Reaction to my piece yesterday "My Problem With eMusic" questioning payout formulas and the use of free music has been strong on both side of the debate. In an effort to learn trying to learn more, I spoke to an industry veteran who told me that every other digital retailer pays 70% of retail gross at a minimum and gets special permission for each free track. eMusic pays 60% of net after deducting about 25% for expenses. In essence, they pay about 42% of gross (or 60% of 75%).
Some sources have said they believe that eMusic gives away and does not report...
about 25% of all tracks. If true, this would put their payout
at about 34% of retail. Our source said. "No matter how you compute it,
they are keeping 58% to 66% of retail instead of a standard 30% or
less. If they just charged the (industry standard) business model of
70% of gross, payouts would grow considerably. (It's) safe to say eMusic keeps 50% to 100% more margin than any other digital retailer. Great friend to the indies."
TOMMOROW: How eMusic Save Its Soul...And Help Indie Music