D.I.Y.

Tunecore CEO Jeff Price Defends Flat vs. % Music Distribution Fees

image from www.google.com When Tunecore raised its yearly flat fee digital distributions rates recently, many users supported the change while a few vowed to leave the service. Yesterday, after competitor CD Baby offered a discount to artists to switch to its percentage based distribution, a heated debate raged among Hypebot readers over Tunecore's new rates and flat fee vs. percentage based distribution fees for d.i.y. artists.  As part of his response, Tunecore CEO Jeff Price shared a passionate argument in favor of flat music music distribution:

"I am by no means suggesting TuneCore is not a business, it is. And it does charge a flat fee for a service, but I feel I can look someone in the eye honestly when I do that, not when I take a piece of what they make when their music sells.

…You get what you pay for with no hooks left in you in the event you succeed…

I don't believe in pre-assuming artists are going to fail, and I don't believe when you have success others should be able to claw away as much as they can because you bet wrong"

Jeff has more to say in his comments to the original post here. It's an important debate. Jeff, CD Baby and others in the inudstry are paying attention. Tell them what you think.

Bruce Houghton on 05/17/2011 in D.I.Y. | Permalink | Comments (15)
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15 Comments

  1. Lets say if you sell 100 ITunes Downloads in 2 years
    ITunes maybe 0.70 a song
    TuneCore $49.99*2 Yrs = $99.98
    CDBaby $39.99 Flat = $39.99
    TuneCore .70 * 100 = $70
    CD Baby .70 – .07(9 Pct) = .63 * 100 = $63
    TuneCore $70 – $99.98 = Lost $29.02
    CDBaby $63 – $39.99 = Made $23.01
    What if you sell 1000 songs?
    TuneCore .70 * 1,000 = $700
    CD Baby .70 – .07(9 Pct) = .63 * 1,000 = $630
    TuneCore $700 – $99.98 = Made $600.02
    CDBaby $630 – $39.99 = Made $590.01
    If you think that you’re only gonna sell 100 songs then go to CDBaby. 1000 songs? go to Tunecore.
    I know its not THAT simple but, do what is better for your bottom line. Either way get back to work doing what you love

  2. People should be focusing on figuring out how to sell more albums, so $50 a year is a small percentage of their overall sales. $50 a year is the equivalent of selling 7 albums through iTunes on Tunecore ($49 dollars, ok). Are people really up in arms over the idea of giving away 7 albums a year in exchange for distribution on all major digital retailers? That is crazy. We don’t use Tunecore for our label because our physical distributor handles it (and does a great job doing retail marketing on iTunes/Amazon/etc in exchange), but we used them at my previous job, and it was an excellent system. We sold a few hundred records a month through Tunecore, so paying $20 bucks (or $50 bucks now) was worth it.

  3. In the flat vs. % debate, I’m on Jeff’s side.
    I think the cost structure also comes into play. It doesn’t cost the digital distributor more to handle an album that will sell 10 x than it does to handle one that goes platinum. The expenses that scale as sales go up are bandwidth, storage, computing… all costs that have become too little to matter (or quickly getting there).
    It’s the same for us at Bandzoogle. We have hard costs in acquiring and supporting a new member (dev and support salaries, hosting, domain name registration, marketing, etc.) so it wouldn’t make sense to offer a free service. But once a member succeeds and starts selling lots of music (and merch) through his website, our costs don’t increase, so why should we take a commission ?

  4. I think it should be a one time only fee. There are a couple of services that will give you digital distribution out there, that you only pay 1 flat fee 1 time only and thats it. You don’t have to pay a yearly fee like tunecore, or give up a percentage like CD Baby. So to me thats the way to go.

  5. I’m sorry, but TuneCore and CDBaby and every other digital distribution company out there are handling tons and tons of independent artists. Like I said yesterday, most of these artists aren’t going to be selling many albums to begin with or possibly ever! This is the reason why I think TuneCore is a bad deal. CDBaby’s practice of taking a percentage whenever an album is sold is more realistic to the needs of true indie artists. TuneCore’s methods are only good for those extremely lucky musicians who have somehow managed through different ways to sell enough music to be successful or somewhat successful. THIS IS NOT THE REALITY MOST INDIE MUSICIANS LIVE IN.
    The music industry is SO unpredictable right now. The major labels that are multimillion dollar companies are signing less and less acts and making less and less money every year. If these companies are literal sinking ships, then how are independent labels or musicians able to stay afloat? We live in a time where musicians need to save as much as they can while selling very little. Paying a percentage of the revenues a “very little” brings in is better than paying a “flat fee” that has to be achieved before an artist can see a profit.
    Also, if musicians DO wind up having multiple albums on TuneCore that they have to pay flat fees for, it makes even MORE sense to have them on CDBaby. With TuneCore you’re likely to pay $50 for EACH album and what if your back catalog isn’t selling or some sell and others don’t? With the CDBaby system each album’s sales pays it’s own way and doesn’t have to rely on the sales of the other albums to help make up for the others.
    http://www.facebook.com/chancius
    Photobucket

  6. Or you could have both options with RouteNote.com!
    Free option: artist have no upfront fees and keep 85% royalties.
    Or
    Premium option: artist pays smallest upfront fee in the industry and keep 100% royalties.
    Plus the artist can upgrade or downgrade whenever you want and whatever makes most financial sense.

  10. “Many users supported the change”…??? Try Valleyarm, way better than Tunecore.

  11. This is why I support the percentage model. I recommend going to Venzo Music. I can upload and sell unlimited music, music videos, ringtones, and iTunes LPs? Earn 80% of my sales each month? No hassles? And upload DIRECTLY to iTunes?
    Oh yeah, its probably the BEST deal yet!!!
    Check it out: http://www.youtube.com/itunesdistribution

  13. Yeah, I did d.i.y with Valleyarm with my label and now I cut a % deal with them (80% to me), they do both, pretty good and lots of stores.

  14. I actually want to see more flat fee services, and iTunes not taking down the reviews if you switch distributors. That way there’s true competition. I agree with Jeff’s business model, as long as it is in the context of a free-market. Otherwise, how do we know Tunecore won’t raise the fee to $100?

  15. fuck that! People shouldn’thave to pay a yearly fee at all! for what, I want to pay 1 flat fee, 1 time only and thats it. No percentage taken out per download either. Just want to pay say 50 to 70 dollars 1 time. A never have to worry about it again. I want all of the money from then on, no percentage taken out.

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