This course provides an engaging and methodical insight into the past and present cultural and commercial music industry developments, directions, and trends. It will equip the students with the knowledge and skills necessary to appreciate, understand and more productively participate in today’s music industry field.
Methods and Practices Part 2: Music Promotion, Distribution and Sales (Part 5 of 7)
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MW
Oct 17, 2016
fantastic information with outstanding detail and comprehension- Thank you Professor Velichkovski and West Virginia University!
AA
Jun 16, 2017
Very concise and broad. I enjoyed the challenge, and look forward to revising the materials as I apply them in my business.
De la lección
CD, MP3, and Online Marketplace
Impartido por:
Darko Velichkovski
Music Industry Program Director
OK, so now that we have looked at some of the, more or less, one-stop services out there,
for music promotion and sales, let’s look at a couple of music aggregators that concentrate
mostly on distributing your music to different online music services and retailers, and get
a sense of the lay of the land in that area. We’ll start with TuneCore. TuneCore has
been around since 2006, and during that time has made their members over 400 million dollars,
selling over 6 billion downloads and streams. It does one thing, and it does it well. Actually
it used to do one thing. Now it has a number of services, but it still does that one, original
thing well. And that’s distributing your digital music to online music services and
stores. Upload your single or an album, and it will distribute it to about 30 main stream
digital music retailers and streaming services, including iTunes, Spotify, AmazonMP3, Google
Play, Shazam, Rhapsody, BeatsMusic, and so on. Yes, it’s that simple to have your music
included on all those sites and services. Join, pay the fee, upload, and you are on,
your music available all over the net, around the world. And before you get too excited
about it, just remember how we said earlier that that’s good news and bad news, at the
same time. If it is that easy for you to get your music on all those sites, it is just
as easy for everyone else, so the competition is brutal out there. That’s why we spent
all that time earlier talking about building your market presence by performing, creating
your narrative, and communicating with the public through services that might help you
connect with your fans, network, promote your music, and expand your fan base. Just putting
the music up on iTunes or Spotify, or any of the music sites, is simply not enough to
move forward.
And while on the topic of what all is needed to move forward, how about regular radio?
How do we get our music on those radio playlists, and do we need that at all, as an indie? Of
course, it would be nice and helpful to have radio airplay. Radio is still a major instrument
driving sales and fan base expansion. But, the mainstream radio is not a cheap tool,
and it may be prohibitively expensive for an artist to utilize it in the early part
of his career. Radio promotion service companies could charge thousands, and tens of thousands,
of dollars for a month or a two-month long campaign, promoting a single with radio stations
across the country. Alternatively, you could chose to work, and fair cheaper, with online
services like RadioAirplayPros, RadioDirectX, RMGDigital, and so on, but remember that as
usual, you get what you pay for. Check them out and see if what they offer might fit your
needs at the time. You may find a match there. But generally speaking, getting regular radio
airplay is most likely too expensive for the early part of a career. Except perhaps college
radio stations, and local indie stations, where you can personally start soliciting
airplay by communicating with program directors yourself, especially if you live and are musically
active in the area where they are located.
Anyway, back to TuneCore and its digital music distribution services. It’s fee structure
includes charging 29 dollars and 99 cents for releasing an album the first year, and
49 dollars and 99 cents for every additional year the album is available through the TuneCore
services. Singles releases are 9.99 per year, for the life of the release, and ringtone
releases are 19.99 per year, for the duration of the availability. Ringtones are distributed
to iTunes store only, by the way. And that’s it. There are no percentage cuts for digital
music sales using the TuneCore distribution.
So that’s clean and simple deal that works pretty good, as long as you sell more per
year than you pay in fees for distribution, of course. But given the fact that singles
usually sell for 99 cents, and albums for 9.99 you really don’t have to sell enormous
amounts to break even. And, by the way, keep in mind that you don’t get 99 cents and
9.99 for those singles and albums respectively, but you get your cut from those sales, after
the store that made the sale, takes their portion. For instance, iTunes pays out 70
cents for a 99 cent single, and 7 dollars for a 9.99 album. So when you are trying to
figure out how many singles or albums you need to sell to break even using TuneCore,
divide the distribution fee by the amount of your sales cut, and that’s the number
per year. For the singles, that would be: 29.99 divided by point 7, which is 42 point
8. So you need to sell 43 single downloads per year in order to break even. And if you
can’t sell 43 digital singles per year, then it’s time to leave this land of Oz
and go home, if you know what I mean.
OK, so that’s the TuneCore’s main and original service – digital distribution.
Over time, they have added other services to their menu as well. We’ll just list those
briefly here, fore the sake of being thorough and informed. TuneCore has partnered with
a number of different music type service companies, in order to offer its members additional value
through those services, which include: music web site building; internet radio airplay
support; merchandise inventory, sales, and management; audio mastering; and CD duplication.
Also, TuneCore now offers music publishing administration service, which they call TuneCore
Music Publishing Deal. For a one time setup fee of 75 dollars, and 10 percent of the collected
revenues, TuneCore will administer collection of your worldwide composition performance
royalties in conjunction with ASCAP, BMI, or SESAC, depending on which PRO you joined
as an author. In addition, they will make your music available to music supervisors
and producers for film and television projects, and keep 20 percent of the collected synchronization
revenues, if they secure the license. TuneCore Publishing Deal, as of relatively recently,
also includes YouTube monetization option, which demands our attention, as it created
some controversies and frustrations with artists. We’ll come back to that issue in a minute.
Another music aggregator with long history and wide reach is CDBaby. CDBaby’s digital
product distribution scope is similar to TuneCore, as it distributes to over 30 digital online
music services and stores - from iTunes and AmazonMP3, to Spotify and Rhapsody, and to
just about every mainstream service in between. Their fee structure is somewhat different
from TuneCore, though: 49 dollars per album distributed, 12.95 per single, and no annual
fees. Plus, 9 percent cut from all digital sales. Meaning, they pay out 91 percent of
what they receive for the sales of your music from the music services they work with.
CDBaby also makes your CDs and vinyl available and distributed to stores through their partnership
with Amazon, Super D, and Alliance Entertainment. Which also means that if any physical music
store out there wants to stock your CD, they can get it from CDBaby. And while on the topic
of physical stores. Keep in mind that there is really no reason for your CDs to be on
the shelves of Best Buy, or Wallmart, or Barnes & Noble’s stores nationwide, unless you
as an artist have a national touring and media presence. Even if you achieve such presence
doing it independently, through your own label, you will probably want to think twice before
stocking those physical shelves across the country. Why? Think about it. Let’s say
you found a distributor who caters to Walmart, and a Walmart music buyer orders 5 of your
CDs for every store. That’s close to 25,000 CDs, since there are almost 5,000 Walmart
stores in the U.S. Would you really be willing to spend over 20,000 dollars to manufacture
those CDs, and gamble that after the sale cycle is over, the amount of the leftover
CDs returned to the distributor from Walmart, will not be such that you lose money on the
deal?
Because those CDs are 100 percent returnable. Neither Walmart, nor the distributor, has
to keep them, and you are the only one with a financial risk there. Whatever CDs are leftover,
you will get them back and, of course, you will not receive money for those. Let’s
look at the ballpark figures in the whole scenario. We’ll use round numbers for the
ease of calculation. Let’s say the retail price of your CD in the store is 15 dollars.
That would make a wholesale price around 10 dollars. Distributors cut is let’s say 40
percent of that, so 4 dollars. Your cut is therefore 6 dollars per CD sold. If you paid
20,000 dollars to manufacture the CDs, you would have to sell over 3,300 CDs at Walmart
stores to break even. (20,000 divided by 6 is 3,333.) Even if you sell that much, and
do break even, you just used and tied up 20,000 dollars for that, instead of having it available
for promotion of your other music efforts, that could easily create a better return on
investment, and be more productive for your career in general, then having your CD available
at Walmart stores.
For that Walmart scenario to really be worth the trouble, you would have to spent another
40, 50, 60 thousand dollars on marketing and promoting the CD nationally as available at
Walmarts, which combined with other promotional efforts might bring about better than “break
even” sales, and thus creating some meaningful profit. But that’s really a long, long shot,
and if the sales don’t realize, you would be even deeper in the hole, having made that
additional investment. If you invested, let’s say 50,000 dollars in promotion, combined
with the initial 20,000 dollars for manufacturing, that makes 70,000 dollars total, which brings
your “break even” point up to over 11,600 CDs sold (70,000 divided by 6 equals 11,666).
Meaning you would have to sell almost half of the inventory before you break even on
the deal
So let’s stick to more modest, but more realistic distribution methods, at the indie
level, like through CDBaby that we talked about a minute ago. Your CD will be available
on the online stores that offer physical CDs for sale, and unless someone orders it, you
don’t owe anything to anybody. The fee for the CDBaby’s physical distribution service
is flat 4 dollars per unit, regardless of the sales price. Meaning, you set the price
of your CD, and CDBaby takes 4 dollars cut from the sales. The same deal applies to selling
your CDs and vinyl through their own online store.
We should also mention that in addition to aggregation and distribution services, CDBaby,
like TuneCore, has other services available as well. Those include: CD manufacturing,
audio mastering, Internet radio airplay support, publishing royalties collection, synchronization
licensing support, and YouTube monetization.
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