User:Etobin33/Digital Music Distribution

The ability to easily create and distribute digital music has created some unique challenges for the music industry. Both record labels and artists are trying to discover new ways to produce revenue. Online music stores like Amazon and iTunes have made it so a buyer can purchase songs instantly. Due to the rise in the popularity of online music stores, artists are facing challenges selling their music digitally. These challenges have created opportunities for developers to create valuable pieces of software and hardware for the music community. The software and hardware is making it possible for almost anyone to create and record their own music. After recording their music, musicians need a way to distribute it through the online stores mentioned above.

Background

With the ability to turn music into easily distributed digital formats the music industry has changed in the last ten years. The iTunes Music Store launched in 2003, selling 25 million digital tracks in the first year. By 2006 the Store had sold over 1 billion songs. The iTunes Music Store and other online music stores have caused some drastic changes in the way music is being sold and marketed .

Over the last ten years, and especially the last five, the digital music industry has grown exponentially. In 2003 there were fewer than fifty licensed online music distributors, with a catalog of about 1 millions songs. These distributors netted about $20 million in revenue, and the percentage of the digital music share on the entire music industry’s revenues was negligible. In 2009 there were more than 400 licensed online music distributors, with a catalog of over 11 million songs. The digital music industry’s revenue was $4.2 billion, and the percentage of revenue from these digital music marketplaces was 27%, the first time it was ever over 25% . The revenue growth from the digital music market grew by more than 200% in just six years.   Another interesting growth factor in the digital music industry is the number of users buying music online. In less than a year, from July 2003 to March 2004, the number of Apple iTunes Music Store customers grew from 861,000 to 4.9 million. In other words the number of customers in that nine month span grew by 500%. Also in July 2004 Apple reported that its iTunes Music Store had sold over 100 million songs . Apple has recently announced the sale of its 10 billionth song on iTunes. Meaning that, in just over seven years, iTunes has sold about 10 billion songs, more than 9 billion of those songs having been sold since July 2004 .

Hardware and Software

With advances in technology, musicians are now able to record and master their music themselves, forgoing the time and money spent in a recording studio. These pieces of software that integrate with a piece of hardware are called Digital audio workstations. One of the most popular Digital audio workstations is called Pro Tools. Pro Tools is essentially a multitrack recording studio on your computer. A multitrack recording studio allows musicians to record various pieces of music and layer them together. For example, you could record separate vocal parts, guitar parts, and drum parts and then layer them together to create a single song. The software package also comes with an M-Audio Fast Track USB Audio interface.thumb|right|300x100x|Digital Recording Studio The USB interface allows for inputs of microphones, guitars and various other instruments. A musician who purchases the Pro Tools package can create their own personal recording studio in their homes.

By deciding to record music themselves, independent acts will be able to save money and spend it on items to record their own music. Now that music technology has advanced so far in the past five years or so, musicians are able to easily record their music themselves using relatively cheap pieces of software and hardware, like Pro Tools. “Bands no longer need to hole up in studios for days. They can record directly to laptops and hand off recorded files to their producers.” Guitarist Bob Robles, who has toured with Lyle Lovett and Jackson Browne, raves about the sound quality and how easy it is to record with a computer and his guitar. "If I get an idea, I don't have to book a studio, hire an engineer and pay an hourly fee to record it, now I just record it directly into GarageBand or Logic, save the file and send it off ." The Digital Audio Workstations have become so popular that every Apple computer is shipped with a Digital Audio Workstation called GarageBand.

Services

If musicians and bands are able to easily record and produce music using technology like Pro Tools and GarageBand, how do they get the music into online music stores like iTunes and Amazon? Digital downloading has become so popular that companies have started to spring up which charge a band to distribute their music into the most popular online music stores. Brooklyn based TuneCore is a company that distributes digital music for bands to marketplaces like iTunes and Amazon. An important piece of TuneCore’s business model is that it does not require rights to any of the master recordings of the artist. Upon visiting their website two phrases stand out right away “Get 100% of the Royalties” and “Keep all your rights .” All they ask of the artist is a flat rate for each album and a yearly maintenance fee. “The days of bands needing a record deal could finally be at an end following the launch of a revolutionary new online service .”

Another service making it easy for independent musicians to easily distribute music is CDBaby. CDBaby is the largest online distributor of independent music. They only sell music on their site that musicians themselves send to them, and they also help artists get their music on the popular online music stores. Their main goal is to help people discover their new favorite artist. They do this by listening to every piece of music that is sent to them, comparing that music to music already on the site, and making recommendations based on that. The best part of the site is how much artists make from their albums sales through CDBaby. With a standard record label, artists make about $1 or $2 per album sold, on CDBaby they make between $6 and $12, and they get paid weekly. To date CDBaby has sold 5,339,025 CDs and have paid $107,769,092 directly to artists .

Examples of Use by Popular Musicians

In October 2007 the English alternative rock band Radiohead released an album on their website via digital download. The hitch to this release was that Radiohead left it in the hands of the consumers to decide how much they should pay for the album; consumers could pay anything as their website stated it was “up to you .” Due to the fact that Radiohead recorded and released the songs on their own website, they owned all the master recordings. In an interview with David Byrne (former Talking Heads front man), lead singer Thom Yorke stated “We mastered it, and two days later it was on the site being, you know, preordered. That was just a really exciting few weeks to have that direct connection.” Yorke goes on to say “We're out of contract. We have our own studio. We have this new server. What the hell else would we do? This was the obvious thing.” With the initial release the band made about $3 million dollars, all profit, and the average each customer paid was $6. The release of the “pay what you want” digital download, helped to promote future album sales, and was a very successful business model for the band. Yorke states “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 .”