Digital Noise: Music and Tech

Update, Thursday 1/30: Today, I received a followup e-mail from Audiolife CEO and co-founder Brandon Hance. Audiolife has changed its cut on digital album downloads from $3.50 to $3.00, and on digital singles from $0.35 to $0.30. The company has also posted a detailed price list, including prices for different configurations of t-shirts. I've modified the original post accordingly.

Audiolife not only lets you create an online store to sell CDs and digital downloads, but it will actually manufacture the CDs for you, on-demand, as customers buy them. The up-front cost? Nothing. Zero dollars and zero cents.

On-demand CD creation from Audiolife.

(Credit: Audiolife)

This is a big deal. As any self-financed musician knows, CD manufacturing is a big investment. Print runs for CDs with a jewel case and nice color insert generally start at 1,000 for close to $1,000, though you can get away with spending a few hundred bucks for a short run, if you're willing to pay quite a bit more per disc. This is all well and good, if you sell all of the CDs you print. If not, you're left with some expensive drink coasters.

Instead of charging you up front, Audiolife takes $5.49 from the sale of each physical CD. That's slightly more than CD Baby, which charges a $35 one-time fee, plus $4 per CD sold. But, of course, CD Baby assumes that you've already paid to manufacture CDs.

Audiofile will also let you design and sell T-shirts (they keep at least $4.82 per shirt, depending on the type of shirt) with no minimum purchase, and create and sell ringtones either from MIDI files or samples of the actual song (they'll pass along 50 cents per download, but the phone company sets prices). The online store isn't a static Web site, but rather a widget that you can place on your band's home page, or on social-networking sites like MySpace, which is still a necessity for musicians (though it's been surpassed in total users by Facebook).

If you're only interested in digital distribution, Audiolife may not be the best deal. They take a cut of $3.00 of each album download and $0.30 of each single-song download sold through your online store, and don't distribute them to third-party stores like iTunes. In contrast, CD Baby lets you keep 91% of all revenues from downloads, minus its one-time up-front payment of $35 and any fees from third-party stores, and Tunecore takes no cut but forces you to pay an annual fee of $10 per song or $20 per album. Both of these services will redistribute your songs through major stores such as iTunes.

I've read through the Audiolife FAQ, and I can't find any obvious gotchas--artists retain the rights to their music, deals are nonexclusive with other distribution sites, and their bulk price list looks pretty competitive with Disc Makers, if you want to buy a bunch of CDs to sell at shows, give away in press kits, or send to radio stations.

With no up-front costs or exclusivity contracts, there's not much to lose--if you find out that Audiolife isn't serving you well, you're free to move on.

When the history of the early 21st century is written, I'm afraid Radiohead will be included for pioneering a new business model rather than their groundbreaking music. Last year's digital-first release of In Rainbows allowed users to pay whatever they wanted for the download. Now there's an entire Web site devoted to pay-what-you-like: Aralie.com. It's a no-risk way for listeners to discover new music from independent bands.

Aralie gives fans a low-cost way to discover new music, and musicians a great way to gain exposure.

(Credit: Aralie)

It's also a no risk-way for independent musicians to get some exposure: it costs nothing to upload a song, there's no contract involved so you can sell your songs through other stores and remove them at any time, and the artist keeps 85% of all sales revenue. Aralie also offers an application that artists can embed on their Web site, where they probably get most of their traffic. The only risk is that users might freeload everything, but freebies can be a valuable promotional tool--that's how you build a fanbase who will come to shows and eventually buy CDs with more or better-sounding tracks.

Hip hop giants Public Enemy will release their next album via digital distributor TuneCore, according to a story in yesterday's New York Times.

As a musician who's recorded a lot of CDs with unsigned bands, I'm a longtime fan of CD Baby, which provides an online store for selling physical CDs, as well as digital distribution through iTunes and other online services. How do the services compare for digital distribution?

CD Baby charges a one-time $35 fee for each album you want to sell through them (digital or physical), and takes a 9% cut of each download. TuneCore charges about the same amount up-front (although it will vary depending on how many songs are on an album and how many stores you want to sell your music through), and charges an additional $20 per album per year. But they never take a cut of any sales.

If you're a relative unknown with a local fanbase and minimal tours, you might sell 100 tracks in a year. From each of those downloads, you'll probably earn about $0.60 of the $0.99 that most sites, including iTunes, charge. Sixty bucks. CD Baby takes 9%, leaving you with $54. TuneCore's always going to be better in that first year, as they let you keep the full $60.

But in the 2nd year, you'll pay TuneCore $20 per album regardless of whether it sells or not. Or you'll pay CD Baby 9% of your gross from digital sales. Assuming the $0.60 per download is accurate, the breakeven point is 370 downloads: that is, you will have to sell more than 370 downloads to do better with TuneCore than with CD Baby. For a name like Public Enemy, that's a no-brainer. For other unsigned bands--depends on whether you tour, whether your MySpace friends actually translate into paying customers, and so on.

If you're signed with a label, they've probably already covered digital distribution for you, and the contract says what the contract says.