Music Business and Trend-Mongering

I’ve talked a lot about how TuneCore and CD Baby are great online distribution options for independent bands. The two are set up differently, with CD Baby taking 9% of sales, and TuneCore making money on a $19.98 annual fee plus $.99 per store per record upfront costs. We run the numbers in my course on which is the better option for online distribution, and at low sales, there is very little difference between the two services. But at higher sales figures, there’s quite a bit of difference.

Eliot Van Buskirk at Wired’s great music blog just wrote a quick piece on what Trent Reznor likely paid to distribute his new record, ‘Ghosts I-V’ to Amazon. It’s really pretty amazing:

“Trent Reznor found a great deal for distributing his comprehensive new Nine Inch Nails album to the Amazon MP3 store: going through TuneCore, while keeping ownership of the master recordings and 100 percent of royalties. Now we can see why he was so eager to leave his record label.

This is assuming TuneCore charged Reznor its standard for delivering a 36-song album on the Amazon MP3 store for the first year; I have a question in with TuneCore to try to confirm:

$35.64 ($0.99 per track)

$0.99 to put one album in one online music store

$19.98 charge per album

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$56.61: Total cost to distribute Ghosts I-V to Amazon MP3

That’s not the only efficient aspect of Reznor’s plan. He’s using BitTorrent to distribute the first 8-song volume of the album to fans for free, and the innovative aspect of the release generated lots of (deserved) press attention.”

Trent is using a Creative Commons license with this current release, which I also think is noteworthy

With everything that is happening right now with the Copyright Royalty Board and the new mechanical royalty rate discussions (which will be the first time ever that rates are set for digital products such as digital downloads, subscription services and ringtones - more here from Eric Beall), I thought it might make sense to talk about how you, as an independent musician, can get into the digital music retail game. I did a quick interview for CNN/Fortune last week on the topic of digital distribution, which is a fair enough primer on the basics. Text is below, and shortened interview can be found here.

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The good news is that a lot of what independent labels did for artist in the past can now be accomplished by the artists themselves. Distribution is key among the tasks that in the past were monopolized by labels and are now open to almost anyone through forward-thinking online distributors. Two companies in particular have empowered artists to get their music on iTunes, Rhapsody, eMusic, and the other online retailers: CD Baby and TuneCore. Essentially these online distributors do exactly the same thing – they have direct relationships with the digital retailers and provide a bridge to get your music into the stores. However, they operate slightly differently. CD Baby charges a small fee (currently 9%) for every sale that generates online. Tunecore charges no fee on sales, but instead charges a one-time fee, per store, per album for delivering the music, and one-time charge per song you upload (both charges are currently $.99), plus a $20 annual fee. You’ll need to run the numbers to see which one works best for your particular situation. There are other online distributors popping up all the time, but these two are the most established and have a proven track record of success.

One important factor to note: distribution follows marketing. One does not market their music by getting on iTunes. The key is to generate interest outside of these retailers and to drive folks to the outlet so they will buy your music. This is best done though a fully integrated marketing campaign that focuses on effective traditional outlets, and also takes advantage of the marketing outlets and technologies that are now available to the independent musician (Internet marketing is a big part of this, of course). Quick advice: be sure to have your own Web page to start (do not make the mistake of only having a MySpace page), and tour, tour, tour. Of course, checking out my Music Marketing 201 course wont hurt either. ☺