matador's deal with emusic.com

[anagrama]

I recently signed up with emusic a few weeks ago and basically gorged myself on the insane amount of Matador releases on there...nearly the every Matador release.

So...I highly recommend the site, the price is really reasonable there is a ton of music on there...so much.

My question is...for possibly Patrick, are the artists/label being paid fairly for participating in this deal??, there are countless releases which I had planned to buy...eventually but have now just downloaded off emusic instead. With the service only being around $15/month and the average cost of a Matador CD being higher than that (in Canada at least)...are the labels/artists being properly compensated well in relation to how often their material is downloaded...especially when people like me...who downloaded nearly 500 mp3s of Matador material.

[Patrick]

There are really two implied questions: (1) are the artists being compensated well and (2) are the artists being compensated fairly.

The answer to (1) is no -- eMusic's gross subscription revenues could not possibly pay all the artists (or copyright owners) all the money that they would usually get from selling their music in physical form. Unlimited downloads for a fixed sum of money does not yet raise the equivalent dough from selling a fixed number of CDs.

The answer to (2) is maybe. Subscription deals vary all over the place, and they are usually made with labels, who in turn have all different kinds of deals with their artists. But a common arrangement, simplifying greatly, would be 50% of Net Receipts pro-rated by label share to the label, who would then turn around and pay, say 50% of these moneys to the artist (or to the artist's unrecouped balance).

Right now the money is peanuts. But hey, it's better than not getting paid at all by having your files shared for free on Kazaa, right?

Our deal with these services is of limited duration because we believe the digital marketplace will adjust in various ways in the near future and our priority (and that of our artists) is for the time being to have our music available on paid subscription services and get promotional value and at least some cash out of it. Hopefully one of these services will grow into a genuine revenue- (and profit-producing) model.

Either that means that so many more people will subscribe to Emusic and its like that the revenue pool will grow large enough to supply the money that jused to come from sales of physical CDs. Or else it means that the subscription fees will gradually go up as people get used to the service.

You're right, it's a hell of a deal. I just don't know how long it's gonna last.

Patrick

[anagrama]

Patrick, will the new Cat Power and Yo La Tengo album be up on emusic when they are released?

[Patrick]

Yes.

Patrick

[tinobeat]

always a man of many words..

next step should just be a simple "mm hmm"

[anagrama]

no.

he should reply with a Y or N.

simple.

[johansen smith]

I think he should reply with a blank message, and then we try to figure out if he's nodding his head yay or nay.

[bitterfruit]

I am in shock that one can legally download unlimited amounts of music for just $10.00 a month. It's almost criminal.

I don't think that enough people will ever sign up to make up for the losses being incurred on traditional sales.

[RockAction]

anyone with a high speed connection can find everything for FREE on the web.

ps: i still buy cds :)

[bitterfruit]

I realize that people can get the stuff for free. My point being that such a low amount is almost analagous to free anyway. So how does $10.00 a month really help combat the problem of those who don't buy the album?

You guys are probably a lot like me. You probably actively spend a healthy amount of money for music monthly. $10.00 a month is way too low. It should be in the range of $40-50 to be worthwhile for the artists.

Obviously, these types of clubs will only become more popular at this rate. It has to hurt the smaller labels even more because of the obvious.

[anagrama]

Originally posted by bitterfruit
I realize that people can get the stuff for free. My point being that such a low amount is almost analagous to free anyway. So how does $10.00 a month really help combat the problem of those who don't buy the album?

You guys are probably a lot like me. You probably actively spend a healthy amount of money for music monthly. $10.00 a month is way too low. It should be in the range of $40-50 to be worthwhile for the artists.

Obviously, these types of clubs will only become more popular at this rate. It has to hurt the smaller labels even more because of the obvious.

as an emusic.com member, i'd officially like to ask you to shut the fuck up. we've got a comfy knit of good indie music thieving on our hands...and we dont need whistleblowers like you to ruin or sexy $10/month fees.

[bitterfruit]

How about a little compassion and thought for the people that make our lives a little better? You know who I am talking about.

You can officially ask me to do whatever you would like, but asking me to 'shut the fuck up' won't accomplish much.

[tinobeat]

as an emusic.com member, i'd officially like to ask you to shut the fuck up. we've got a comfy knit of good indie music thieving on our hands...and we dont need whistleblowers like you to ruin or [sic] sexy $10/month fees.

so anagrama, you've never really "worked" for anything, have you?

there's times when getting a "deal" is great, but I hate how people feel entitled to getting a deal, instead of treating it like a privilege. I mean, emusic.com is a cool thing, I guess, but in a way its almost worse for the labels and musicians than free filesharing. see, you're already paying (basically nothing, but still) for all this music, so you don't feel like you might owe anything to anyone (hell, you're complaining about the mere *suggestion* that they make it $40-50 a month, which is still a complete steal), while I'd like to think that people cruising soulseek who find an album they like might feel inspired to buy it. you know, like tipping a waiter or buying someone a drink.

I could just be an idealistic bastard, though. everyone just wants to get what they think is theirs, and don't worry about how it affects anyone else...

[modicum]

there's times when getting a "deal" is great, but I hate how people feel entitled to getting a deal, instead of treating it like a privilege. I mean, emusic.com is a cool thing, I guess, but in a way its almost worse for the labels and musicians than free filesharing. see, you're already paying (basically nothing, but still) for all this music, so you don't feel like you might owe anything to anyone

I am not convinced it is quote that bad. I think that it is possible for consumers, artists, and labels to get a good deal out of EMusic. The big losers are the record shops.

Consider the following breakdown of costs in selling a CD. (This information is for a major label, not an indie, but it is still illustrative.)

First, here are the costs to the music shop:
Retail Price $16.98
Staff Costs 1.36
Distribution Costs 1.36
Rent 2.55
Wholesale Price 10.75

Profit 0.97

And here are the costs for the label:
Wholesale Price $10.75
Cooperative advertising 0.86
Manufacture of CD 0.60
Manufacture of CD booklet 0.15
Distribution and sales 1.40
Marketing and promotion 2.15
Artist and repertoire 1.08
Royalty to performing artist 1.29
Royalty to composter 0.70
Overhead and mailing 1.94

Profit 0.59

So right off the bat we can get $6 off just by cutting out the record store. Obviously EMusic will need a cut, but I imagine their costs are much lower, so they don't have to pay so much for rent and teenagers to sell this stuff, so they can probably get by on $2 a record.

Also because the record label is no longer selling the physical CD, we can cut out the manufacturing, distribution, and cooperative advertising costs. Now they can sell you the album for $10, and everyone still gets paid.

Now, you are going to say "but I pay $10 every month and download a lot more than one album, so aren't I ripping someone off". However, a bunch of the CDs I download are ones I wouldn't have gone to the store to buy, and I imagine most people are the same way. And some months I get busy and don't download at all. I doubt that I download more than one CD every month I would have purchased (Certainly Matador hasn't been putting out that many albums recently. Promoting Interpol is a full-time job.) So I am giving the same amount of money I would to labels and artists, it is just being distributed differently. And I have been exposed to a broader array of artists, and are more likely to buy tickets to their shows and their merch. So when Patrick says that "eMusic's gross subscription revenues could not possibly pay all the artists (or copyright owners) all the money that they would usually get from selling their music in physical form", I am not sure that means that artists are worse off for being on EMusic.

Granted, this system probably favors the unpopular artists over the popular ones, and EMusic probably has complex relationships with artists to compensate them for this. I just don't think it is an inherently unfair system.

This is important to me because I do think that file-trading is stealing plain and simple. I don't feel comfortable doing it, and I am surprised so many people do. (That is not an attempt to provoke people, it is just my beliefs.) But I do prefer downloading music, so I want to believe that EMusic can work out.

Disclaimer: I abandoned the indie world and am in business school, which is why I am so hot to talk about cost structures. However, I really don't know anything about the music industry, so my facts are probably terribly flawed.

[9000]

thought this diagram would be of interest to this thread and the constant questions about emusic/matador. seems to be a bit simplistic, but gives you a rough estimate of the economics of MP3s:

http://www.business2.com/articles/mag/0,1640,49472,00.html

oh, i just remembered the emusic is subscription based, so this is out the window. use it for the itunes questions.