Tunecore, a company that enables artists to sell their music on digital platforms without a label, has released some interesting data on digital music behavior. Tunecore is a digital music distribution service that set out to democratize music distribution by making it simple and affordable for any artist to offer songs for sale. For a fee, an independent artist can place their song in selected online stores and streaming services and receive compensation based on the number of sales it generates.
Artists register with TuneCore, select the online platforms they would like to have their music placed on, upload their songs, pay, and get paid for every song sold or streamed with those services. Last year the service placed 61,000,000 songs and artists received $32,000,000 in compensation. TuneCore takes no percentage of the revenue artists earn. They work placing music with iTunes, Rhapsody, MySpace Music, Amazon, eMusic and others.
Artists can earn money from two different types of sales – permanent downloads, where customers purchase the song and download a file; and streams – where a listener pays a subscription fee to listen to songs – in that case, the listener is actually “leasing” the song, as TuneCore’s faq’s explain.
In 2009, 40% of TuneCore’s sales were from single track downloads and 57% were from streaming (which is per song). The other 2.3% of revenues were full album downloads. For song downloads, Rock is the most popular genre, followed by Alternative and Hip Hop. For streaming sales, Hip Hop wins followed by Alternative and Rock. Sunday is the best day for sales and Christmas day and the day after were the biggest days for song sales in the last six months. There’s even more data available, here.
MySpace Music will run instream audio ads sold by national Internet radio sales company Targetspot. According to reports, the audio ads began running last week for advertisers like Turbo Tax and Office Depot. The ads are inserted after a listener hears one song, and can be followed by a complete album or up to 100 songs on a playlist without another interruption.
Targetspot has announced that this is an exclusive deal that adds MySpace Music’s audience to a network that includes AOL, CBS, Yahoo!, Slacker and Live 365.
Since MySpace Music’s launch in September 2008, unique visitors to the music.myspace.com subdomain have increased 190 percent — growing from 4.2 million unique visitors to 12.1 million in June 2009. Year-over-year traffic to the URL has increased 1,017 percent. Since June, MySpace acquired social music site iLike, and later added imeem to its platform as well. MySpace Music was an announced key partner in Google Music’s music discovery platform.
This is great news for CBS backed Targetspot, and for the Internet radio industry. Last fall Pandora announced that they were beginning to air instream audio ads. It’s important for the development of a successful business model for Internet radio that key platforms like Pandora and MySpace Music contribute to creating that business model by running audio ads and creating more and better opportunities for advertisers on their platforms.
There’s enormous buzz about Spotify, the European streaming music platform that promises to launch before the end of the year here in the US. I wish I could say I’ve tried it, but can’t unless I fly over to Europe for the weekend. Spotify is a music service that allows listeners to browse and stream songs on demand from a library of 3.5 million songs. Listeners can also build playlists, and their interface is supposed to be very intuitive and fun to use.
According to CEO Daniel Ek, Spotify aims “to provide the world’s biggest catalogue of music that’s quick, simple and fun to use.” He says they’ll compete with Napster and Rhapsody here in the US (among others) but that only Spotify offers both an ad supported and subscription ways to enjoy the music.
Two main things about Spotify make it a good bet for success. On demand song streaming is appealing to music fans. Recent research has shown that as on demand streaming of songs increases, illegal song downloading goes down. Music fans are content to legally listen and share their music via an on demand streaming service rather than illegally download the music. Research also shows that fans would consider using an ad supported platform to get their music for free. Spotify’s platform gives music fans the chance to hear what they want when they want it, without paying for it. Legally.
Everything I’ve read mentions their nifty platform, which requires a download onto your computer. They do not yet have an iPhone app, and they have a Google Android app that has not been released.
Already valued at $242 million, Spotify will be under enormous pressure to generate both advertising revenues and premium subscriptions to appease both their VC investors as well as pay royalties to the labels. In an article in Techcrunch over the weekend, guest author Michael Robertson is skeptical that they can make it given current royalty rates.
I have to admit I’m curious – both to see the service and to see how well they can monetize it. It will be an interesting test of both the ad supported and premium subscription marketplaces. May they thrive…
I like music site Grooveshark, and have written about it several times (here, and here). They’ve got a great service that allows you to listen to any song you want. They’ve been exploring some unique revenue models – for example, in addition to selling advertising, they have a service that allows musicians or independent labels to purchase a certain number of song plays to listeners who like their kind of music.
I spoke with Jack DeYoung, VP of Label Relations for Grooveshark, and Josh Bonnain, VP Marketing, when I wrote an article about Grooveshark in May. At the time, I asked them about licensing deals. I wondered how they were dealing with the major labels given their on-demand streaming service is precisely the kind of thing that the labels dislike. Jack explained that their license was an “experimental” license with the record companies which allow them to stream songs on demand and share revenue with the labels and artists based on how often a certain song or artist is played. Yep, experimental was what he said – I went back and checked my notes. What he failed to mention at the time was that it was only an experiment on the part of Grooveshark.
Well…it turns out that might have been wishful thinking because EMI has now sued Grooveshark. In fact, it turns out EMI had sued Grooveshark prior to my first blog post on May 21st. hmmm.
In any event, as Peter Kafka points out in his article on this topic, Grooveshark now joins the list of services that are being sued by the major labels, and their chances of survival are looking rather slim. The labels – including some of the independent ones – see on-demand services as a threat to music sales. Other on-demand services – Imeem, MySpace Music for example, pay hefty fees to the labels.
I’m not sure what was going on with Grooveshark – but their experiment doesn’t seem to be working out so well…