Bruce Warila | Thu, December 27, 2007 at 11:48 AM SellaBand Amazon Digital Music Madness
I had to LOL when I read about the Amazon UK deal with SellaBand in Digital Music News last night. This deal completely illustrates absurdity of selling digital music.
SellaBand is a website that enables fans to invest in bands. Once a band tallies $50,000 in pledges, the band is able to make an album with the help and guidance of SellaBand. The concept of risk mitigation, the crowd sourcing of A&R, and the fact that they are attempting to produce quality music, are all good things. I would like SellaBand a lot more if they were called SellaSong, if investors could build a “mutual fund” of songs to invest in, and if albums were skipped entirely, but that’s not the point of this post.
The absurdity of the Amazon SellaBand deal is this: Amazon is going to feature SellaBand artists, good stuff so far right? The freaking nuts of the deal is the money involved. First of all, Amazon cuts Apple’s price - great for consumers, not great for artists. Next, the retail price of a track is split between: (grab your crotch) Amazon, SellaBand, the Investors that backed the artist, and ultimately the artist. Whoopee! Then, if you subtract the manager’s cut… Who gives a shit about this deal? Just to earn back $50,000 someone has to sell 250,000 tracks - just to get out of the trench. Who sells 250,000 tracks? .000001% of the artists on earth - that’s who. With odds like this, you would have more luck trying to throw a rope around a cloud.
If SellaBand was called ExposeAband and if Amazon was matching tracks to purchase patterns on Amazon then this would be exciting. Let’s imagine that Amazon has the data to match music consumption to purchasing patterns; if Amazon was giving away specific ExposeAband songs to purchasers of rubber booties and sheepskin rugs – now that would be interesting, but announcing your intention to sell music like it matters is just a joke.
If Amazon wants to be in the music business then please find a way to match music to overall purchase behavior, cut out all of the middlemen, enable consumers to program free and personalized music streams, make relevant music recommendations to your shoppers, tag in relevant adverts for your products, pay us one or two cents per song streamed, and divide the revenue by popularity.
Amazon is one of my favorite companies, but when you come to the party by cutting Apple’s price and when you are using music as a loss leader, then I can’t show you any love at all. Try harder Amazon. Music is no longer a product to be sold; it’s content to be paid for when used to sell something else.
And, sorry SellaBand, according to what I could gather from their website, $600,000 dollars have been invested in SellaBand artists. Theoretically, the investors should earn at least $600,000 back right? If the net of every dollar is split 1/3 to SellaBand, 1/3 to investors, and 1/3 to artists, then the twelve SellaBand artists will need to generate $1.8 million divided by 70% or $2,571,429 in iTunes sales just to make this look somewhat smart. If per-artist SellaBand sales hit $200,000, I will blow a kazoo from Boston to LA.
I will conclude with a funny joke... Q: What's the easist way to sell $200,000 in digital music? A: Spend $400,000 promoting it...
Bruce Warila
Krzysztof,
Thanks for the comment. Here's my comment to your comment…
I said in my post above that music is no longer a product to be sold; it’s content to be paid for when used to sell something else.
I understand that you may have concluded that I solely support ad-supported music. Perhaps you should read these two (ONE, TWO) posts: Both of these posts are examples of propositions that I believe would truly help artists.
In addition, I want to make my “used to sell something else” comment clearer. That “something else” does not have to be pants, shirts, nuts, bolts, drills, toys or cows. The “something else” that I refer to will certainly be “convenience”.
Convenience, in regards to music, could be sold in many forms. Every one of these forms will come with ads, or the convenience will be sold ad-free. Examples of these forms are:
- Personal and portable streams of music accessible in the automobile.
- Personal and portable streams accessible while at the gym.
- Personal and portable streams of music to be shared and mixed at the pub.
- Etc.
As far as the paid download business goes, I don’t think it helps anyone. Nobody is going to make a living selling a product for .99cents or less. When you factor in the middlemen, the artists’ foregone wages, the cost of making music, the cost of promoting music, the artists’ business team, and the general cost of living - it just doesn’t work.
As far as Amazon goes, the CD is dying a rapid death and they know it; cutting Apple’s price did not help a single artist; and I expect more from a company that is as innovative as Amazon. Cheap music at Amazon is a loss leader. They are selling cheap music to benefit Amazon (period).
As far as SellaBand goes, If an artist can gather up 5,000 willing fans, and if an artist can recover $50,000 by selling music or banner ads – then here’s my advice: create your own blog or website ($120 a year), create a Google AdSense account (free); make three great songs instead of ten ($5,000 or less); put the songs in every download store on earth (+- $30.00 using TuneCore); put the songs on every file sharing network on earth (read my blog to find out why, and to also learn that buyers are not the same people as sharers). Finally, don’t give 33% of your revenue away (sales or publishing) to anyone unless they can almost guarantee that they can give you some form of celebrity status (continual radio exposure, television exposure, film exposure, massive Internet exposure, etc).
SellaBand would get my support if they charged a flat annual fee for their services, if they had “believers” pick three songs to improve and promote; if they spent between $40,000-$45,000 promoting those three songs; if artists and believers kept 100% of the net from music sales and from banners on their profiles; and if they found other innovative ways to profit from engaging in this business as I just described it.
As far as I see it right now: artists (collectively) are doing all of the work; including sending traffic to SellaBand and now to Amazon. They should be paying you for making - "content to be paid for when used to sell something else"!
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Reader Comments (7)
Good post. My band happens to be on SellaBand and I can't say that my number-crunching looked any different. As it happens, the Amazon deal is actually part of a larger sales scheme involving both physical sales and downloads, but that doesn't change matters much.
I'd like to address a different point. I started reading your blog (and Andrew Dubber's New Music Strategies a bit earlier) in search of new ideas for promoting my music. One thing you both seem to agree on (and I've noticed it's something of a trend) is that music should no longer be looked at as a commodity for sale. Personally, I think it's a very dangerous point of view to take.
Not to stretch this comment, I'll try to be brief: we already have a precedent with music being "content to be paid for when used to sell something else". It's called advertising. (Or premium sales, if you prefer a more narrow view) It's a good source of money, but to rely on it as a major business model will ultimately kill music.
Consider: there are fewer advertisers (people who are willing to buy music as premium content) than consumers of music - by a long shot. They will be interested primarily in large-draw artists (major ones). While the to-date music-marketing model had a rather good allowance for the existence of a large number of independent artists (who were able to generate enough consumer-sales revenue to continue in existence), ad/premium-based revenue (with music itself given away free) will in all likelihood eliminate this lower-tier of artists from the market. Permanently.
Plus, I think something is wrong if a business earns money on something different than its primary activity. For a start, the quality of this activity suffers in accordance with the necessities of secondary activities (eg. writing music businesses are likely to licence for premium purposes - I personally can't stand ad music).
Of course, I invite you to prove me wrong. Till then, I think that the advice you are offering to unsprung artists is basically unsound.
Bruce, thanks for writing so promptly.
Yes, I thought you might mean just what you did - the comment about ads simply addressed a factor which has been considered in discussions on the future of music.
However, I would like to point out that what you are talking about is simply a question of alternative distribution. What you have described is basically paying for music in a different way.
All this is nothing new - we've been through it with radio. Yes, if you consider the basic mechanism, the only difference is fidelity. And greater scope for personalisation.
I'd take issue with the assumption that the CD is dead or dying. Even vinyl is making a comeback, but the target group is different now. Instead of the technocratic mindset that seems to permeate most discussions on this subject, I'd like to suggest a more economics-oriented approach: what is the value-added of a CD (or any physical whole-album format) that gets lost on transfer into the digital domain.
You're right about the paid downloads - digital music on the Web has become subject to the economics of abundance. You're also right about the difference between buyers and sharers - I'm perfectly aware of it. For this very reason I'd hesitate before formulating a business policy based on the behaviour of the latter.
I don't consider SellaBand a big step forward, but it has its benefits. It's always easier to do something as part of a larger initiative than on your own. Especially on the Web, where the usual result of going it alone is that you get lost in piles of unsorted garbage. There's more than enough music on the net (economics of abundance again). Plus, I've already reconciled myself with the fact that in the music business, musicians are last in line to get paid.
The real purpose of my previous comment (and this one) is an attempt to look beyond the narrow: "CD is dying, paid downloads don't cut it, music should be free" outlook that seems to dominate. It won't work. Musicians need to get paid for making music and people should know what they pay for. Otherwise the whole activity is pointless. We don't value air (or water if we can get it free) - even though we can't live without it - so why should we value free music?
I see the Sellaband deal a bit differently. The people who put their cash into this are not promised anything but a CD in return for their 10$, and a share of the potential incomes from ads and sales.
So, personally I'd say I've recouped my money on the one artist I've invested in that has come out with a cd. The cash I've received after that is a bonus to me.
As far as I'm concerned I get a) a hopefully good CD and b) the pleasure of felling that I'm helping out an artist I like.
So, to sum it up. The $600000 can be seen as preorders of CD's. Some people preordered a whole lot, and have to sell them ( either themselves, through the Sellaband site, from Amazon.co.uk or brick and mortar stores.) But that is not really the concern of the artist or Sellaband, in my view. The CD is made, and every sale from then on (except for some of the sales of the investor prebought CD's) gives the artist some return. Whether through downloads at Amiestreet, or CD-sales through Amazon or whatever.
@Magnus: Good point! Though not quite as as good as it could be.
I too saw SellaBand as a CD subscription service. I (as Viridian) wouldn't have been on SellaBand were it not for a bizzare series of circumstances.
The thing is: the only really feasible business model at this point is the traditional "get signed to a record company, release a CD and hope for paid downloads" approach. Having said that, I - as a semi-professional musician with ten-years plus of experience - owe something of a debt to Bruce and others for pointing me in new directions. I just don't think that free music is the way to go.
This is hardly the time and place to go into some things in detail. Let us just say, that I have gleaned an idea of what a viable music distribution model might look like in the second decade of the twenty-first century. This is still something that requires real-world testing (next year hopefully), but it seems like it might work.
To sum up: I still think that economics of abundance won't work in relation to music so long as musicians have to work within the constraints of economics of scarcity. The trick is to sell commodities that are irreducible to pure digital content (it's - still - Christmas, so I'll leave you to figure out what that is) and that can still function within the traditional economics of scarcity model. Perhaps later.
(As an aside, I'm thinking of starting a blog on the subject of real-world work as a musician. Maybe then I'll be able to write about everything without restraint.)
My wife is one of the 12 artists to have reached the $50k target.
I don't think Sellaband is perfect (what company is?), but overall I am impressed with what they have done so far... and they are only just over a year old.
I'm not entirely clear how you did your calculations Bruce, but you can't include the retailer's margin in it. Any profits from a cd sale (for instance) are split equally between artist/investor/sellaband. So if Amazon give $6 to Sellaband per cd sale, artist/investor/sellaband get $2 each. That's a hell of alot better for the artist than a traditional piece of the album royalty/sale.
The artist also gets the masters after 12 months btw. I don't see trad labels offering that.
What this partnership is about is increasing the exposure of Sellaband artists by a huge measure... and that has been what was lacking... the promotion. Sellaband can't and wouldn't want to spend $400,000 to get $200,000 back.
People can buy tracks from Sellaband for 50c each btw. I don't know what Amazon.co.uk will be charging. There are also free mp3's on Sellaband.
I'm not sure why you digressed so much on the point of the story... which is the excellent partnership between SAB and Amazon. Going into all of your "if it was more like this then I would think it was great" stuff isn't very meaningful. If you have a better idea of how to make a better new music model then please go ahead and start it up.
I'll order a kazoo for you :)
I am Dan Krzykwa(singer/programmer/producer/remixer)-the band-"Madcap Syndrome" a Dance/Techno/Eurodance with a Depeche Mode/Underworld/Tiesto sound. I have been Producing Dance music for over 16 years in 1997 I had my band interview personaly at B.M.G. records with Vince DeGeorgio a/r and thought the wait was over but he liked one song of my 3rd c.d. and explained how a famous boy band nsync or backstreet boys one of them was put on a shelf for 4 years before they were released that burst my bubble he said to send him my new music see how I develop not a door slam but I really don't feal like waiting around for a measly 11% of my c.d. sales from them. I never sent him any new material so I have been marketing myself ever since now with my 8th.c.d. available at Apple I-Tunes I thought things would take off....not true at Apple I-Tunes to get in the main genre directory you have to be famous already or top seller if I could pay for that exposure I would but in summary I will look into the sellaband cause one or two opinions don't write a book and it's not for everyone but I have about $150,000 invested over 16 years and that gives me 150,000 reasons to try anything to be able to quite my day job!!!!
Sincerely Dan Krzykwa(singer/programmer/producer/)
"Madcap Syndrome"- Check out band website:<www.madcapsyndrome.com>
@Dan
Dude, one word: punctuation. Please, your post was informative, though very hard to read due to the lack of comma's and full stops...