Digital Distribution Consolidation

Most Indie musicians and bands are now, and have been for several years selling their music on-line via a variety of digital download (DD) providers such as, Apple iTunes, Emusic, BuyMusic, etc. If you are one of the few folks that is not, well, I will write a brief post about how to get started in the next few days.  For those of you that have been uploading your music for the past 24 months or longer have probably noticed that some of the DD providers that were around two years ago no longer exist (e.g. Viztas, Disclogic, or MP3 Extension to name a few).  For the most part, this is because 80 percent of consumers are only using the top 5 to 10 providers, while the other 50 plus DD providers have to fight for the remaining 20 percent of consumers. And those numbers will probably not support a viable business, especially when you are talking about revenue transactions based on pennies. That is to say, if a band sells a song for 99 cents, the DD provider will receive about 25 to 45 cents per song, just barely enough to cover their operational costs like bandwidth... Alas, we see another DD provider fall victim to consumer market pressures, as Sony Connect announced it will cease operations in the Spring of 2008.

So, what does DD consolidation mean for the Indie musician... well, at least three things:

1) It's going to continue so you may want to stick with the top DD providers like Apple iTunes, Napster, Emusic, MSN Music, or BuyMusic. That way, you can be fairly certain you will get paid for any music you sell.

2) By working with the top providers, you are going to see the largest net payment back to you for the songs you sell, as typically, these companies pay the most back to bands and musicians.

3) If the majority of consumers are buying their music from the top 5 to 10 DD providers, than this is where you need to spend the majority of your time and resources promoting your music, as that will give you the most return for your efforts (more on this in a future post).

Now, there are exceptions... For example, DD providers that have certain market niches, and I will discuss those in a future post. That's it for now, and as always, I welcome your feedback.

Peace.