Peter Kafka

Recent Posts by Peter Kafka

A Cautionary Tale From the Digital Music Wars. Or How to Make $63 in Five Years on the Web.

Required reading for anyone interested in the economics of digital music and the pitfalls of digital media in general: This post from Tim Quirk, who is currently an executive at RealNetworks’s (RNWK) Rhapsody but who used to sing in a band called Too Much Joy.

Quirk’s tale revolves around his quest to find out how much his band earned from three albums’ worth of digital music over a five-year stretch. Warner Music Group (WMG) initially tells him that his band, which enjoyed very modest success through the 80s and 90s, has earned a grand total of…$62.47.

After some prodding, Quirk eventually gets Warner to concede that the band generated more than that paltry sum. But it’s still not likely to be that much.

Again, you’ll want to read it yourself, but there are two points here:

  • It is much more difficult than it ought to be for digital content creators and owners to figure out how much money they’ve made online. Quirk, who works for a digital music distributor himself, lays much of the blame on the labels. But in their defense, I’ve heard many label types complain that they’re at the mercy of the likes of Rhapsody and Apple (AAPL). Remember that iTunes has been selling music since 2003. If digital music is still this knotty to navigate, think of how difficult, say, figuring out an actor’s residual for a video download is going to be.
  • At least under conventional contracts, digital really isn’t going to amount to much for most performers. Maybe Lady Gaga really did make more than $167 after generating more than one million plays on Spotify, but she’s not going to make a ton, because streaming music royalties are really, really tiny. And given that streaming music start-ups are struggling to pay even that much, this is not going to change for quite some time.

(Thanks to Professor Derek Nystrom for flagging this one for me.)

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