WaTunes: Tunecore CEO Jeff Price Defends Flat vs. % Music Distribution Fees, Venzo Music CEO Kevin Rivers Responds!

May 17, 2011 at 5:41 pm Leave a comment


Source: Hypebot

 When Tunecore raised its yearly flat fee digital distributions rates recently, many users supported the change while a few vowed to leave the service. Yesterday, after competitor CD Baby offered a discount to artists to switch to its percentage based distribution, a heated debate raged among Hypebot readers over Tunecore's new rates and flat fee vs. percentage based distribution fees for d.i.y. artists.  As part of his response, Tunecore CEO Jeff Price shared a passionate argument in favor of flat music music distribution:

"I am by no means suggesting TuneCore is not a business, it is. And it does charge a flat fee for a service, but I feel I can look someone in the eye honestly when I do that, not when I take a piece of what they make when their music sells.

…You get what you pay for with no hooks left in you in the event you succeed…

I don't believe in pre-assuming artists are going to fail, and I don't believe when you have success others should be able to claw away as much as they can because you bet wrong"

Jeff has more to say in his comments to the original post here. It's an important debate. Jeff, CD Baby and others in the inudstry are paying attention. Tell them what you think.

Official Responses from Venzo Music CEO, Kevin Rivers:

Although I am more in favor of the percentage model, I think this issue was a bold, yet unprecedented move on TuneCore.

While I strongly agree with Jeff that no artist should be denied access to distribution, I have to disagree with his comments in regards to a percentage based model.

Don't get me wrong, I think what Jeff and Peter did with TuneCore is truly a masterpiece. They, like myself and CD Baby have really brought real innovation to the industry. I also would say that I do respect Jeff's opinions, viewpoint and his philosophies. That being said, I honestly don't see why artist should pay any flat fees in exchange to have their music on iTunes.

Base on recent study that an average TuneCore user only makes $178 a year, it is apparent that flat flee models may prove to be more expensive short term & long term than a percentage model. Many reasons could be due to high maintenance cost in hosting the albums on their servers, implementation and deployment on features (as this was practically the case), and of course maintaining the systems.

There are many reasons why I believe a straight-forward percentage based model works is the following:

1.) Its sustainable long-term.
2.) Provides investments to both the artist and the distributor
3.) Sales can be use to re-invest in distribution systems based on customer feedback (i.e. What do the customer really want? And how do we give it to them?).
4.) No increase in prices. Everything remains the same.
5.) Customers don't have to worry about using their credit cards to pay a distributor for renewal fees. Everything is already taken out. The artists are paid, distributors are paid, everyone stays happy.

Now here is where things gets juicy. Lets say for example an artist made $50,000 in a year with 50 albums. It is clear to say that through a flat fee distributor (charging $49.99 per year) they only have to pay $2,500 out of the deal as oppose to $10,000 (from a distributor taking 20% out of the back-end). Seems like a lot of cash right?

Now ask yourself this question: Would it be easier to give a distributor $10,000 to ensure that they are in business long-term? In which they could utilize the funding to not only improve their systems but also their marketing efforts?


Would it be easier to pay $2,500 and hoping that other users are paying the same amount to keep them in business long-term?

Now lets be more realistic. Say an average artist makes $178 a year off of one album. A flat fee company would take $50 while a percentage base company would only take $35.60 (20% taken out).

Overall, I would say that the core function of a business is to make money. Whether or not the model will work in anyone's favor is his or hers own opinion.


Entry filed under: Uncategorized.

BLOG: iTunes Service Venzo Music Steps In After TuneCore Raises Prices WaTunes: And Sony Makes 3. Apple Nears Cloud Music Launch

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