Monday, May 7, 2012

Older but wiser in the information age


Fook I-Tunes

I've come up with a hypothesis about the music business based on scientific observation. Any entity that places itself between the musician and listener is most likely going to exploit one or both parties.

Permit me to submit this story to support the opinion, I-tunes sucks ass.

A little over a year ago, we released “Wartzinall”, our debut CD. We sold copies of this collection of song via our web page, in-world via Second Life, and buy selling physical CDs during our live performances.

In each of the aforementioned methods, the link between the musician and the listener was direct. We own our web page, we own our sales portals in Second Life and we had paid for the CDs we sold. In each case the customer got what they paid for, and we, the artist got compensated for our labors.

Then a couple of “Experts” told us, if we really wanted to move product we had to be on I-tunes. I'm sure these experts meant well, but they could not be more wrong. While each sale using our standard method of distribution did incur an overhead cost, the profit was always greater then cost.

The cost of running our website is about 10$ per-month. We sell more then 10$ worth of MP3s per-month so that is profit.

The cost of selling in-world on Second life is 10L$ to upload the vendor graphic (that comes to about 0.04 $ American), and after Linden Labs usurious exchange rate, we still make profit from sales in-world.

The most questionable arm of our marketing octopus has to be CD sales. But while the most expensive method to undertake, still draws an amazing profit margin. Even when we drop the price, like we did at our first and so far only headlining show, we still had a 100% profit margin.

But when we set up our “Digital Distribution package” with Reverb Nation. The upfront cost was 35$. per-year. We figured we would try it for a year and if it didn't work out we would just let the service expire after that.

But it wasn't that simple and that is why I'm upset.

We made 26.30 in sale over the year, that makes for a 8.70 loss. While that might not seem like a lot, we don't like to lose money while a third party vendor is making money. Keep in mind, every 1.00 $ of product we sell, I-tunes keeps 0.30$ Even if you are not good at math, that is a 30% cut.

We very much wanted the “Digital Distribution Package” service to just expire. But it doesn't work that way and the way it does work is insanely messed up.

We are offered two options. To either pay 35$ to extend the service, or pay the 15$ Take down fee.

If you have trouble understanding that, they want us to pay them to sell our music for us, or pay them NOT to sell our music.

As messed up as that is, it gets even more messed up. If we don't pay the 15$ take down fee, we will have “Abandoned” our release and the third party vendors (while I-tunes is only one of four vendors, it's the only one we sold anything on) would continue to sell our music, and not pay us for it.

While we did try to pay our way out, it seems Reverb Nation will only allow you to pay this “Take down fee” via automated payment. My PayPal account has a spending limit of 0.00 $ so they can't take the money out of that. We tried to get them to take the money out of our “Reverb Nation Bank” but they seem to have trouble doing that.

In effect they are stealing “Wartzinall” from us. In effect the service they sell is valueless.

I'm not saying that Reverb Nation is EVIL. When reading the details of the distribution package I did see they charged a “Take down fee”. But I imagined this was for premature cancellation of the digital distribution package and NOT for after it's expiration. Had I known this they were going to charge me to continue the service or cancel the service after the term of one year, I would have never dipped my toe into the cold murky waters of third party vendors.

The music business changes and stays the same. Yes, now there are more opportunities to get herd, and anybody can... and does make records now. That is the part that has changed. But the guys in the suits are still selling us a bill of goods that profits them primarily. You do the work, I-tune risks nothing and profits off your work at a per sale rate of 30% while charging you to just post your work in their dodgy propriety system.

Modern musicians must adopt the mantra, “Do it yourself”.

Wow, I'm amazed at the lack of profanity in this post.

Keep expecting great things, and expect us to do it ourselves, with a little help from you.

4 comments:

  1. "There's no ogres, wicked witches,
    Only greedy sons of bitches..."

    ReplyDelete
  2. The music business is representative of American business in general. Forty years ago, the people who ran companies actually knew something about the nuts and bolts part of the business. In other words, the CEO of a steel company knew what steel was made out of and how it was produced; the CEO of an oil company knew how petroleum was pumped from the ground and refined into gasoline and other products; and the president of a record company actually knew something about music, what sounded good, and what the public wanted to hear (and buy).
    Nowadays, almost all American corporations are run by MBA's who know nothing about what their company makes or the services they provide. What they know, and all they care about, is how to increase the profit for the stockholder and how to negotiate a juicy contract and a fat severance package. They are nothing but glorified bean counters.
    Unfortunately, the people who suffer the most from this change are the employees (in the record company's case, the musicians) and the end consumers, who are offered a more limited and a much poorer product.

    ReplyDelete
  3. Well I've noticed a significant trend in the business. Instead of the old business model where a record company would invest some money, time in effort into a band before exploiting them horribly. Now third party vendors and various internet music Portals, support anybody's delusion of rock stardom, provided they pay the fee.

    If you think about it, when a band pays to record their music, then work tirelessly on social media outlets to attract attention, they are doing what record companies use to do. Most of the time with a budget far small then a record company can afford.

    Then they post the labors of Love on I-tunes, and I-tune collects 30% off the top while risking no money, doing no work that directly benefits the Musician.

    I really believe it's in our best interest to develop our own distribution methods.

    ReplyDelete