Industry information that you can actually useQuote of the week. Stephen Colbert when speaking directly to President Bush at a White House Press Core dinner said this about Bush's 32% approval rating, "Believe not those who tell you the glass is half empty. Thirty-two percent is two-thirds empty. The point is there's still water in the glass but I wouldn't drink it. The last third is usually back wash." Seeing is believing: http://youtube.com/watch?v=lcIRXur61II&search=colbert%20bush%20cspan XM RADIO DISSES 1000s OF ITS SUBSCRIBERS This month XM Radio, the leading Satellite radio company tossed to the wind what many fans consider to be one of its best stations, Music Lab. What did they replace it with? More Top 40 format stations that are genre specific, disappointing the hip subscribers that helped build the company's credibility. According to XM this was done to free up bandwidth, making room for 10 new commercial-free music stations, but those with even basic a technical background know that this is probably just a PR line. Bandwidth is not a very costly part of this enterprise-- advertising to attract new subscribers, however, is. And it does play well in print to be able to say that you have more "commercial free" stations than your competitor, Sirius, even if it is a play on words. "Commercial free" should also mean that you don't get the same 60 songs in constant rotation. XM is now starting to sound just like the music band on your Digital Cable box; fifty top 40 stations of genre specific music. Will this hurt XMs health? Unfortunately, only in the mind of people who have already been suckered-- oops, I meant succored, into paying $10 a month for the past few years thinking it would be like subscribing to cable TV, where you get far cooler programming for your buck. Nah. In the tradition of radio, which has always been the slot machine of the entertainment industry, we see the same petty shenanigans that gave birth to words like "payola"; the cheesy, long-ball, bait-and-switch tactics to suck money from our pockets, while they pretend to be about serving the public. My heart goes out to all those who pay for this service. I imagine many will be switching to Sirius or may they will just get wise to the prediction I made three years ago about Satellite going commercial, and see that radio, is radio, is radio. It's an advertising driven format that will ALWAYS yield to the demands of the lowest common denominator. Deal with it. Bottom line: we are rapidly approaching a scenario where Satellite music channels are offering substantially nothing more than you can already hear on free radio. And the band played on. Another nice blog on the subject: http://msnbc.msn.com/id/12080572/from/RL.5/ ROLLING STONE FALLS FROM TREE AND STILL GATHERS MOSS We love Keith. He's like the drunken uncle at every family reunion, yet he can really jam with the band. This month Keith Richards suffered a mild concussion after he fell out of a tree at an exclusive Fiji resort. Although he was hospitalized in Auckland it appears that the indescribable rock icon now 62 will be okay and able to soon return to his lifestyle of drinking and dating women the age of Kate Moss. (Who actually dated Ron Wood's son, Jessie.) A controversy has arisen because no one is saying what Keith was doing up a tree to begin with, but a spokesperson for the resort latter told reporters that somebody told Keith that several pints of Jack Daniels were hidden there. The Rolling Stones played their fifth farewell tour in Wellington on April 18 and according to the band's website, the Stones' next farewell tour is scheduled concert is at the Olympic Stadium in Barcelona, Spain, followed by 34 more dates across Europe. CD BABY, ORCHARD COULD FACE SERIOUS CHALLENGES Note: Nothing in this piece is intended to imply any unscrupulous activity by the companies mentioned. Use of fulfillment and digital distribution services (known as "aggregators") has been the number one model for independent artists to handle CD sales and get their music on services like iTunes. Companies like CD Baby and Orchard have led the way for several years now, representing over 30% of all independent CD titles distributed in the US . But according to data from Nielson SoundScan less than 17% of the 4000 CD Baby titles tracked sold more than 12 units in 2004. At this low volume many clients using such services may not be realizing profit. Now, new companies offering deals with wider profit margins are emerging, putting pressure on the old model and concurrently the dominant aggregators in independent music, like CD Baby and Orchard. Why is this good news for artists? Read on. SEE YA LATER AGGREGATOR Meet Jeff Price and his Brooklyn based company, TuneCore. Jeff is the co-founder of SpinART Records, a hip New York indie label that actually turned a profit in the 1990s, with acts like the Pixies. In 2004 Jeff looked at the landscape of independent music distribution and saw a tragic flaw: Artists were exclusively assigning very important back-end rights to their music and paying high percentages just for the privilege of getting it on iTunes or having a third party stuff an envelope for them. (And he figured this out without even being on my mailing list<<<smiles>>>) Jeff's vision with TuneCore is that digital distribution should be a "flat fee service," not one that keeps a hand in the artist/label's pocket for months or years at a time, like a traditional record or aggregation deal. He said to me in our initial conversation, "If you ask Fed Ex to deliver a package to iTunes, Fed Ex charges you $15 and that's it. They do not say 'OK, that will also be 20% of the revenue for the next three years.'" A good point. And since going on-line January 26, 2006 , their volume is up to about 150 new albums a week. Why? Unlike most every other digital distribution contract, TuneCore claims there is no excusive rights granted and no grab is made for back end rights either. They take 0% of revenue and best of all you can fire them at will, leaving the client free to make deals with actual labels should the situation arise. This is the exact opposite of most digital distributors which require anywhere from one to six months to "opt out" and even this often turns out to be a difficult promise for them to keep. (In the June issue of EQ Magazine I have a feature story that includes a comparison chart of several top aggregators and their deal points.) So, if TuneCore doesn't take a cut and you can fire them anytime how does the company make money? They charge 99 cents per song as a one time fee and then 99 cents as another one-time delivery fee of the entire album to iTunes plus any other digital store of your choosing. So, a ten-song album delivered to iTunes US and Rhapsody, for example, would be $10.89 and each store after that would be another 99 cents. An annual storage and maintenance fee of about $8 an album is then applied; a total of about $18 to get set up on two stores of your choice. Compared to the leading competitors with almost double the set up fees and back end rakes of 9% to 30%, TuneCore seems far and away cheaper. For this paltry amount they do all the digital rights management for their clients, collect their fees and pass on the money within 15 days after they receive funds. And, best yet, the deal is non-exclusive. NOT YOUR FATHER'S E-TAILER But there's more. In terms of physical distribution of CDs TuneCore has a solution that makes printing 500 units and sending several of them to an e-tailer look sublimely un-hip: ON-DEMAND PRESSING. The concept has been around for a while in the book world, but for CDs it's always been frowned upon because the quality usually stunk. That's in the past as well. TuneCore has partnered with CD manufacturer, Digital Catalog Service , (DCS) a company with several major label accounts. They can print a top quality replicated CDs with the full-color packaging for about $6 a unit (assuming the artwork is done in print-ready PDF and the music has been delivered in a lossless format–such as a CD or upload). Here's some simple math using the leading e-tailer, CD Baby, as a comparison. Cost of CD: $1.50 (assuming you order between 500 and 1000 units) Shipping to CD Baby: $1 per unit (five unit minimum) CD Baby's fulfillment fee: $4 Total cost per unit: $6.50. Add to this the CD Baby's set-up fee of $35 (per title), $20 for a barcode (which is a "sub-code" not an actual, entire UCC code) and you get into a scenario where you have to sell about 10-15 units of a particular title to just to break even. Think that will be easy to do? Here's some statistics to chew on: Nielson SoundScan--the leading company that tracks retail CD sales, in 2004 reported that out of the 4000 plus CD Baby titles they tracked, only about 700 titles registered more than 12 units sold on the popular service that year. CD Baby claims about 70,000 clients. Bottom line: even when using the most popular e-tailer/aggregator the vast majority of artists and indi labels are probably losing money through the use of a traditional fulfillment service. And before one can get to the stage where this even matters, artists and labels first have to spend about a grand per title to print 500-1000 units, many of which sit in a warehouse for months. This makes the risks of the old method a no-brainer. With TuneCore's model, a client only sends the CD master. They can even upload it and save on postage. You tell TuneCore how many units to print. They do it, weather it's one unit, ten or 1000 units. And you can have them do the pressing AFTER YOU MAKE THE SALE. They then ship it, collect the money and the client can withdraw their profits at will from their TuneCore account within 15 days. They take no fees for warehousing or fulfillment; a method that makes it virtually impossible for a new artist/label to lose money, and freeing up the much needed cash for promotion, tour support, and merchandise. I DON'T BELIEVE IT Sounds too good to be true? Yes, and being a hard-core skeptic I have been holding back the news of this company's offer for three months while we did an investigation of their claims. However I now believe that this company will redefine the self-distributed music deal as we know it and the leading aggregators/e-tailers will not likely be able to sustain themselves without some reform. It's very good news for artists, not because I want to see anyone go out of business, but because competition is what creates the best deal for the consumer— you. There's a new paradigm in town. Related Links : To read the CEO of TuneCore's philosophy go to this blog and look at the April 8th blog entry. http://tunecore.typepad.com/tunecorner/jeffs_thoughts/index.html Or listen to this podcast: http://www.audioblog.com/export/Paf8abcdf3c2e6f8ca9430372a231967dYV57Q1REYmN1.mp3 OBITUARIES June Pointer died on April 12th . June was the youngest sister of the popular singing group, "The Pointer Sisters." They had a number of hit records including "The Neutron Dance," "Jump (For My Love)" and "Fire." Their music was featured on the soundtracks of such films as "Beverly Hills Cop" and "Night Shift." She gave in to cancer at age 52. Gordon Terry died April 9th. Gordon was one of the premiere fiddle players in the Country and Western music industry. He began his career playing for Bluegrass artist, Bill Monroe. Gordon served his country in the US Army during the Korean War and Clint Eastwood cast him as one of the Texas Playboys in "Honkytonk Man." The Country Music Hall of Fame member died at age 74 after a long illness. Mario Babadilla died March 6th . Mario toured with such big bands musicians as Artie Shaw, Benny Goodman and Harry James. Mr. Bobadilla worked for Disney Studios for nearly 15 years. He also recorded for Paramount and Warner Brothers. The studio musician died at age 86. |
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