business model

Digital Distribution – An Emotional Issue

After my last blog Peter Wells from Tunecore was kind enough leave comments and has answered questions at length. CD Baby was also kind enough to alert me to their offer of half price submission if I want to transfer my albums. But I am looking at this long term.

Sound Business Model?

Tunecore’s business model, which provides a service for a fixed (kind of) price where you get to keep all the royalties, sounds very compelling. And it is for larger artists. A few hundred dollars a year for a handful of albums is a drop in the ocean compared to their sales.

But I think there is a fundamental flaw in the Tunecore model. It is not tied in any way to the success of the artist. Their only revenue is new and existing fixed price subscriptions. So the only way for Tunecore to grow and satisfy it’s investors is to put up prices both retroactively and on new albums.

The big artists are not going to protest the price hike but the smaller ones are. But we are all worth the same in income to them. In fact it is probably the larger artists (and labels… they use Tunecore too) that take up most of the accounting and headache time for Tunecore.

And while the large artists don’t notice the price increase, the indie bedroom artists are really feeling it. I have to sell $555 worth of songs on each album each and every year to match the 9% that CD Baby charge. However if I become wildly successful, then CD Baby’s model will not be in my best interests financially.

I am sure if CD Baby suddenly put its percentage up to 22.5% then ALL their artists would be pretty vocal. The percentage protects those artists from wild 150% price increases.

As I don’t have a crystal ball and have no idea if I will become hugely successful, the choice seems to be coming down to this :

1. Do I want to pay a yearly subscription which, over time, eats up a greater percentage of the income and could go up dramatically again?

2. Do I want to pay a percentage which will cost me way more if I become really successful?

Getting Emotional

In examining this I have come to realize that this is an emotional issue. When I put my 2nd album, One Eye On The Door, with CD Baby I knew that it would cost me 9% of sales. So when one of my songs did really well after being on featured on the TV show ‘90210’ I had no problem with paying the 9%. It is what I signed up for… practically and emotionally. I don’t get upset when I get a placement and my publisher takes their cut. It’s what I signed up for.

What I did not sign up for was a 150% price on old albums with Tunecore. Well, actually I did. The small print says that they can change their prices at anytime. But emotionally, I signed up for $19.99 per year.

I have had many CD Baby artists contact me to tell me how great CD Baby is. Not one Tunecore artist has come forward to defend the new features which apparently we have been ‘crying out for’.

If it wasn’t for the loss of my ratings and ‘those who bought this…’ on iTunes, then I would transfer today. But it just may be worth the loss of those to have a long term model that I am emotionally at peace with.

We all need to feel good about the services we are getting.

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