Puddlegum

Imagine spending twelve months working on your new album. You shape the song structures a certain way to convey the emotion of each song, everything is precise. Your independent label pays for you to record the album at a professional studio, costing them $30,000, with a contract saying that you will repay the recording and reproduction costs if the album doesn’t sell fifteen thousands copies.

Everything is planned. Six months from now the album will be released. Marketing plans are formed, photo shoots are scheduled, and your website is being redesigned. You lay awake at night thinking about the expenses that are adding up, but you trust that enough people will buy the album and see you perform on tour.

Two months before the scheduled release, your marketing agency begins to send out promotional copies to trusted music blogs and media sources. You’re excited to read the response as bloggers give you exposure. A demand for the CD is created, and a few mp3s are given away for people to preview… but that was to be expected.

Then something goes wrong. Someone that received the promotional copy decided to place the album on a Torrent site. Now anyone can download your album for free and you won’t see a single penny.

Though you want people to hear your music, you also want to fulfill the part of your contract that requires you to sell fifteen thousand copies.

Questions flood your mind: When the album is officially released, will people buy it? Or will they download it for free? If you can’t sell enough copies you’ll be required by contract to pay the record label back.

This is the situation that most artists are facing today. As consumers, we seem to feel entitled to have full access to music, and we wince at the thought of paying for it.

Yes, artists are given more exposure when albums hit BitTorrent sites. If the album is loved, album sales reflect this and some of the loss is recouped. Recording and marketing music isn’t free, and music consumers shouldn’t expect it to be.

When you consider the costs that fall onto the shoulders of artists and record labels, it’s understandable why BitTorrent sites are caught in litigation. Today, Oink.cd joined the list of BitTorrent sites that have been shut down.

For this reason Puddlegum encourages you to support the artists by purchasing their music and buying tickets when they bus by your city. We don’t agree with exorbitant prices that are placed on CDs, nor do we support the RIAA. But the list of options to purchase music DRM-free at an affordable price is growing.

Note: This fictional story is not about the business model used in the example. We are not proposing this model as being ideal. There are better models and approaches that embrace the album leak. But the majority of artists take a risk with this established model.

Here are a few DRM-free digital music stores that we support:
7digital
Amazon
eMusic
Insound
iTunes

Tags: BitTorrent, Oink, RIAA

When Apple opened the iTunes Store, the only way Steve Jobs could ink a deal with the four major record labels was if the music files were locked with a DRM (digital rights management) software. This software is embedded in the music file, and contains information about the person who purchased the song, locking the song down and limiting what the owner can do with their content.

Major labels were afraid of the Mp3 format since it didn’t have a lock, and is easily copied. Independent labels, for the most part, argued that the music file’s owner should have the freedom to do with their content as they chose. As time progressed more DRM file formats were introduced under the watchful eye of the major labels.

Eighty percent of the music industry is represented by the RIAA. During the debacle over the DRM, the RIAA has taken the role of the law enforcement, suing college kids for file-sharing… something that the Mp3 format does not prevent.

Steve Jobs, CEO of Apple, began to push the music industry to drop the DRM, drawing scoffs from label executives. Tension between Jobs and the big four major labels intensified. The industry pushed back, with most labels arguing for the continued use of DRM and demanding flexible song and album prices. The result of this tension is developing into competition for iTunes.

EMI, one of the big four major labels, surprised everyone when they announced on April 2, 2007 they were offering their songs DRM-free. iTunes made them available for $1.29 per track, under the name of iTunes Plus. This decision sent shock waves through the major labels.

Universal Music Group, another one of the big four major labels, followed suit, and on August 9, 2007 they announced they would offer DRM-free music… but not on iTunes. Instead, they inked a deal with Google, Amazon, and Wal-Mart. Their contract with iTunes is now on a monthly renewal basis, giving them leverage of control as the industry goes through this change.

In August, Universal and SonyBMG opened gBox with Google, selling unlocked files free of digital rights management software. Gizmodo explains:

“Google will play the role of advertiser and Universal will pick up the cash from the sale. Universal will purchase advertising space from Google; the adverts will appear when a relevant search is made for an artist. These will then direct the customer to gBox, where the artists work will be for sale.“

gBox is not yet compatible with Mac or Linux operating systems, stating, “We are working hard to support Mac and Linux users, but it will take some time. Big apologies for the inconvenience.”

Wal-Mart has had a digital music store for a while, but only offered files in WMA (Windows Media Audio) for .88 cents. How useful are WMA files? Not very, especially when you consider that Microsoft’s Zune isn’t even compatible with their own audio file. Coinciding the opening of gBox, Universal and EMI began to sell DRM-free Mp3s through Wal-Mart for .94 cents, though Wal-Mart continues to offer music in WMA format for .88 cents.

Amazon has entered the fray of online stores and opened a digital download store, selling DRM-free Mp3s. EMI and Universal have both made agreements with Amazon, giving them a massive catalogue of songs to sell. Over two million Mp3s are available for .89 cents, and most of the albums are sold for $8.99 or less. Though .89 cents still seems a little steep, Amazon’s offer is .40 cents less than iTune’s $1.29 per Mp3.

Fans of independent music can download Mp3s as low as .27 cents or as high as .59 cents per track at eMusic. Though major labels won’t contract with eMusic, they boast of providing two million tracks from over 13,000 independent record labels. Claiming to be the world’s largest independent music retailer and second-largest digital music store, “eMusic customers typically buy more than 20 tracks per month, while iTunes users average only 1 – 2 tracks per month.” Unlike other subscription based music services, owners retain the rights to the music they purchase from eMusic if they choose to end their subscription.

In spite of fresh competition in the digital music world, Apple’s iTunes Store sales are suspected to increase over the next year. The new iPod Touch will provide access to the iTunes store via wireless technology. With millions of iPods expected to sell this holiday season, the iTunes store will be in the pockets of countless music lovers.

Tags: Amazon, Apple, DRM, EMI, Emusic, gBox, Google, iTunes, Mp3, RIAA, Steve Jobs, Universal, Walmart, WMA