Examples of New Business Models in Music * * Compensation figures and agreements included in this chart are based on and how labels, artists and songwriters are paid research, published FAQs and prior knowledge of services, but should © 2007-2012 Future of Music Coalition be verified with actual sources for accuracy. Are they compensated, and how much? SERVICE FORMAT DETAILS LABEL PERFORMER SONGWRITER YES. Artist sets price of their album. CD Baby keeps $4 for each physical Online mailorder and digital Consumers can buy physical CDs that are CD sold. The rest goes to the artist. For retail store. CD Baby also acts N/A. Almost entirely unsigned artists, or Songwriter and publisher are paid then shipped to them in the mail, or can buy digital sales, artist gets 75% of income CD Baby as an aggregator, delivering artists running their own labels, so mechanical rate: label/artists' digital albums or singles via CD Baby from sales on CD Baby, and 91% of net digital music to iTunes, Amazon, entire payment goes directly to artist. responsibility. website. revenue from iTunes/Amazon/ Spotify, etc. streaming services. Paid out every Monday. DIGITAL RETAIL DIGITAL YES. unsigned artist: gets anywhere from 91% to 100% of the $7.00 paid to Consumers buy individual tracks or albums YES. Of $9.99 sale, label or digital Songwriter and publisher are paid label/aggregator. Indie label or major iTunes Music Store Digital retail store. for set rates, usually 99¢/track or distributor reportedly gets $6.50–$7.00. mechanical rate: label/artists' label artist: more complicated because $9.99/album. iTMS pays out on sales monthly. responsibility. sales are based on percentages or "points" on contract. YES, Same as above. Unsigned artists Consumers buy individual tracks or albums YES. Though terms are not disclosed, get 91% - 100% of what's paid to Songwriter and publisher are paid Digital retail store. All MP3 for set rates, usually 99 cents/track or it's similar to iTunes Music Store where, Amazon Music Store label/aggregator. Indie label or major mechanical rate: label/artists' tracks. Also offers cloud storage. $8.99/album, though some tracks are of $9.99 sale, label or digital distributor label artist gets whatever their contract responsibility. steeply discounted. reportedly gets $6.50-$7.00. stipulates. YES, Same as above. Unsigned artists get 91% - 100% of what's paid to label/aggregator. Indie label or major Consumers buy individual tracks or albums YES. Though terms are not disclosed, label artist gets whatever their contract Songwriter and publisher are paid Digital retail store with cloud for set rates, usually 99 cents/track or it's similar to iTunes Music Store where, Google Play stipulates. Artists can also go direct to mechanical rate: label/artists' storage. $8.99/album, though some tracks are of $9.99 sale, label or digital distributor Google Play and get 70% of profit, after responsibility. steeply discounted. Free song of day. reportedly gets $6.50-$7.00. $25 setup fee. Provides good integration with YouTube for track sales. For subscription streaming service, YES. For interactive streams: direct YES. For interactive streams, fractions YES. For the subscription/ streaming consumers pay $5 to $10/month to have licensing fee negotiated with the labels. On demand subscription service of a penny per play. For noninteractive services, each have licenses with Rhapsody, Spotify, MOG, real-time access to enormous library of Rates are not disclosed. For (with other features including streams, featured performer also gets ASCAP/BMI/SESAC for SUBSCRIPTION Rdio, Zune, Slacker albums and songs. Some offer free, ad- noninteractive steams, label gets 50% downloads, to go, etc). 45% of SoundExchange digital songwriter/publisher performance suppored tiers. (Paid downloads also of SoundExchange digital performance performance royalties. compensation. available for subscribers). royalties. Consumers pay from $11.99/month for 24 YES, Same as above. Unsigned artists YES. eMusic pays a set percentage of downloads, up to $31.99/month for 73 get 91% - 100% of what's paid to Songwriter and publisher are paid Online subscription download subscriber revenue/month to label or eMusic downloads. Since songs are MP3s, they label/aggregator. Indie label or major mechanical rate: label/artists' service. All MP3 tracks. distributor, calculated on their share of can be played on any player, including label artist gets whatever their contract responsibility. downloads. iPods and iPhones. stipulates. YES. Artist gets 85% of sales under ARTIST-TO-FAN USUALLY N/A BUT.... Almost entirely $5000, and 90% of sales $5000+. Provides fast, dependable streaming and unsigned artists, or artists running their Bandcamp, as the intermediary, gets Adds physical and digital music downloads of an artists' entire catalog, Artist own labels, but some indie labels have 15% of each transaction, but that drops Songwriter and publisher are paid sales and merch sales option to sets prices (which can include free), can Bandcamp storefronts here as well. Assume that to 10% if your sales exceed $5000. For mechanical rate: label/artists' existing band website or blog, or choose high bitrates. Bandcamp provides label gets 85% under $5000 and 90% artists signed to labels using responsibility. serves as web host for artist. the web interface for a very powerful, artist- of sales over $5000, same deal as Bandcamp, assumption is that label controlled storefront. unsigned artists. receives sales revenue and passes along royalties to its bands. © 2007-2012 Future of Music Coalition www.futureofmusic.org 9/12/12 Are they compensated, and how much? SERVICE FORMAT DETAILS LABEL PERFORMER SONGWRITER Consumers could pay "nothing", although YES. Though real figures were not Short term digital release YES. Radiohead are also the there was a $1 "handling charge", plus N/A. No record label involved, at least published, it's assumed that Radiohead Radiohead experiment experiment run by the band that songwriters, so they retain all the Radiohead collected everyone's contact at this stage of the experiment. kept the vast majority of the income offered variable pricing option. income from these sales. info. from these sales ARTIST-TO-FAN On website, fans could choose from: A) getting first nine songs for free; B) paying YES. Trent Reznor reported to media Digital release of 36-track $5 for a high bitrate download of whole that all the box sets sold out YES. NIN are also the songwriters, so Nine Inch Nails experiment album, Ghosts I-IV, that offers a record; C) $10 for 2 CD set; D) $75 for N/A. No record label involved. ($750,000), and that, in the first week, they retain all the income from these range of pricing and features. deluxe CD set or E) $300 for signed edition. there were 781,917 transactions that sales. Also released simultaneously on Amazon, earned $1.6 million. and seeded to P2P networks. Consumers can download as many albums Website with physical and digital or songs as they want for $15/month. Songwriter and publisher are paid retail store, with $15/month YES. Magnatune, acting as a "label", YES. Artist gets 50% of any sale and/or Magnatune Members can also access simple, one-click mechanical rate: label/artists' subscription fee and online keeps 50% of sales/licenses. license fees. style licensing for music uses in films, TV, responsibility. licensing. videos, etc. High bitrate options. Musician sets up a goal -- say, raising enough money to record an album or buy a YES. If the project goals are met, the Creative incubator that van -- and offers different incentives to artist receives 95% money that facilitates project funding by funders to contribute. $5 may get you a free Kickstarter collected for them. Kickstarter helping artists build project N/A. No record label involved. N/A in this case. CD, and $5000 may get you executive Kickstarter keeps 5%. If they do not pages, create incentives, track producer credit. Projects must meet target meet their goals, the funders are given fundraising progress. within 30 to 60 day time frame. Money is their money back. not given to artist unless project goal is met. Musician sets up a goal -- say, raising Music-focused incubator that YES. If the project goals are met, the ADVANCE PROJECTFUNDING ADVANCE enough money to record an album or buy a facilitates project funding by artist receives the 85% of the money van -- and offers his/her funding patrons helping artists build project that Pledge collected for them. Pledge Pledge Music different incentives to contribute. There is N/A. No record label involved. N/A in this case. pages, create incentives, track keeps 15%. If they do not meet their no time limit on project length (must be less fundraising progress, pre-sell goals, the funders are given their than 364 days). Money is not given to artist albums and offer exclusives. money back. unless project goal is met. YES. Two funding options. (1) fixed Creative incubator that Musician sets up a goal -- say, raising project goal that must be met in order facilitates project funding by enough money to record an album or buy a to be funded, in which artist gets 96% Indiegogo helping artists build project van -- and offers his/her funding patrons N/A. No record label involved. of pledged money or (2) flexible goal in N/A in this case. pages, create incentives, track different incentives to contribute. Musician which artist gets 91% of what's fundraising progress. chooses the funding strategy. collected, even if they don't reach their target. Musician sets up a financial goal and YES. If the project goals are met, the Online service that sells "parts" incentives for fans. Music fans can by a $10 artist receives the 85% of the money Sellaband N/A.