Slices of the Digital Music Business Early 2008

“ Global digital music sales totaled an estimated US$3 billion in 2007, a roughly 40% increase on 2006 (US$2.1 billion).”

“ Digital sales now account for an estimated 15% of the global music market, up from 11% in 2006 and zero in 2003. In the world’s biggest digital music market, the US, online and mobile sales now account for 30% of all revenues.”

“ Record labels have created a digital music industry worth approximately US$3 billion in just five years, a rate of growth many industries would envy.”

“ Today a single artist release can be packaged in multiple formats include video downloads, ringtones or mobile full tracks. Sales of Justin Timberlake's FutureSex/Love Sounds comprised 115 products which sold a total of 19 million units,of which only 20 per cent were in CD format.”

“ The digital market is roughly evenly split between online and mobile, with widely varying shares in different countries: for example online sales account for 67% of the US market while over 90% of Japan’s digital sales are on mobile.”

“ There are more than 1.2 million rock acts and 1.7 million R&B acts alone clamouring for attention on MySpace. This overwhelming number of new bands and music available to consumers also highlights one of the key roles for record companies in the digital space. The need for filtering, selection, marketing and recommendation is greater than ever.”

“ An internet survey of 3,000 people who downloaded the album found that most paid an average of £4, although there was a hardcore of 67 fans who thought that the record was worth more than £10 and a further 12 who claimed to have paid more than £40.” Sherwin, Adam. "How much is Radiohead's online album worth?". The Times. 2007.10.11.

“ In terms of digital income, we've made more money out of this record than out of all the other Radiohead albums put together, forever — in terms of anything on the Net. And that's nuts. It's partly due to the fact that EMI wasn't giving us any money for digital sales. All the contracts signed in a certain era have none of that stuff.” Thom Yorke "David Byrne and Thom Yorke on the Real Value of Music". Wired . 12.18.07

“A week after the album's release, the official Nine Inch Nails site reported over 750,000 purchase and download transactions, amassing over US$1.6 million in sales.” http://en.wikipedia.org/wiki/Ghosts_I-IV#cite_note-tribune-12

“Pre-orders of the $300 'Ultra-Deluxe Limited Edition' sold out in less than three days of its release.” http://en.wikipedia.org/wiki/Ghosts_I-IV#cite_note-13

Magnatune: CC+ in Action

Lisa DeBenedictis is a singer-songwriter on Magnatune who creates lilting, textural alt-pop http://magnatune.com/artists/debenedictis

"Girl and Supergirl" is a song from Lisa's album “Tigers” http://magnatune.com/artists/albums/debenedictis-tigers/

Lisa posted the a capella vocals for "Girl and Supergirl" to ccMixter, a community remix site. http://ccmixter.org/files/lisadb/373

It was then remixed into 76 songs .

Including “Supergirl” by MC Jack in the Box. http://ccmixter.org/files/mcjackinthebox/7436

The best remixes were compiled into Mixter One , an album where distribution agreements were signed with all the selected remixers. http://magnatune.com/artists/albums/debenedictis-mixterone/

The remixers and the musician get paid for sales of this album: 50% of the total price goes to Magnatune, and the other half is split 50/50 between the artist and the remixer.

So if someone pays $10 for the album, $5 goes to Magnatune, and $5 is split between Lisa and the 15 remixers. Which means that for each album sold, $2.50 goes to Lisa, and then 1/15th ($0.17) goes to each remixer (since there are 15 remixers on the album).

One of the remixes, “Cuckoo (Muffin Mix)”, was then commercially licensed by the bicycle company 53x11 for their promotional album, “ROULEUR”. http://www.53x11.com/rouleur/

For the commercial license of the song, the royalty rate is 18 cents per song per CD made. So 9 cents go to Magnatune, and the other 9 cents are divided evenly between Lisa D and the one remixer. They initially made 500 CDs, for a commercial license fee of $90.

Sources IFPI Digital Music Report 2008. "David Byrne and Thom Yorke on the Real Value of Music". (2007-12-18). Wired . http://www.wired.com/entertainment/music/magazine/16-01/ff_yorke?currentPage=all Sherwin, Adam. (2007-10-11)."How much is Radiohead's online album worth?". The Times. http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/music/article2633798.ece