Do It Yourself Digital Distribution article

Here is an article that is posted in our member pages of Hillbilly Culture Club. This is the kind of information you have access to as a member of Hillbilly Culture Club. I am posting it here because I think a lot of independent musicians can use this information to better choose which digital distribution service to choose.


Ever since Napster irreversibly changed the face of the music business in 1999, music consumers have increasingly preferred to get their music delivered digitally directly to their computers or mobile devices. According to one report, digital sales have increased by 40% in recent years. Japan actually bought 91% of their music on their mobile devices in 2007, and that number has probably risen since then.
With over 500 legal music services available, it’s hard to figure out the best way to make your music available digitally to consumers. I have researched the top digital distribution sites & offer this article as a way to help you make an informed decision about how to get your music up for sale online.
First of all, we should consider strategy. Would you rather make your music available on a wide array of third party sites (such as iTunes & Amazon mp3), or would you rather sell your music directly from your own web site? Both strategies have their advantages and disadvantages.
If you want to sell your music directly to consumers from your own website, you will have to provide a secure payment solution to protect them from exposing personal financial information over the internet. Also, you will need to be able to steer traffic to your site. Consumers will find your music because they have sought you out & know where to find you. This is a great strategy for established artists with a fan base, because typically, if you do the selling directly from your own site, you will get to keep a larger percentage of the profits.
If you choose to go through a third party site, your music will be available to people who are browsing the catalogues of large music oriented sites, such as Rhapsody, Napster and others. The music lover may be looking for the hot new single on the radio, find your song by accident & end up buying it. The disadvantage of sending your customers to a third party site is that you risk losing them to the same phenomenon: they come to iTunes to buy your single and end up buying someone else’s instead.
Perhaps the best strategy is a combination of the two approaches: make your music available on your site and on the third party sites. That way, you keep a larger cut of the profits if people come to you directly, while allowing customers browsing third party sites the benefit of finding your music there as well.

Chart comparing features & costs for each of the digital distribution sites:

CD Baby
one time set up fee-----$9.95 per single; $39 per album
yearly fee------------------$0
other per song fees-----25% per song for onsite sales;
9% of digital distribution sites sales (plus their fees)
take down fees-----------none listed

Reverb Nation
one time set up fee------$0
yearly fee------------------$59.95 for 44 stores; $34.95 for 35 stores
other per song fees-----flat $0.30 per song or $3 per album on site sales
take down fees-----------$50 or $30 depending on service (goes to 3rd party sites)
Tunecore
one time set up fee------$0
yearly fee------------------$9.95 per single; $49.99 for album 1st year
$19.98 per each additional year
other per song fees------none
take down fees-----------$20 per album or single

My Song Store
one time set up fee------$9.95
yearly fee-------------------$47.70 per year for up to 25 songs
$83.40 per year for up to 50 songs
$203.40 per year for up to 150 songs
other per song fees------25% per song plus additional 1/2 cent for licensing
take down fees------------NA


Until recently, if you wanted to keep the customers on your site while purchasing your music you had to pay for an expensive e-commerce site. These sites cost a considerable amount to set up and maintain, ranging from $5,000 to upwards of $15,000 annually. Now, there are digital distribution companies who create a widget you can imbed in your site which will handle all your sales for you for considerably less money.
One such site is My Song Store. Here, you can sign up for a membership which will provide you with a personalized widget enabling you to sell up to over 150 songs from your own web site. There is a one time set up fee of $9.95, and are several levels of membership starting free up to 4 songs, $3.95 per month for up to 25 songs, and so on. In addition, My Song Store keeps 25% of your total selling price, so in effect, when you sell a download at $0.99, you keep $0.7425. You can, through My Song Store set a higher selling price for your downloads.
Another feature of My Song Store is help in licensing the songs you release, so you can record cover songs with permission. Many people don’t know, but you have to have written permission from the copyright owner to record a song, that’s one of your rights granted under the copyright law, the right to distribute. Even performing songwriters who are signed to publishing deals, or who’s cowriters are signed, are required to license their own songs (because the publisher owns the copyright.)
In order to do this on your own, you have to get a license from the mechanical licensing agent of whoever owns the copyright. For example, if you want to record “You’ve Lost That Loving Feeling,” you have to contact the Harry Fox agency and secure a mechanical license. This will cost you a small fee ($15 per song for up to 4 songs, and $13 for 5 or more).
My Song Store has a special licensing agreement with Harry Fox which allows you to license each download as you sell it, which saves you the $15 or $13 per song fee. To provide this service, My Song Store charges an additional $0.005 per unit sold, thus in effect, reducing the royalty paid you to $0.6465 ($0.091 of each unit goes to Harry Fox to pay the songwriter & publisher.) To put things in perspective, if you’re planning to sell more than 3,000 units, you should go ahead and pay the $15 to Harry Fox. Otherwise, it’s cheaper to let My Song Store negotiate for you.
Reverb Nation is another company that offers you the ability to imbed a widget in your own web site to sell music, and they have the added benefit of being a third party music site themselves, so browsing music lovers can find your songs. Reverb Nation charges a flat $0.30 per download you sell, so a song selling for $0.99 will pay you $0.69. You must own all the rights to your music distributed through Reverb Nation.
Now, let’s look at the other piece of your strategy: selling your music on the third party sites. In 2009, 25% of sales came from iTunes, about 69% of all digital sales.1 Everyone (except Garth Brooks) wants their music on iTunes. But, it is fairly difficult and cost ineffective for the independent musician to get their music on iTunes by themselves. Enter the middle men:
It is better for the independent do it yourself musician to go through a company who will deliver your music to an array of digital distribution sites for you. One of the first sites to offer this service was CD Baby, founded by indie musician guru, Derek Sivers in 1997. Sivers has since sold the company to compact disk manufacturing company, Disc Makers. Other sites also now offering to deliver digital downloads for you number in the hundreds, the best known being Reverb Nation & Tune Core.
There are so many choices available to you on these sites that it is hard to determine which is best for you. Here are a few helpful pointers:

Service--------------lets you pick-------takes a per-----provides-------set-----helps you
which retailers song fee or % bar code your $ license

CD Baby yes yes yes $20 yes yes
Reverb Nation no yes yes free no no
Tunecore yes no yes free no no


When you are considering digital distribution, it is just as important to understand the practices of the individual retailers as it is to understand the practices of these third party companies. After all, they can only pay you what the retailers send them.
Here is a handy chart that lets you know which retailers pay the most money to you, the creator of the content:

iTunes
pay per single $0.70
pay per album $7
fine print for releases over 11 songs, they bundle your work & set a flat rate

Amazon mp3
pay per single various levels for front line, mid line & catalogue
pay per album various
fine print they get final say in pricing - can be as low as $0.21 per song
Rhapsody
pay per single varies
pay per album varies
fine print they allow free streaming for their customers trial period - no pay

ShockHound
pay per single $0.693 per song
pay per record $6.993

LimeWire
pay per single depends on customer’s level of membership
silver =$0.40; gold=$0.30; platinum=$0.27
pay per album NA
fine print they allow 50 free downloads during trial period - no pay to you +
these are the guys that have been stealing our music for years

MySpace Music
you get a portion of ad sales + streaming fees through Tunecore

Thumbplay
pay per single varies; $0.49, $0.70 or $0.91
pay per album NA
fine print pay 50% of streaming revenue

Spotify
pay per single variable
pay per album
fine print pay portion of ad revenue or subscription cost

Nokia Music Store
pay per single 0.49 GBP
pay per album 4.45 GBP
fine print international only

Napster US
pay per single $0.65
pay per album $6.50 for 11 songs or more
fine print variable streaming pay rates

MediaNet
pay per single $0.70
pay per album $7
fine print 40% of streaming income

IMVU
pay per single $0.70
fine print streaming revenue comes from Sound Exchange - more like
social network

After digesting all this information, here are a few basic pointers: with just flat out numbers, you will make the most money from selling your music on your own site using My Song Store & on site selling via CD Baby (not digital distribution through them). If you want your music distributed to the large 3rd party services, you will want to use Tune Core & select only those retailers who have consistent pay scales (such as iTunes & MediaNet). My Song Store is currently going through an update of the “look and feel” of their site to make their widgets more customer friendly. In the future, I will be doing all my own direct selling of digital downloads through their widget on our website.
You may choose to go with one of the other retailers for personal reasons, or you may like one of their supplemental services enough to override the monetary loss. The reason I don’t recommend going through Reverb Nation for digital distribution is that they do not allow you to pick which retailers you sell through. This, after averaging out the variable royalty rates, brings your profit down significantly. You might sell more music through them, but you won’t see the money from it. If your goal is simply to get your music out there, go for it. They distribute to the largest number of retailers - it’s just that many of them give your music away for free.
I know I have neglected to mention a few of the larger independent distributors in this article, such as IODA & the Orchard. That is because those companies make it harder for the independent musician to use their services by requiring you to fill out information requests & disclose the number of sales you currently have. For the person new to digital distribution, these services are not practical, and therefore, I left them out.
I hope this information helps you navigate the tricky world of digital distribution a little better. Please let me know if you are currently distributing from a company and want me to include them in future articles, or if you have a particularly good customer service story to share.
In the meantime, get your music out there! The time is right for independent musicians to take up the do it yourself mantle & show the big boys that indie music is alive and kicking & that you don’t need to spend a fortune doing “buy ins” or paying independent radio promoters to make a few bucks in the music business.