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.

Digital Music Distribution – Simple?

I have another new album coming out and normally I would use Tunecore for my digital distribution. I have for all but one of my releases. I used CD Baby for my 2nd album to try something different.

But Tunecore’s recent 150% price hike on all new and existing album distribution has got me looking around at what others have to offer.

A Little Background

I wrote, recorded and produced a song a week for a year. During that year I released some download-only EPs. The at the end of the year I released an album with 13 of the best songs of the week. I also got some songs placed on TV that were neither on EPs or the album so I released them as singles.

So now I have 3 EPs and 4 singles from that project. At $49.99 per album (even a 4 song EP) and $29.99 per single, that’s a lot of money to pay every year for just over an album’s worth of songs. So I had to have a think.

Then, after being asked about releasing more of the songs of the week, I decided to take the best songs from the EPs, the singles and some never released songs, remix, rerecord and master them for Song of the Week 2. So 7 releases become one.

So that is why I started examining where to go for my distribution.

Tunecore’s Price Hike

My problem with Tuncore isn’t that is costs $49.99 per year to put up an new album. I think the price is reasonable for a new album. My problem is the price hike on existing albums. Albums that, over time, are likely to get less sales as the years progress. Albums, where the work to put them up has already been done. Albums that cost around a just a couple of dollars a year to host. It’s not is if we are allowed to modify or upgrade anything about the albums, yet they are costing us more.

They added new features like trending and widgets and bundled them together with the distribution but it feels a bit like they are saying “here’s a bunch of stuff you didn’t ask for, now you owe us more money”.

So the quandary for indie artists is that to take our business elsewhere means losing those precious stars, comments and ‘others that bought this bought…’. We need all the attention we can get.

By all means put up your prices for new business but don’t penalize old customers for something they can’t do anything about.

Attitude problem

And then there’s the attitude to those who were not overjoyed at the price hikes. I think they took take offence to the statement by CEO Jeff Price – “So we just said screw it, simpler is better”…  “Let’s give Tunecore customers all the things they asked for and not charge them for each and every new feature.” (from Digital Music News)

Simpler for Tunecore. I think customers would always prefer to chose what they are paying for. I have a feeling they paid for the development of these features and found that people weren’t as interested as they thought, so, as I said earlier, they have bundled them… for who’s convenience?

Distribution

But enough bitching. I still have the problem of who to distribute through. There seems to be 2 basic options. Pay a fee each year but pay no percentage of sales (Tunecore, Reverbnation) or pay a one time fee and pay a percentage of sales (around 10%) (CD Baby, Indie Pool). I did a little research and came up with this chart so I could see a comparison between many companies now offering music digital distribution. It’s not pretty but it’s as simple as I could make it. (click on the image to see in detail).

The Indie Artist Dilemma

Now if you’re a well known artist it’s a no brainer. Selling a lot means that you are way better off with paying the yearly fee and keeping all the sales. But for less well known indie artists then it’s a gamble. Especially if you have a lot of CDs out there. It adds up. But if I get a song on a TV show, which happens from time to time, then my potential sales make it worth paying the yearly fee. If not then which is my best bet.

What’s Next?

I totally get that it’s all business. I do. And if this was my first album I would most likely go with Tunecore. They have a great website, make it easy to get your albums on iTunes quickly and your money from sales is easy to withdraw. But I have a bad taste in my mouth and I think that there is one simple thing Tunecore could do to keep the indie artists happy, if they really want to… and Tunecore are all about keeping things simple, right?

Leave existing albums at the yearly price that they were originally signed up for. Simple and fair. Those albums require no more work, only the storage cost.

For this new album, Tunecore may still be my best option. I would be interested in other’s thought on this.