Part 4: Tunecore’s Jeff Price On The Democratizaion Of Music

In the conclusion of Ethan Bauley‘s conversation with Tunecore
CEO Jeff Price, they talk about trending reports, how Tunecore chooses partners and the democratization of the music industry 

Read Part 1, Part 2 and Part 3 of this exclusive interview.

Ethan: How do you guys go about expanding your syndication partners?

Jeff: The stores that we currently deliver to (at least in the United States) represent 99.9% of all music sales.  It’s the iTune Music Store [including international iTMS], Napster, Rhapsody, eMusic, Amazon, MP3, lala, Amie Street, etc.  That said, we have a rigorous criteria set which does limit the number of stores that we distribute to.

I think the list is only 14 or 15 outlets long, but this is done very consciously.  The fact [that we don’t work with every possible store] has been used against me by potential competitors and on conference panels.  The thing is, TuneCore doesn’t take any revenue off the backend [sales], so a huge syndication list is not my goal.  I’m not desperate to shove music into every stupid crappy store that exists on the planet in hopes that I can generate half a penny in the future.  That process is usually to the detriment of the musician because his or her music gets wrongly labeled, wrongly displayed, royalties aren’t paid appropriately, and so forth.

We have criteria that follows from the demands of our customers and the strength of our business.  Take quantity/volume for example. There’s more music released on TuneCore in one day then there is on any major record label over the course of a year. There’s between 150-300 titles released every day through TuneCore.  It’s nuts.  n any three day period…

we’ve released more than all the majors combined over the course of a
year.  In a 60 to 90 day period, there is more music released through
TuneCore than all the majors combined in their entire history.

My point is that we have a tremendous amount of volume and whomever we
partner with has to be able to handle that volume. That is a very
high-end technical task because there’s a lot of data.  They have to be
able to handle the volume, they have to be able to process it, and they
have to be able to display it properly with the right metadata.

When you start clicking through those criteria, it limits who you work
with, but we very consciously do it.  The reason is because if that
store can’t accept the music or doesn’t display it properly, their
mismanagement becomes my customer support problem; it would be me
letting the customer down, so that store better have its crap
together.  That’s why we filter the list.

To answer your question, we are always constantly looking for places to
expand to, but we want them to be quality stores that will give our
customers what they want.

Ethan: That’s really interesting info because that’s a major
value-add for the artist, or the customer (however you want to put it),
that people should know about.  It’s easy to think, "Oh, it’s digital,
so it’s so easy to do."  But what you’re talking about is like "chasing
down the wholesaler" 2.0.

Jeff: I got lucky; my background is not only running spinART
Records for 18 or 19 years (putting out the Pixies and Echo & The
Bunnymen and Apples In Stereo), but I also helped to write the original
business plan for eMusic (the first online digital store) and helped
them raise venture capital. I helped the company that was working with
them to build their business, and I got firsthand knowledge about
exactly what’s necessary to operate an online digital music store.

Apparently everybody in the world wants to have one now.  Most people
are thinking, "Wow, we’re going to editorially select great music and
we’re going to get known for that."  What they don’t factor into it is
customer support, the basics that they’re going to have to do to serve
and maintain the integrity of the music.  Also, the redundant backup,
the accounting system that has to be iron-clad and pass muster for
major labels and independent auditors, etc.

It’s a very expensive endeavor and it’s very risky because the costs to
operate a structure like that are extremely high.  Your start-up costs
and maintenance costs are the same no matter how much music you do or
don’t sell.  Then you get the added bandwidth if you do make sales and
the resulting customer support issues.

All this is something that we factor in [to our syndication decisions]
and some people aren’t happy; they’d rather us just slap music out
there everywhere.  Frankly, we prefer to try and maintain that level of
quality so we can be sure that your music is placed in the places that
will pay and that actually matter.

Ethan: I saw that you guys have begun a new service where the geograhic point-of-purchase data that TuneCore gets from the retailers is being passed along to the musicians.  That’s a fee-based service, right?

Jeff: It’s just with iTunes at the moment and they’re called trending reports.  iTunes is the only digital store to release this information.

iTunes recently began releasing the trending reports, which provide information as to what sold yesterday.  They show trends, and they’re not 100% accurate, but they’re pretty close.  What you can see is itemized detail broken down to each individual sale for a song or album, what country it occurred in, and the zip code/postal code of the person who purchased the music.

So if you’re a band, you can now see in these trending reports what songs sold and where the purchaser lives.  What we do for TuneCore customers is: every Wednesday the new trending reports show up at your account and they cost $2.98.  If your account has one album or thousand albums, it doesn’t matter; it’s still $2.98, and you can get your report to see what music sold from the Monday through Sunday down to the zip code level of each individual sale.

Ethan: Access to the geographic data is incredibly important because as we all know that booking shows is another part of this beast that is a huge challenge.  Being able to go to venue promoters with this kind of information is really strong; you’ll definitely look smart, at the least!  Certainly worth $2.98 in my opinion.

Jeff: I thought so too and the reason we charge for it is because it costs so much damn money to build the system; these are huge files, there’s millions of lines of information that we have to break down and ingest and splinter out to everybody’s account, so it has a hit on us.

Ethan: I think that decision you’ve made to structure your business around the actual costs of network distributed digital media, instead of trying to keep prices where they "used to be," is what needs to happen more for real progress to occur.  There’s tons of literature about how to price data and information products; more people in the music industry should be boning up on that.  It’s the right decision, so I’m applauding you.  Here’s one guy clapping, yay.

I do have one broader strategic question about how to succeed as an artist.  It’s around the idea of putting out less music more often.

It used to be you had to make this whole big album and do this huge campaign push in just the same way that Huggies or whatever has a new product and they launch a big expensive 90 day marketing campaign.  I think that was a function of how broadcast media was bought and sold.

The whole point of the Internet and "social media" like blogs and IM and YouTube and social networks is that it’s cheap to communicate with people; it’s cheap to stay in touch.  Given the new structure that we’ve been describing, does it make more sense to focus on creating a subscription kind of relationship, to keep people interested?  Once you fall off the radar, it’s hard to get back on it
.
Jeff: To answer to that question, we recently introduced a new pricing opportunity.  Basically, it’s one song delivered to all of our stores for $9.99.  The reason I did that is because I was looking at the marketplace, and it was obvious that many people are recording music differently, it’s no longer all album based, where they’ll work on something for 8 months and then release a body of work.

Artists are going and making something each week and I assumed (and it turned out correctly) that our pricing, although inexpensive, is still $30.00 for an album to all the stores.  It was a little prohibitive if it was just one song, so we put up this offering under the assumption that there was probably a lot of people out there that wanted to get one song out.  Low and behold, from the Monday we started it to Tuesday the number of releases through TuneCore doubled.

I think that answers your question, or at least it provides some evidence that the way music is being created is changing.  It doesn’t mean that albums are dead, but it also doesn’t mean that if Pink Floyd released The Wall now it would be more exciting because it would have an interactive .pdf and remixes and mashups and everything else.  But I think artists are able to create things more quickly for less money, and as soon as they do, then why the hell not get it out into the world?