s album doesn’t sell three times in a year (that’s what it would take to cover the $19.98 for a full album sale on iTunes), then they’re free to not pay and we’ll take it down. No harm done, right? If it wasn’t selling, no reason to keep it in the store, unless you want to for your own joy.

    –Peter
    peter@tunecore.com

    Reply
  2. David C. Coleman

    Peter, I believe it was a report from NPD. Directly from their site, “The NPD Group has recently conducted a comprehensive, three-year study of the digital music and video* marketplaces, gathering data using leading-edge collection tools.” I’ve been searching for the source document where I originally obtained the stat but can’t find it. It was either sent to me via e-mail or I came across it via a blog post sometime around the middle of last year and is apparently either buried or lost. Either way, it was a direct quote from an exhaustive study conducted by a reputable company. I remember the 85% figure due to it’s staggering nature. I’ll continue to search to see if I can come up with the direct quote.

    Just to be clear, this post was not intended to be a slam on TuneCore by any means. In fact, I clearly indicated the positive aspects of TuneCore. My intent was to instigate some critical thinking amongst those who sometimes don’t consider all sides of the argument. The truth remains that some artists need someone else to assume the risk on their behalf. Your solution benefits some but not all.

    Reply
  3. David C. Coleman

    Peter, I finally found the e-mail with the source information. It was not NPD:

    Entitled “The Long Tail of P2P”, the study by Will Page of performing rights society PRS For Music and Eric Garland of P2P research outfit Big Champagne will be aired at The Great Escape music convention tomorrow. It’s a follow-up to Page’s study last year which helped debunk the myth of the “Long Tail”. Page examined song purchases at a large online digital retail store, which showed that out of an inventory of 13 million songs, 10 million had never been downloaded, even once. It suggested that the idea proposed by WiReD magazine editor Chris Anderson, who in 2004 urged that the future of business was digital retailers carrying larger inventories of slow-selling items was a Utopian fantasy.

    The P2P networks are harder to quantify, but apparently show a similar pattern, where most of the action – and profit – is in the ‘head’. Each Top 100 CD on on PirateBay averaged 58,000 downloads a week, for example. Lady GaGa’s The Fame was downloaded 388,000 times in a week from PirateBay alone. Like its predecessor, the new study also finds that downloads follow a log-normal, rather a Pareto (or “power curve”) distribution as Anderson envisaged. The WiReD man had guessed the shape of the internet – and picked the wrong shape.

    Read the full article here: http://www.theregister.co.uk/2009/05/13/long_tail_p2p/

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