Imeem is still waiting for a signature on the deal selling the all-but-defunct company to Myspace – and the writing is far from on the wall as to how successful the integration of the two company’s software and customer bases could possibly be, especially when you take into account MOG’s recent and Spotify’s impending US launches of their streaming music services. Will anyone go to a band’s myspace page to listen to a few tracks if they can just hear the whole catalogue for free on Spotify? Perhaps not, but Myspace must still consider they’ve got a great deal, considering that Imeem spent at least $25 million on building their brand, technology and user base, and the sale price is rumoured to be as low as $1 million. According to Digital Music News, it was a legal dispute with our digital distribution competitor the Orchard that finally pushed the ailing social network over the edge and forced the negotiation of a sale:
“We held an emergency board meeting to shut everything down,” one executive told Digital Music News. “The [Orchard] lawsuit was definitely the final nail.”
Subsequently, other executives close to the situation confirmed the decision. “They just ran out of cash, it was just a cash thing,” one executive shared, also anonymously. “The potential liabilities – $150,000 per stream – could get astronomical. [Imeem] thought they had a case, but they couldn’t afford to fight it.”
I think it’s a shame that Imeem has been forced to give up their autonomy, but the fact of their acquisition by Myspace shows who got the model the right way round; Imeem couldn’t stay afloat because they couldn’t afford to pay for the licensing costs of the music they were using from the advertising they sold, and because they were not efficient enough in properly securing the rights to use it, hence the court case threatened by the Orchard, whereas Myspace gets everyone to sign up their music for free – read their sign-up agreement again – and their proposition snowballed, a little free music, and a few million users kept growing until they had every major act and every teenage girl in America signed up. The combination of huge traffic and no licensing costs meant that they were able to pocket all of their ad revenue, but they are not as attractive a proposition to the artists and record labels as there is no revenue coming back to them in the same way that Spotify sends money upstream per play, unless, like the major labels, you’ve got enough clout to demand a revenue sharing deal. If MOG or Spotify can find a way to include the band info and minor social element that Myspace provided, or perhaps team up with Facebook to provide music streaming and playlist sharing then Myspace will be blown out of the water – regardless of which little social startups they squash into their business in the meantime.
We’re aware of the fact that we’re a small company compared to some of our competitors, but our cost to bands is also smaller than most of them. All of our major competitors make a charge for either uploading or hosting your tracks, subscription fees, renewal fees, charges for ISRC codes, different charges based on how many outlets you want your music to appear in, the ways they find of hiding new charges are as innovative as they are various.
We don’t charge you anything until you start making money. Uploading is free, hosting is free, picking different stores is free, in fact everything is free until you sell your first track, at which point we’ll take 10% of the revenue that comes back. You get to keep 90% of everything we make by working together. Ours isn’t the lowest percentage rate in the market: CDbaby offer 91% to their clients, but their upfront charges mean that not only do you have to get your credit card out of your wallet and pay them before you can hope to see any return from selling your music, but you’re also worse off with them than us until you sell more than ten thousand units. The same is true of Tunecore and Musicadium, and the Orchard never get close, as they take 30% of sales revenue for themselves AND charge you $90 up front.
Here’s a little table showing what you’d pay up front to distribute 2 albums over two years through some of the big distro sites (Musicadium deal in AUD, which I’ve converted at today’s rate of 1.549 to the USD).
And here’s another detailing the income you’d get from various levels of sales, again based on distributing 2 albums over 2 years to all the stores RouteNote deals with, with an average per track income of $0.65, which is what you get back from iTunes.
As you get up to the 5k mark, Tunecore begin to pull ahead, it’s all pretty even around 10,000 and there are undeniable differences in the revenue earned when you get up towards to 30k sales mark, but we’re cheaper all the way up there, and the money will only ever flow one way – to you – if you deal with us.
So why are we better than our competitors? For artists starting out on their own, who want to be in control of their own destinies until they can prove the worth of their music, who don’t want to spend up-front money, and who aren’t realistically looking for sales of thirty thousand records in the first year or two, we are cheaper, quicker and much more interested in the success of our artists, because we’re smaller and our own success is that much more closely linked to that of our musical partners (read some of our testimonials!).
We had a response from Musicadium about this post – querying the way we’d worked out the fees mentioned. Here’s how it works out, based on the figures here in their agreement:
2 x upload fee to more than 3 stores = 2 x $99 = $198
2 x barcode (UPC) generation = 2 x $39 = $78
2 x annual renewal fee = 2 x $20 = $40
198 + 78 + 40 = 316
$316AUD / 1.549 = $204.00USD
Although the exchange rate has probably changed by now…
Amazon has just launched their
Mp3 Music store in the UK. The store can be found at
http://mp3.amazon.co.uk. The simple-to-use digital music store offering over 3 million DRM-free (Digital Rights Management) songs which will work on any MP3 player including the iPod™- with top-selling albums from just £3 and individual songs from 59p.
Amazon Mp3 UK has all four major labels signed up, SonyBMG, Universal Music, EMI Music and Warner Music – and leading independents such as Cooking Vinyl, Harmonia Mundi, Beggars Banquet, The Orchard, Concord and IODA.
There are a few online music distribution companies out there, each professing it’s service and it’s model to be the cheapest and the best: what you need to do is figure out which of them is going to be the best for you. How many tracks can you reasonably expect to sell? What can you afford to outlay? Figure those things out and then decide which deal is best for you.
The basic models of distributor are:
Subscription – Keep your royalties, but pay a maintenance or subscription fee to keep your music online. Good if you’re going to be selling a lot of tracks. (CD Baby operate this model, also charging an upload fee)
Percentage – Don’t pay any fees, but pay for the service with a percentage of the royalties from sales (this is the model we use at RouteNote). Good if you don’t want to risk losing any money, or your sales aren’t likely to be massive just yet.
Upload fee – A flat fee for uploading your music, and then keep your royalties. Again, good if you’re hoping to sell a lot of tracks, but there’s no incentive for the distributor to promote your music, as they’ve already made their money, and can’t profit further from helping you out. (EmuBands do this)
Managed – The next best thing to being signed to a record label, some digital distribution companies will take labels and larger bands on, and for a larger cut of the royalties from sales, will make more of an effort to promote their music, or offer other benefits to their partners. It’s up to you to decide whether their efforts are likely to be worth the cut. (The Orchard operate this model)
Controlling your own output means that you don’t have to go with the same partner for multiple releases, you can pick and choose different partners for different releases. If you find that the music distribution deal you’re on with one company is working better for one release than another, you can change partners for the one that’s losing out.
Also consider that digital music sales increase your presence in the marketplace, and a record label will look at the level of your sales of both physical and digital music, and of your live gig audiences when they’re looking at signing you (if that’s what you’re after).
Lime Wire LLC (the company) has announced a deal with The Orchard, a large digital distributor for independent artists and small labels. The deal will effectively double the amount of music available in the LimeWire Store to more than 2 million tracks.
The LimeWire Store launched in the spring of 2008 selling 256kbps DRM-free MP3s from Redeye, Nettwerk Music Group, IRIS, RouteNote and others. The store also offers features exclusive releases and targeted marketing opportunities.
Here at RouteNote we haven’t found Limewire to be a successful partner at all and have since stop delivering content. They seem to not even respond to our emails, which is not a good sign.
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