How Music Works (43 page)

And in the back of my mind, I knew getting it into some real retail [outlets]

was the key… and also in the back of my mind were conversations we had with

the director Paul Thomas Anderson, who was putting a bunch of her songs in the movie
Magnolia
, and I suspected that was gonna be kind of a big deal. We had some stuff going on, but [the movie deal] gave us the confidence to do it ourselves…

I think we sold about twenty thousand copies just off of the website ourselves before we got the record into traditional retail.

To do that we hired a traditional distributor and paid them a percentage in

order to get the CDs into regular retail outlets. Tower Records, Best Buy, etc. We also did a deal with Artist Direct to fulfill the orders from Aimee’s website instead of us continuing to do it ourselves. This also enabled fans to purchase the CDs with a credit card. We didn’t have that function at the beginning, believe it or not.

Paypal was either not invented or not in common use at the time.

My manager, David Whitehead, on P&D deals:

DAV I D BY R N E | 237

Mac touches on it, but the P&D model really fails when you aim to put records into not just Target, but also [into the] remaining chains, [like] Barnes &Noble, Best Buy, Transworld, Walmart. The costs of buying into these stores for a CD that may sell anything between two and ten thousand CDs can be very prohibitive, between $1 and $2.50 per CD. So you never reach the tipping point where your costs are recouped and you start to earn back at the full margin level, between $4 and $5 per CD—which is what they would hope to get on one of these kinds of deals. And

while digital sales help offset this disadvantage to some degree, physical is still the high-volume format.

This sounds like one of the ways to go if you don’t hope or expect to sell

too much of a given record. But you will see much more income from those

units sold than you would from larger-scale distribution deals. Sometimes,

then, this is the most practical and profitable choice.

6. SELF-DISTRIBUTION

Finally, at the far end of the scale, is the self-distribution model, where the music is self-written, self-played, self-produced, and self-marketed. Do it

yourself, all the way. Well, you don’t necessarily have to play every instrument yourself and design the cover graphics, but everything after that stays under the artist’s control. In its humblest form, self-distribution means CDs are pressed in limited numbers, and then sold at gigs and often through a website. Promotion in this model is sometimes a MySpace or Bandcamp page, and the band

buys or leases a server to handle download sales. Within the limits of what can be afforded, the artists have complete and absolute creative control—not just of their music, but of how it is sold.

For emerging artists, this can mean freedom (nice!) but without much in

the way of resources, so it’s a pretty abstract sort of independence. What good is freedom, many argue, if no one gets to hear your music because you can’t

afford to market it? For those who plan to take their material on the road and play it live, the financial constraints involved in DIY cut even deeper, depending on how elaborate the show is. Backup singers, musical gear, vans—it all costs money. Obviously, though, of all the models we’ve discussed, the profit percentage in self-distribution is the most favorable to the artist.

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Though I have painted it as rather homemade and self-limiting in scale,

this approach doesn’t exclude cobbling together the DIY approach with other

deals—doing a P&D or something similar to get the physical CDs out, for

example, but handling digital yourself. You can mix and match. That combo

platter concept is one of the best things about the current environment.

Radiohead adopted a DIY model to sell their record
In Rainbows
online, and then they went a step further by letting fans name their own price for the download. They weren’t the first to do this. Issa (now known once again as Jane Siberry) pioneered the pay-what-you-will model in 2005, but Radiohead’s move was much higher profile. It may have been less risky for them than it was for her, because they have a huge pre-existing fan base that knows their music and is excited about their output. One of their managers pointed out to me that it wasn’t entirely the altruistic gesture it might have seemed: so many of their fans were sharing files of their records immediately upon release (or sometimes even before) that they couldn’t do worse than the pay-what-you wish plan. If there were going to be so many illegal downloads, this option might generate at least
some
income from people who had previously paid nothing. As one of Radiohead’s managers, Bryce Edge, told me, “The industry reacted like the end was nigh. ‘They’ve devalued music, giving it away for nothing.’ Which wasn’t true. We asked people to value it, which is very different semantics to me.”

Obviously, not every artist can risk this approach. Even Radiohead’s sub-

sequent record went back to having fixed pricing, but they’re still partly going it alone (they do a P&D deal for distribution of physical CDs). For artists who aren’t so well known, however, there’s a chance that without marketing and promotion no one will ever know they exist. Others will not find the DIY route attractive because they don’t have the time or inclination to get

involved in all aspects of the business. It isn’t for everyone.

However, within this model are sub-models. DIY can be done on a rela-

tively small scale. A local band can have their own CDs pressed, sell their

downloads, and market themselves via their live shows. A larger percent-

age of fewer sales is a likely, but not inevitable, result. Artists doing it for themselves can actually make more money than the massive pop stars with

a standard royalty deal, even though the sales numbers may seem minuscule

by comparison. The debts accumulated paying off label advances and pro-

motional expenses aren’t there in the DIY model, for starters. Of course, not everyone is as smart as those Radiohead boys.

DAV I D BY R N E | 239

Many new companies have emerged to play various roles in this new DIY

universe—Bandcamp, Topspin, and CDBaby all allow unsigned artists to sell

their songs as downloads in ways that are less financially onerous than using iTunes or Amazon, both of which charge hefty percentages and have lots of

rules. Topspin, which I have worked with, can also sell physical CDs and other things online. They’re not the megastore that iTunes is, so fewer customers

are randomly wandering around the shop, but with the help of links from

music blogs, reviews, and elsewhere, fans do find their way to buy through

these sites. I know I do.

Amanda Palmer of the band Dresden Dolls made a record on which she

covered Radiohead songs on her ukulele. She released it on Bandcamp and

made $15,000 in a few minutes. In 2012, Palmer raised money for her new

orchestral recording project via the crowdfunding website Kickstarter and has raised over $800,000. That’s a lot of money! Way more than was needed for

the actual recording, so much of it will go toward touring, distribution, and special packaging expenses. Her video on the website claims, “This is the

future of music.” Sufjan Stevens’s Bandcamp release got him onto the Bill-

board chart of top-selling albums.5 So DIY can be profitable and can move

numbers of recordings as well.

When Brian Eno and I were nearing completion of our collaboration
Every-

thing That Happens Will Happen Today
in 2009, we decided to give this DIY

model a try, though we didn’t go as far as the pay-what-you-wish plan. We’d

both been mouthing off about all the new opportunities for artists, and here, we thought, was a chance to find out the truth for ourselves. We had some

things working in our favor:

• The recording and mixing of our record didn’t cost all that much for a typical pop record (if one could call it that); besides, we had already covered those costs ourselves, so we didn’t owe anyone anything.

• We have established names and reputations, and we assumed that some folks who like what we’ve done previously might like this record as well. Our sales probably wouldn’t be zero. Beyond that, the curious might even seek out news of the project without us having to pay for a huge marketing and promotional budget. (I was curious about what would happen if there were almost no ads or marketing at all—I hoped the magic of the Web would take care of spreading the news all by itself.)

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• Lastly, I have been frustrated by the increasingly long time that record companies say they need to “set up” a record release—the time between delivery of the finished mixes and the time the album lands in stores. This time lag is at least three months, often four. I understand that you’ve got to prime the pump for ages for a blockbuster movie, because if it doesn’t do amazing business in the first weekend it will get pulled from the theaters. But records don’t work like that anymore.

With digital distribution one can, if one desires, have the record “out” almost as soon as it is done. The artist doesn’t have to worry quite as much whether or not the distributor actually has the records in the stores. You don’t have to wait for the trucks and the advance copies to arrive—there’s always stock available in the digital store, and shipping is instant.

Our DIY experiment sort of worked. When we had nearly finished the

record, I decided that I wanted to do a tour during which I’d perform some of the material. This might draw some attention to the record, as Mac pointed

out, but I didn’t think of the tour as a sales tool; I did it because I wanted to have the experience of singing the songs again. Singing them was, to some

extent, its own reward. As it turned out, the tour made money.

We had to hire other companies to handle some of the ancillary work:

Sacks & Co. in North America and Gareth Davies at Chapple Davies in the

UK did publicity; Topspin built the web pages to sell the tracks online in

various configurations; Tunecore handled administration when the digital

files went to iTunes; Red Eye handled Amazon and other digital download

vendors in North America, as well as physical CDs; Essential pressed and

sold physical CDs to shops, chains, and online merchants in Europe. That’s

a lot of vendors to keep track of! You can see how it might be daunting to

an emerging artist.

David Whitehead explained his philosophy toward some of these vendors:

“I prefer to get accounted to monthly by Tunecore (as opposed to quarterly

by Redeye), and for a onetime flat fee of twenty-five dollars rather than paying 10 percent monthly fees. The big advantage for anyone supplying the digital

service providers [download stores like Amazon and iTunes] direct or via

Tunecore, is you get paid monthly. Over the last twelve months we’ve aver-

aged over $3,000 per month in income from iTunes sales on that record.”

Within three weeks of the digital files being available online on our own

websites, we sold enough to cover our recording costs, which added up to

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$49,000, and included travel, the mixing engineer, graphic design, flights, and extra musicians. Based on my own experience, that seemed amazing to me.

With a standard record deal, it would normally have taken six months to a

year to recoup those costs. And then there would have been other miscel-

laneous costs to recoup—the music video (there wasn’t one), that open bar

after the concert, the car service to the airport.

EXPENSE BREAKDOWN FOR SELF-RELEASED

EVERYTHING THAT HAPPENS

($315,000)

1% Website

3% Travel

3% Legal Fees

7% Photography Fees

23% Promotion

10% Business

Management Fees*

19% Recording/

Mixing/Mastering

16% Manufacturing

18% Design

Fees

* Business Management traditionally retains a 5% commission on income

generated. In this case, the 5% accrued by business management resulted in

10% of the total expenses related to self-releasing the album.

The charts on the next page give more detail on U.S. and foreign sales. The

one on top shows the percentage of total units each vendor sold. Below that is the income accounting for each of those vendors.

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SALES BY DISTRIBUTOR FOR
EVERYTHING THAT HAPPENS

(160,000 UNITS SOLD)

Japan/

Oceania

9%

Tunecore

17%

Redeye

41%

Topspin

14%

Essential

19%

REVENUE BREAKDOWN FOR SALES OF

EVERYTHING THAT HAPPENS

($1.15 MILLION)

Japan/Oceania

5%

Licensing:

TV, Film, etc.

18%

Redeye

19%

Tunecore

17%

Essential

12%

Topspin

29%

Note that although Redeye sold 41 percent of the total units, the income

generated from those sales was only 19 percent of the total pie, which illustrates how expensive it is to sell records in stores. Conversely, Topspin only sold 14

percent of the total units, but they generated 29 percent of the total income, largely due to the fact that we were selling deluxe edition packages direct to consumer swithout having to give percentage to retailers.

The $59,850 cost of making this record was only part of what it cost to

prepare it for market. All told, the total costs to self-release the album were $315,000—building the website, paying for servers, design fees, promotion,