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Pandora Forces $29.95 Payments From Indie Bands

(UPDATED) Until recently, Pandora accepted music from indie artists at no cost in almost any form including home burned CD-R's. But now, in part because of a deal to display album cover art via Amazon's servers,  submissions must be available as a physical CD for sale on Amazon and include cover art and a UPC code to even be considered for airplay.

Compliance with the new rules will cost artists in several ways. According to its FAQ page, to get play on Pandora you now need:

• a CD of your music
• a unique UPC code for that CD
• your CD to be available through Amazon (must be a physical CD, not just MP3s for download)
• the legal rights to your music
• MP3 files for two of the songs from your CD
• free Pandora account, based on a valid email address, which can be associated with your music

In addition to art and packaging costs, Pandora explains that to comply with the new "available through Amazon" rule, indie artists should join the Amazon Advantage Program. Membership costs $29.95 each year plus Amazon takes 55% of the list price of every CD sold.

Established artists and labels already comply with Pandora's new rules. But for an indie artist trying to win new fans with a little help from Pandora and to keep his hard earned cash by selling direct, the new threshold may shut off an important avenue for exposure.

More:

• Pandora 's Founder Tim Westergren Responds
• POLL: What Do You Think Of The New Pandora Requirements For Indie Bands?
• Read one Hypebot reader's open letter to Pandora in the Comments section below.

The Michael Jackson Effect: An Unprecedented Spike In Sales

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Once again new media trumped old with AOL's TMZ breaking the Michael Jackson story an hour before other news and gossip gatherers. But in addition to the predictable spike in online interest, Friday's death also led to an unprecedented spike in sale.

As of Monday morning,  Michael Jackson held 8 of the top 10 slots on iTunes with 20+ more tracks sprinkled throughout the top 100. At Amazon wait times for most of his CD's and DVD's had jumped to 11-14 days for the usually instant-ship retailer. See real time iTunes singles sales data above and the iTunes album chart after the jump.

New Album Releases Hit Hard By Sales Downturn

A Nielsen study presented last week at NARM (link to full presentation after the jump) contained some particularly bad news for artists and labels releasing new albums. As steep as the overall sales decline has been, the drop for new releases has been been sharper and the chance of breaking through even more difficult.

• 105,575 albums released in '08
• Less than 1% of all releases or just 950 albums sold more than 25,000 copies
• Those 950 accounted for 82% of all new releases sold
• New release album sales fell 18% to 149 million
• That's half the new release sales generated in '01
• 50,000 digital only albums accounted for 1.8% of all new release album sales

It's possible to be critical of the figures and methodology....

Video Interview: Sandy Bitman Of Park Ave CD's

Interview by Virgil Dickerson for Hypebot. Virgil sits down with Sandy Bitman, owner of Park Avenue CDs and Records. Park Avenue is a great store that is part of the Coalition of Independent Music Stores. He has lots of great ideas and has managed to keep his indie store running when others are closing.

Other Virgil NARM interviews include  Kevin Arnold of digital distributor IODA , Tim Hinsley of SuperD Distribution and NARM President Jim Doneo. Watch more video interviews next week.

A Look Inside Topspin's Premium Offerings

Deluxe and limited editions are one of the new tools in the artist monetization Toolkit that seems to be working. Think of it as music's version of retail up-selling ("Do you want fries with that 99 cent burger?")  Nine Inch Nails was one of the first to use it effectively offering versions of a new release from for free to $5, $15, $75 and even $300.  Whatever your level of income of interest; there was a product for you.

Topspin is helping to refine the concept of premium music offers with a series of deluxe and limited edition packages, and Topspin's lead guru Ian Rogers has been recording the unboxing of several of them.  These clips aren't going to win awards at Sundance, but they provide some insights into this effective marketing and monetization strategy.

And if you're thinking that your band is not "big enough" to start charging fans a premium, then maybe your not thinking enough out of the box about what you'd put into your deluxe box to make it worth buying.

Metric's Fantasies Deluxe Edition

Distributor Traffic Entertainment Taps The Orchard

(EXCLUSIVE) Massachusetts based music and video distributor Traffic Entertainment has moved to The Orchard for both digital and physical distribution, Christian Hedlund of Traffic  and The Orchard's head of Physical Distribution  Michael Bull told Hypebot in an exclusive interview. Previously, Traffic used IODA for digital distribution in addition to direct sales to iTunes and brick and mortar.

The alliance with Traffic, best known for releases including EMC's "The Show", Vaughn aka MF Doom's "Vaudeville Villain", De La Soul's "Mission Impossible" and Lil Scrappy's "Silence & Secrecy" marks the first time that The Orchard has opened their marketing and promotion to another distributor. The Orchard recently proved its muscle by delivering a gold single for Pitbull.

Many labels had seperated their phsyical and digital distribution, but bringing both back under one roof is bcoming a popular option for indies.  Sales declines at brick and mortar, as well as, bankrupcies and consolidation has led to fewer physical distribution options for indies. And for digtial distributors like The Orchard via its recent purchase of TVT and INgrooves through investor UMG's Fontana arm, adding physical counters downward pressure on sales fees caused by Tunecore and others.

Founded in 2002, Traffic Entertainment Group has carved a niche...

Album Sales Drop Accelerated To 18% In May

On the eve of the annual NARM music sales convention,  Nielsen Soundscan delivered the sobering news that the decline in album sales accelerated to 17.8% in May compared to the same month in 2008.  Last month's sales were 37.7% lower than in May 2007.

The drop compares to declines in recent month of 11-13.5% and suggested a even sharper sales fall off then most had predicted. However, the figures do not reflect most direct to fan sales from indie and d.i.y. artists via their own sites and at shows.  While not nearly enough to counter the overall decline, this direct artist to fan relationship is one of the bright spots in an often bleak music sales landscape.

Virgil's Headed To NARM. Are You?

The Ongoing Adventures Of An Indie Entrepreneur

Intrepid indie maven (Suburban Home, Vinyl Collective) and Hypebot columnist (You Can Always Go Back to School), Virgil Dickerson is packing his bags for SanDiego for next week's two headed mother of all music retail conventions - NARM (brick and mortar) and NARM Connects (digital).  He'll be filing regular reports for Hypebot; and if you're headed there we'd  both like to hear from you too. Stop Virgil in the hall and say hi; or write something and send it in. Or just add a comment to  one of Virgil's posts. Whatever works for you. And please buy Virgil a meal or a drink. It's his virgin NARM experience.

VIRGIL DICKERSON: I am excited to report that for the first time in my 14 years of running a small, independent label and distribution company, I have decided to experience NARM. NARM (The National Association of Recording Merchandisers) is a not-for-profit trade association that serves the music content delivery community in a variety of areas including networking, advocacy, information, education and promotion. Each year, they host NARM Connects, a convention aimed at bringing together retailers, distributors, labels, artists, as well as mobile, digital, and technology companies.

I registered as a retailer, as Vinyl Collective, but my main goal is to meet with distributors with the hope of gaining better distribution. Since my label, Suburban Home, left Koch, we have been self-distributing ...

INgrooves Adds Physical Distribution With New #1 Crystal Method Release

Digital distributor INgrooves has added physical distribution to it offering with the new Crystal Method album "Divided By Night" released on May 12th.  In its first week of release, the album hit #1 on Amazon and was the #1 electronic album on iTunes.

INgroove's brick and mortar distribution will be handled via Universal's Fontana, a relationship facilitated by UMG's major equity investment in the company last year. Competing digital distributor The Ochard began offering a similar dual service recently with it's aquistion of TVT.  Physical sales are shrinking.  But because of  increased competition, so are the margins that digital distributors can charge making  revenue diversification an essential busines stategy.

Interview: CIMS' Jim Fahy On ThinkIndie.com

The Coalition of Independent Music Stores (CIMS) recently launched their ThinkIndie online download store. The site was conceived as an answer to the revenue lost to iTunes by independent brick and mortar music stores, as well as, a place for online music discovery. Traffic will be driven by and profits shared with participating indie retailers. Just days after the launch, CIMS' Jim Fahy answered a few questions about the new online store:

Q: Is the ThinkIndie.com only partnering with CIMS stores or can other indie stores get involved?

FAHY: A healthy portion of AIMS stores are also among us. Other stores may be involved in the future.

Q: The selection is currently all indie. Do you ever intend to sell music from the major labels?

FAHY: Of course. One of our major label deals is about to be finished. After tha,t it's just a matter of uploading the content that makes sense. We're hoping our other deals will work out soon - especially as they see how it runs. Lawyers are a bigger problem than people.

Q. Does all of the music come from individual labels. Which of the indie digital distributors like The Orchard, IODA and INgrooves do you have have deals with for ThinkIndie?

"iTunes' magic lies in its integration.
Our magic is knowledge."

FAHY: Some of it does. Our deals with Sub Pop, Merge and Matador, for example, are all direct.As far as the digital distributors you mentioned: Yeah, we have deals with all those guys.

The Orchard are still involved in the physical business and employs several people who have been friendly with us over the years during their respective tenures at other labels. We're hoping that we'll be going ...

Think Indie CIMS Digital Store Launched Today

ThinkIndie.com launched today as the music download destination for  Coalition Of Independent Music Stores' (CIMS) indie music retail outlets. The catalog comes entirely from indie labels with tracks encoded as DRM-free 320 kps mp3's; among the highest bit rates of any download store. Album downloads are generally $9.99 with individual tracks at $1.11 though many exclusives and specials are priced much lower.

"This launch has been a long time coming and we are stoked that the big day is finally upon us," says an enthusiastic CIMS head Jim Fahy. Still one can't escape the feeling that Fahy and his member stores would rather you came by in person and bought a CD. "If you gotta buy an MP3 then we want you to do it from us," continued Fahy. "What's best is that you can buy said files from the record store of your choice, enabling you to still shop digitally and locally. It's all the convenience and twice the snark... Just how we like it."

Independent music has long needed an alternative online download destination to eMusic, which is only accessible via subscription. Think Indie, which was built by a group of indie record stores to compete...

People's Music Store Adds 300K Universal Tracks To Fan Retail Offering

Universal has become the first major label to embrace fan powered download retailer People’s Music Store. Using the UK based site, fans in set up online stores, choose music, write reviews, and market via their blogs and social pages. But People's is not another multi-level marketing scheme. Fans-turned -storekeepers earn 10% of each sale in points which can be used to buy music.

I met two of the People's Music Store team at the meetup that Hypebot co-sponsored with Tospin at Midem earlier this year. and was struck then by the potential of this simple concept.  Bloggers get rewarded because people bought what they wrote about, and bands can place their music next to the  artists that influence them. Labels Rough Trade, Lex and Ninja Tunes, and acts including Nightmares on Wax and Various Production have already set up shops. It is possible to do something like this with an Amazon affiliate account, but People's is only about music and adds review and other personalization tools.

People's supports commerce in multiple countries includinig the UK and US. But the problem I saw with the site back in January was lack of selection, and the Universal deal goes a long way towards solving that...

Record Store Day Gives Indies Sales Boost

Saturday's National Record Store Day provided U.S. indie music stores and labels with a tangible boost in sales.

Billboard chart analyst Ed Christman put the gain at just 1% of overall independent label sales. But Coalition Of Independent Music Stores (CIMS) outlets were up 22% over the previous year and vinyl sales jumped 222% according to the indie store alliance.

"What we have here is one more glimpse into the future," said new CIMS head Jim Fahey. "We can make these days happen more and more through a concerted effort to let the indies sell something worthwhile and let The Big Boxes go back to selling microwaves and cheap TV's. Leave the music to the experts."

Here's a video of Smashing Pumpkin Billy Corgan at an Indiana record store on Saturday:

Survey: Despite Recession Fans Will Buy Music

According to a new NPD tracking study 75% of consumers say they will spend the same amount or more on digital music downloads as they did in 2008.  65% will spend the same or more on video games, and 60% will spend the same or more on CDs.

“Even in the face of a down economy, entertainment remains a popular spending category,” said Russ Crupnick, entertainment industry analyst for NPD. But the the importance of buying music lags behind videos.  and gamingThe study reported that 51% of consumers surveyed purchased a DVD or Blu-ray disc in the prior three months. Purchasing a console or portable video game ranked second at 36% followed by buying a CD at 31%.

Sales At Trans World's Shrinking f.y.e. Stores Drop Another 24%

Fewer stores means less goods sold, and that was certainly the case as the downward music retail spiral continued with losses at Trans World and its shrinking f.y.e chain falling another 24% to $344.7 million in the last quarter compared to $451.5 million in 2007.  Same store sales for the quarter dropped 14%. During the quarter, TW operated just 763 stores compared to 922 stores the previous year.

For the fourth quarter of 2008, the Trans World recorded a net loss of $9.4 million as part of the fiscal year 2008 where total sales decreased 22%. Comparable store sales for the fiscal year decreased 11%.

Layoffs At Redeye Distribution

The trickle down of lower music sales is effecting distributors and today North Carolina based Redeye let at least four staffers let go as part of a move that combines the Strategic Marketing Department and the traditional Marketing Department into a single sales and marketing unit.

In an email sent to labels by Redeye general manager Steve Dixon, he said that as of today staffers Brian Pearl, Craig Powell, Rich Minter and Leyla Cruz would no longer be with the company.  Josh Wittman will head the smaller combined team who are now responsible for physical distribution co-op marketing, digital distribution and online marketing, direct to consumer marketing, licensing and export marketing.

Top Vinyl Sellers For 2008

iTunes To Expand DRM Free & Variable Pricing According To Report

IT'S OFFICIAL: SEE UPDATE HERE.

As soon as today at Macworld, Apple will announce that iTunes is expanding its DRM offering to include all of the major labels and will add variable pricing according to cNet.  Over the aor downloads are also part of the deals which were concluded last week.  Leaked details appear to match many of the label demands that Hypebot reported in early December.

Songs will be priced in three tiers: 79 69 cents for older catalog, 99 cents for midline product and slightly higher for some new hit tracks. Depending on how much of iTune's catalog is priced at 79 cents, Jobs may have bested Amazon and WalMart.com who have used price as part of their strategy to whittle away at Apple's dominate 70%+ download market share. How the costs and profits of the price changes will be shared between Apple and the labels is not yet public.

Who Is The Winner?
Labels got higher prices on hit product, but lowered them on catalog. Fans got DRM free msuic and over the air downloads, but have to pay more for hit product.

For two years afer calling for DRM free and over the protests of labels who publically decry his dominance, Steve Jobs negotiated an agreement that should extend his regin. If early reports prove correct, Jobs has trumped the competition with lower prices and broadened the Apple/iTunes/iPod ecosystem to include OTA downloads to the iPhone.  Why would music fans want to buy their music anywhere else?

2008 CD & Ringtone Sales Fall, Digital Growth Slows

For the 52-week period ending December 28th, according to retail data collected by Nielsen SoundScan:

• Physical album sales were down 20%
• Overall album sales dropped 14% after digital was added
  • This follows a 15% drop in '07 and represents a 45% decline since a high in 2000
• Digital track sales were up 27%
  • Down from a 45% rise in '07
• Digital album sales grew 32% to 65.8 million units
  • Down from a 53% rise in '07
• Ringtone sales fell 33% to 43.8 million units
  • Only 1 sold 2M (Lil Wayne's Lollipop ); in '07 3 did.

By The Numbers: Digital Music Sales Hit New High

• Weekly U.S. digital track sales set a new record Dec. 22- 28 with 47.7 million sold

• That's a 126% jump from the prior week

• Why the increase? Filling up iPods and redeeming download cards received as gifts

• Digital sales were up 27% from 2007

• 1.07 billion tracks were sold in 2009

stats from SoundScan via Billboard

Music's Long Tail Just Got A Lot Shorter

• 173,000 of the 1.23M albums available sold at least 1 copy last year
• That means 85% of albums did not move a single copy all year.
• 80% of of all single track sales revenue came from 52,000 tracks

All this is according to a new study by Will Page, chief economist of the MCPS-PRS Alliance, the UK based not-for-profit royalty collection society.

Does this meanthat we should all be back to chasing hits? No, but if correct, the study should remind us that making music available for sale is the beginning and not the end.

Music Sales Drop 2% Q3 Despite Digital Growth

Overall demand for music among U.S. internet users fell 2% in Q3 of 2008 according to a new NPD survey which included purchased CDs and downloads, P2P sites, and borrowing music to rip. It's not clear if the numbers are just a blip or within some margin or error, but they certainly can't be spun as good news for a beleagured music industry. Growth in track sales and the number of new downloaders did, however, offer a ray of hope along with music discovery via video games.

The proportion of U.S. Internet users, age 13 and older, purchasing a CD in the prior month fell from 25%  in Q3 '07 to 22% this year and the overall volume of CDs purchased declined by 19% compared to last year. Teen  CD purchases dropped 34% (so much for the Hannah Montana effect) and among adults age 26 to 35  sales were down 36%. CD purchases by adults 36 and older declined ony 10%.

Paid digital downloads experienced growth...

Kid Rock & AC/DC Rank 3,4 In 2008 Despite Anti-Digital Stance

Nielsen SoundScan reports show that Kid Rock's "Rock N Roll Jesus" was the third best selling album of the year in the U.S. as of the beginning of December.  The release was CD only until nearly a year after its release, when  Rhapsody grabbed exclusive digital rights where its sold only 3,000 digital copies so far.

AC/DC has still not gone digital with its "Black Ice" which was released exclusively via Wal-Mart. But it is the fourth best selling album of the year with 1.6 million copies sold.

While digital sales unequivocally contributed to the success of many of the records that top the 2008 charts, these two release prove that in a shifting marketplace there is no single path to sales success.

CIMS Indie Retail Top 200

For week ending December 7, 2008

TW LW    Artist    Title                            
1 D YOUNG,NEIL SUGAR MOUNTAIN
2 D SPEARS,BRITNEY CIRCUS
3 1 WEST,KANYE 808S & HEARTBREAK
4 2 KILLERS DAY & AGE
5 3 BYRNE/ENO EVERYTHING THAT HAPPENS
6 6 GUNS N' ROSES CHINESE DEMOCRACY
7 8 KINGS OF LEON ONLY BY THE NIGHT
8 15 AC/DC BLACK ICE
9 7 WILLIAMS,LUCINDA LITTLE HONEY
10 10 LAMONTAGNE,RAY GOSSIP IN THE GRAIN

Amazon MP3 UK: A Quick Second Look

Accept for competitor 7Digital throwing down the kps gauntlet, the initial reaction to Amazon's UK launch of their DRM-free MP3 download store have been generally positive.

But the phone, fax and keyboards over at Amazon HQ must have been burning yesterday as late comers jumped on board.  This morning track count jumpes to  3,470,042, almost 32,000 higher then yesterday including the much missed Oasis who has suddenly contributed its entire catalog to the new offering.

iTunes Top Selling Albums & Songs Of 2008

Best Selling Albums of 2008:

1. Coldplay - Viva La Vida or Death And All His Friends
2. Jack Johnson - Sleep Through The Static
3. Juno (Music from the Motion Picture)
4. Lil Wayne - Tha Carter III
5. Sara Bareilles - Little Voice
6. Once (Music from the Motion Picture)
7. Jason Mraz - We Sing. We Dance. We Steal Things
8. OneRepublic - Dreaming Out Loud
9. Across the Universe (Music from the Motion Picture)
10. Leona Lewis - Spirit

Best Selling Songs of 2008:

1. "Bleeding Love" Leona Lewis

US Digital Music Will Climb To 41% Of Sales In 5 Yrs

A new study by JupiterResearch, a Forrester Research company, predicts that digital music will grow from the current 18% to 41% of total sales in 5 years. Researchers credited stores like Amazon and the transition to mp3's which make downloads portable for some of the increase.

The "U.S. Music Forecast 2008 to 2013" predicts that growth in digital music sales will not compensate for declining CD sales, with the U.S. music market shrinking over the next five years from $10.2 billion to $9.8 billion.

64% of subscribers to digital music services and 57% of those who download music also bought a CD in a store within the last year. Regular digital music consumers have shifted 60% of their music spending to digital. The study predicts that music on cell phones will only contribute 3% to overall sales or $300 million by 2013.

ANALYSIS: While the CD will continue to hang on, most..

A Look At Amazon's 70,000 New Artist Stores

Amazon.com yesterday launched 70,000 Amazon Artist Stores that place biographical information alongside music and related material like books, posters and t-shirts. The inclusion of physical goods could prove a major point of differentiation for Amazon with other online music stores lacking warehouse operations and unable to match the broad a merchandise selection.

Biographical information is provided by the All Music Guide and some community, photo, video and music recommendations are provided via SoundUnwound, an in beta joint venture between Amazon and IDMb which encourages Wikipedia like fan editing.

Artist stores are accessed via a dedicated section and found in an alphabetical listing. But a search by artist in the general Amazon, Amazon Music or Amazon MP3 store do not take you to the artist's store, but to the usual Amazon product listing. Perhaps further integration of Amazon's various music destinations is pending. Examples of the special content available in Amazon Artist Stores include:

Circuit City Files For Bankruptcy

Just last week Circuit City announced the closing of 155 stores which meant 155 fewer music stores.  Today the retailer filed for Chapter 11 bankruptcy protection.  According to the Associated Press:

"...the nation's second-biggest electronics retailer, filed for bankruptcy protection on Monday but plans to stay open for business as the busy holiday shopping season approaches.It filed under Chapter 11 of the bankruptcy code, which will allow it to hold off creditors and continue operations while it develops a reorganization plan. (more)

155 Less Record Stores As Circuit City Downsizes

As part of a fight for survival, Circuit City is closing 155 underperforming stores located in 55 U.S. media markets. The closures means Circuit City will exit 12  media markets completely. A pdf of locations that are closing can downloaded found here.

The effect on the record industry, already hurt by dozens of store closings ranging from mom and pops to Touwer superstores, will be immediate. The company expects that impacted stores will not open on Tuesday, November 4th, and the store closing sales will begin on Wednesday and completed no later than calendar year end.