Okay … And?

This is a nice “+” in Google terms, but it’s not earthshaking. There are three players here — the artist, the middleman and Google.

The artist now has a chance to sell direct to fans on Google Music and keep 70 percent of retail. This would be unprecedented only if Amazon MP3 didn’t already offer this via their CreateSpace entity, and if TuneCore and about a dozen other services didn’t offer this already, via their own platforms for iTunes and other digital music retailers. All cost $25 or more upfront, which means an artist needs to sell between 37-75 songs at 99 cents retail to recoup — except for Amazon, which is free.

It’s important to distinguish here between signed and unsigned artists. Nothing about Google Music’s launch voids existing signed recording contracts. Lady Gaga or Adele can’t void their recording contracts and sell direct via Google Music; neither can your favorite indie band that has its own (indie) label deal, like Barsuk.

Lots of folks are going on about major label payouts ($0.08-$0.14 per download, vs. $0.70 direct from retailers), as if all artists will benefit. But signed artists have no out — on iTunes, Amazon or Google.

So what about the “unsigned”? They fall into two categories — the “unencumbered,” like NIN and Pomplamoose, who have demand, options and the ability to use their music as they choose. The other group are the “unsupported.” It doesn’t matter who I name, you won’t have heard of them. This artist has no presence, no support, no marketing and no financial backing. They can use the music however they choose, too, but they don’t have demand. The Artist Hub is another place they can spend 15 or 20 minutes and $25 online hoping to sell to fans.

So let’s say an “unsigned” DIY artist wants to generate revenue on the top six digital retailers. Here’s what they’d have to spend to get their stuff there:

1. iTunes, Amazon, Spotify: $50 via TuneCore
2. YouTube: No distributor offers this on a flat-fee basis, so let’s guesstimate this will cost $25 a year, based on average $1 RPM and 30,000 video views
3. Deezer (What? Never heard of them? Huuuge in France); CD Baby: $59 plus nine percent (it’s a given you’re gonna need a barcode)
4. Google Music: The aforementioned $25

Total: $159. Honestly, not that much money if you’re a professional artist. And if an artist isn’t recouping that in sales each year, then he is a hobbyist.

As Seinfeld said, “nothing wrong with that.” It’s just not a business. And if it’s not a business, why spend hours researching and debating distribution options to save a couple dollars? Spend that time making the music you love.

All artists need teams; all teams cost money. Today, there are just a lot more ways to manage that money: In the form of assigning copyrights via a traditional “deal,” by paying agency consulting fees, by hiring employees and by offering a distribution percentage.

One or many of those options can arise, and it is tricky to determine the most cost-effective one. Here’s a quick guide to determine whether a DIY distribution service is cost-effective for a music professional:

Do you or someone you know closely have a personal relationship with editors at the major digital retailers? Do you want to talk to them weekly?

• If yes, then DIY distribution is for you.
• If no, then consider the costs of hiring a sales team and employees, or of spending weeks of your life on marketing and promotion, compared to the relative advantages of a distribution percentage or label deal. Distributors and labels can leverage their catalog bulk in an artist’s favor when releasing new music.

So, what about the labels, the middlemen that sit between artists and retailers? Will Google Music’s Artist Hub impact them? No.

1. The middleman has already secured the rights, encoded the assets and prepped the metadata of millions of songs — these deals exist. Even if you are using TuneCore and are free and clear, it’s probably more economical to wait for them to offer delivery to Google Music, then pay again.
2. The middleman already incurs the customer support costs, the accounting costs and the marketing costs. Most artists want or need marketing and hands-on support. The Artist Hub will not likely provide that, certainly not in promoting, and artists will look to outside agencies, labels and distributors that offer access.
3. The middleman, presumably, represents that the rights are cleared and clean — no messy copyright claims to be filed against the retailer by aggrieved parties.
4. Artists could do this work themselves. But is an artist’s time best spent managing dozens of digital retail platforms, or making and performing music?

But let’s be clear: Google Music and the Artist Hub is a good move for Google. It helps them:

1. Build up Google+ using consumers and bands to build trust and engagement.
2. Build up Google checkout and card gateway. If you’ve paid $25 to Google to sign up, now maybe you’ll buy something from them. And they’re already used to paying out tons of small cash increments via AdSense — not an accounting hassle for them to assume.
3. Challenge their newest direct competitor — Amazon’s own entertainment marketplace, available online — on Kindle Fire, and presumably on next year’s locked-down, Android-powered smartphone.

Most important, Google Music is awesome for Android.

Ben Patterson is the founder and President of DashGo, Inc., www.dashgo.com, a digital content distribution and marketing engine for labels, podcasters and artists.

If you’re not paying attention, it may seem as if the cratering economy hasn’t stopped the steady stream of start-up funding announcements.

Today, for instance, we learned that online music distributor TuneCore has raised $7 million, while CrispyGamer, a newish videogame site, has raised $8.25 million from J.P. Morgan’s Constellation Ventures.

But don’t be deceived: Almost all of the deals you’ve read about recently, as well as the ones you’ll see for the next few weeks, were closed earlier this fall.

If you want to get a sense of why these announcements will slow to a trickle going forward, scan down through VentureBeat’s discussion of CrispyGamer’s business.

Let’s leave aside the basics. The site wants to make a name for itself in the crowded world of videogame review sites by offering high quality reviews, but it’s not clear that CrispyGamer’s reviews are much different than its peers, and it’s not clear that readers are making the distinction either.

Instead, focus on the dollars, from the VentureBeat report:

Right now, the site isn’t commanding huge ad rates. It gets about a $2 CPM (cost per million, a measure of the amount of money that comes in for every 1,000 readers). Just a month ago, it looked like it would get $8 CPMs, but the economic downturn is taking a toll. CrispyGamer relies on a half-dozen ad networks to feed it the ads.”

Assume that the CripsyGamer folks, like most publishers, are inflating their advertising rates (and traffic, too) for public consumption. It’s still telling VentureBeat that its ads have been marked down 75 percent in the last month.

Yikes.

The upside, I suppose, is that CrispyGamer has advertising revenue, period. There are plenty of ad-supported start-ups that have yet to get around to actually selling ads, and it’s going to be awfully difficult to start doing so now.

And, if you want to be really generous, you could argue that videogames are going to get beaten up less badly than other sectors during the coming recession/depression/meltdown/whatever. In theory, dudes will keep buying videogames, while they hunker down in their basements, because it’s cheaper than most other entertainment options.

But CrispyGamer also says it has a staff of 20 people, including five full-time writers (what does everyone else do there?). That’s an awfully big staff to keep afloat on $2 CPMs–and it’s hard to imagine that CripsyGamers’s backers imagined that’s what they were getting into earlier this year.

[Image Credit: Itjournalist]