By Nate Anderson | Published: June 02, 2008 - 11:58PM CT
The bad old days
Industrial goth rocker Trent Reznor isn't usually mentioned in the same sentence with artists like Over the Rhine and Steven Delopoulos, but all three have something in common: in the last year, the bands ditched record labels altogether. Instead, they're part of a bold new experiment that could let artists hang onto more rights, make more money, and go directly to fans. It's possible through a startup called TuneCore that let all three bands get their music into digital stores like eMusic and iTunes... for just $30 a year. All royalties—and all rights—remain with the artists.
Jeff Price, who heads TuneCore, says that "the music industry changed" when the service went live, but can a small Brooklyn outfit running on rented virtual servers really remake the music biz? Let's take a look... and then upload an original Ars composition to see how well the system works.
Back in the day, it just didn't matter how big you were; as a musician, you weren't going to distribute your own record. It simply wasn't possible to get the records, tapes, or discs onto retail shelves without a label making it happen, and of course no exhaustive online stores existed. Unless you were content selling your music from the trunk of your car after gigs, a label was a necessity.
Jeff Price, who heads TuneCore, notes that the record labels' primary role became distribution (though they also do marketing). When the digital revolution arrived, though, it "disintermediated" the labels; it cut out the middleman.
Suddenly, without the need for massive infrastructure and with the presence of unlimited "shelf space" for music, artists could get themselves into the new stores without needing a label, but they still needed someone to help with the mundane details that surrounded loading music into a store like iTunes, stuff like contracts, signatures, renewals, payment processing, properly-formatted music files, and album art produced to each store's specifications. In other words, artists needed an administrator but not necessarily a full-blown label.
And the digital stores want a middleman, too; none of them really want to deal with a million artists directly, artists who can't properly submit XML-formatted album data and AAC files at the right bitrate.
Enter TuneCore. The company competes with aggregators (companies like The Orchard) and with traditional record labels, but its model is quite different. While the other entities generally want to control the rights to master recordings and take a cut of the proceeds, TuneCore ditches this model in favor of flat-fee payments.
TuneCore charges $19.98 a year to store an uploaded album from any artist. It charges an additional $0.99 per song on that album, along with a $0.99 charge for each music store that it submits to (iTunes, eMusic, Amazon, and Rhapsody, among others); these are one-time charges. That's it.
Twenty years ago, an artist with an acoustic guitar and a four-track demo would need to find a label to get her album on the shelves at Tower Records. Getting that contract was a long and painful process for the few who could navigate it; for most, it never led to anything, and that four-track demo was heard only by friends, family, and patrons of the local coffee shop.
Today, an artist can stock her music on the digital equivalent of Tower Records for a few bucks (the real Tower Records went out of business years ago, its business model rendered increasingly obsolete by digital downloads on the one hand and cheap physical discs from stores like Amazon, Best Buy, and Target on the other).
This shift in the economics of distribution is what leads Price to tell Ars that "the music industry changed" on the day that TuneCore went live. Any person on the planet "can have access to worldwide distribution; there are no filters," he says, and he says it with energy. This is a man who relishes what he does, and he's thrilled with his chance to upset the industry apple cart.
Price summed up his excitement about the new model in a recent Huffington Post piece on the democratization of the music business, saying, "I took to the emerging digital sector the way Bush took to weapons of mass destruction." But Bush's excitement about WMDs turned up little in the Iraqi sands; Price is hoping for more success.
I used to run a record label...
Price isn't new to the game. In 1991, he started spinART records, a small indie label that pumped out some excellent records by the Pixies, The Apples in Stereo, Eels, and Clem Snide (along with more obscure artists like Head of Femur). But with the rise of digital distribution, Price found that spinART was experiencing "a lot more valleys than peaks" and he began thinking about ways to work in the music business without relying on the "exploitation model" (his words) in which a label made more money as a band sold more records.
TuneCore was founded in 2006 as an attempt at creating a new service model for the music business that could offer a viable alternative to the traditional labels. In this brave new world, artists no longer needed to fight for shelf space and no longer needed to do physical manufacturing (though most still sell physical CDs). "It's Star Trek," says Price of this new reality. "It's really cool."
Price is fond of his Star Trek metaphors. I press him on TuneCore's flat-fee model; hasn't he been tempted by the "exploitation model," especially when someone like Reznor stands to make tens of thousands of dollars from a new release, but only pays TuneCore a measly $40?
"For me to take a back-end fee would be for me to turn into Spock's evil twin," Price says. "The idea for this company came out of me being disgusted by what I saw in the marketplace. TuneCore serves the artist, helps them succeed, but isn't contingent on the exploitation of their music."
What this means is that TuneCore is a volume business. It needs the bedroom crooner, the garage band, and the guy who whistles Beatles covers as much as it needs Chuck D (also a client); in fact, it needs them even more than the celebrities, since there just aren't enough big names to keep a company like TuneCore running at these prices. When Price talks about the democratization of music, he's serious. His business depends on it.
Downsides of democracy
You can think of TuneCore as the plumber in music's kitchen, called in to remove a water filter (the labels). That filter limited the rate at which water flowed from the tap, but the water that did emerge was far more desirable than the unfiltered, copper-tasting liquid entering the house.
That was the plan, anyway, but it turned out that the filter wasn't perfect and plenty of talented acts were able to find homes on indie labels and make a career in music. With TuneCore removing the last bits of the filter altogether, water can flow faster, but all the impurities come rushing into the sink as well. Amid the flood of bands using TuneCore, how many have earned more than $500 in revenue?
Radical democratization can almost make it more difficult for great new music to be found by opening up the tap for everything (and we do mean everything... some of these acts were undiscovered for a reason). TuneCore certainly doesn't want a reputation as a repository of utter crap, but it does risk this by opening stores like iTunes to everyone. And that's all right with Price.
TuneCore has "broken the control of a $35 billion a year industry," he says. "There's going to be more crap, but there's going to be more good stuff."
And TuneCore does do some basic marketing and promotion for its bands in an effort to build its brand and attract new artists to the service. TuneCore singles are played in Guitar Center stores in the US (Guitar Center is an equity investor in the business) and artists receive some publicity in Guitar Center e-mails and the physical catalog, both of which reach several million people. TuneCore also promotes its work on iTunes and has racked up two "single of the week" picks in the last two months.
For most people, though, this is going to be the equivalent of vanity publishing, but at least it will be inexpensive. When I ask Price about this, he shows me TuneCore's recent sales figures. While most artists using the service don't make much, a surprising number seem to do okay.
TuneCore customers earned a combined $6.5 million in revenues last year. More than 1,000 artists currently pull in over $1,000 a month, and this includes an album made up solely of white noise. This isn't "success" of the coke-and-groupies-in-a-stretch-Hummer kind, but it means that people are getting their music into the hands of fans. Even unsigned artists who have never had a record deal can make money, with one earning over $100,000 in a single month thanks to social networking and word of mouth.
The very success of some of these artists using TuneCore's new model causes Price to reflect on his days running spinART. "It pisses me off as a label guy," he says with a laugh, "because these sell better than bands like the Pixies ever did."
Powered by Amazon
To keep costs low, TuneCore automates everything it can, then outsources that automation to Amazon's server farm. Storage comes courtesy of Amazon's Simple Storage Service (S3) while computing power is rented from the company's Elastic Compute Cloud (EC2). The great virtues of this setup are the enterprise-class redundant backups and the low cost. Although TuneCore now stores and processes 2,000 times the information that it did back in 2006, it pays only three-quarters of the amount it paid for servers back then, when it bought and maintained its own machines.
Musicians manage their accounts through an intuitive web interface that worked quite well in our testing. The web apps are coded in Ruby on Rails and hosted on TuneCore's own servers, but all the collected information is immediately passed to the back-end apps running on EC2 and stored with S3. All storage, retrieval, and transcoding is done on Amazon's system.
These backend systems take the songs, the album information, and the artwork and convert them to the correct formats for each online music store using open source tools such as shntool. Four to six hours after songs are uploaded into the system, they're already on their way back out, headed to the various stores using custom Ruby on Rails code to interface with each retailer's system.
TuneCore currently maintains 3-4TB of data on S3, which represents 500,000 songs from 50,000 different albums. Paying only for the storage and processing power that it uses, the company has seen a 480 percent increase in revenue due in part to keeping server costs low. It's not profitable yet, but Price tells me it's "nearly there."
We try it out
To see the service in action, I whipped up a song called "The Ballad of the TCP Reset Packet." Certainly, TuneCore is the only way I'm going to get a guitar-driven ballad about Comcast's P2P blocking practices onto iTunes; no sane label would take on such a project once they heard me sing. (You can download the track as a free MP3 if you're interested.)
Creating an album couldn't be simpler. Just sign up for a free account, then start entering the album name, genre, and release date. Pick your stores; in addition to the five regional iTunes stores, TuneCore can serve songs to LaLa, eMusic, Rhapsody, GroupieTunes, Amazon, and Napster. After that, it's simply a matter of uploading the individual tracks and the album artwork. Pay with a credit card and bam!—you're on iTunes. (Well, in reality, you're on iTunes after six to eight weeks, the only disappointing feature of the service.) If you don't have album artwork of your own, the system will generate an (extremely) primitive cover.
The only glitch I encountered was the system's desire to prevent multiple consecutive capital letters. Thus, "Ballad of the TCP Reset Packet" became "Ballad of the Tcp Reset Packet" and my band, "Nate Anderson & the Orbiting HQs," became "Nate Anderson & the Orbiting Hqs."
Once the songs are live, marketing is in large part left up to you. TuneCore will handle all back-end royalties, passing them along to you without taking a cut, though the stores will still exact their pound of flesh.
Changing the business
Price says that TuneCore isn't about to kill off the indies. The service works best for 1) established artists who already have name recognition and just need inexpensive distribution and 2) unknowns who can't get a deal any other way. Labels continue to provide a valuable service for artists who fall between these two categories: they offer a promise that a discerning pair of ears have listened to and approved the music in question.
TuneCore doesn't have a reputation as the home of quality releases, and it doesn't appear that it will ever be seen that way. "Record labels make decisions based on subjectivity," says Price. "We don't."
But that said, he remains convinced that he is changing the music industry, and it's hard to argue with him. Democracy has already come to print publishing via the web and musicians are already participating in a similar revolution. Sure, that might mean that the world is soon awash in pure musical dreck, but it also means that all of the good stuff will be available, too. For music lovers, that's a powerful promise; for artists, it's a powerful opportunity.
Welcome to the world, basement GarageBanders.