Friday, January 31, 2014

News: ChaseLawyers On Breaking Into The Music Industry: Aggregators


Today’s Topic: TuneCore vs CDBaby

With digital music sales increasing due to the decline of physical albums, companies (called “aggregators”) such as TuneCore and CDBaby are revolutionizing marketing opportunities for independent artists. Aside from offering online music distribution and performance-royalty collection (working alongside PROs), they also collect publishing royalties from the sale and streaming of compositions. When faced with the choice of affiliation, however, an in-depth comparison between the two giants may seem daunting.

Allow us to provide a starting point…

(1) With CDBaby, the sign-up cost is $12.95 per song and $49 per album with no annual fee. There is a 15% commission for collecting publishing royalties, with a self-renewing contract term (as long as neither composer or CDBaby terminates) for songwriters & composers (there is a 1-year contract for publishers). In contrast, TuneCore offers free membership, but services trigger fees after affiliation. For example, album distribution costs $29.99 the first year and 49.99 each following year; single distribution costs $9.99 the first year and each following year; ringtone distribution costs $19.99 the first year and each following year; and collection of publishing royalties costs a one-time setup fee of $75.00 plus a 10% commission on earnings.

(2) Even though both CDBaby and TuneCore offer a similar range of services — music distribution for albums, singles, and ringtones; music publishing royalty collection, among others. – they do have marked differences regarding royalty collection, commissions on sales, UPC Bar codes, etc.

It’s always helpful to visualize, though. So let’s make a chart!

                                                                                                      

Fee for Collecting Songwriter Royalties:  
15% commission. (CD BABY)
$75 flat fee + 10% commission (Tune Core)

Commission on Digital Sales (after store percentage):
 9%  (CD BABY)
 0%  (Tune Core)

Commission on Physical Sales:  
 $4  (CD BABY)
 N/A (Tune Core)

Number of Digital Retail Partners: 

(download sites)    
95+   (CD BABY)                     
 74+  (Tune Core)


CD and Vinyl Distribution:             
Yes  (CD BABY)
No   (Tune Core)

Sell music on Facebook :                  
Yes   (CD BABY)
 No    (Tune Core)
 Including CDs and Vinyl

UPC bar code:                                
$20 for an album, $5 for a single (CD BABY)
Free (Tune Core)

Sync Licensing :                               
 Up to 40% Commission  (CD BABY)       
10% or 20% Commission*  (Tune Core)
Outsourced  (CD BABY)               
In-house Creative Team (Tune Core)
US-based artists only (CD BABY)
Open to songwriters & publishers worlwide (Tune Core)
Exclusive Sync & Licensing Database (Tune Core)
20% commission if its secure licenses through its Creative Team's efforts (Tune Core)



So What’s The Bottom Line?

Like anything else, it depends on your needs. Taking no cut from digital sales, TuneCore may be the better choice for artists with smaller catalogues or those who set out to do volume. Why? Because annual fees would be more manageable for few as opposed to many works, and those same fees would be more easily recouped for an artist anticipating high sales immediately. A larger body of work, however, can result in annual fees that start piling up (especially if unit sales remain modest). In that case, CD Baby’s one-time fees may seem more accommodating. On the other hand, CD Baby’s perpetual commission may offer less profit over the long-term and could potentially exceed the value of recurring fees many times over! If physical product is a controlling consideration for you, CD Baby offers the services you need. However, this advantage declines over time as the profitability of hard copies continues to dwindle across the majority of markets. Finally, customer service and aggregator-sponsored artist websites can also influence affiliation. Here, CD Baby triumphs with the more accessible staff and more polished design. So the choice of affiliation remains with the artist in light of his/her objectives. Do not be overwhelmed or confused. Simply gather all of the facts and charges you’ll incur, and balance pros and cons as we have.



Good luck on your musical journeys!

By: Barry Chase, Greg Bloom, and Michael Epstein.

Entertainment Attorneys at ChaseLawyers.

Miami : 305-373-7665 | New York City: 212-601-2762

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