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Online music retailers: A leg up for artists or a step back for the biz?

The Who's Pete Townshend acts out playing the guitar during his keynote conversation at the South by Southwest Music Festival in Austin, Texas on Wednesday, March 14, 2007


Pete Townshend represents one school of thought. For him, iTunes is a "digital vampire."

Why doesn't Apple's iTunes Store provide more career support to "artists whose work it bleeds like a digital vampire ... for its enormous commission, that it decides?" asked Townshend in a now notorious speech to a room of radio-industry reps last fall.

In his view, iTunes and by extension other digital-music services from Amazon to Spotify aren't doing enough. They should take on the role A&R people at record labels once did: offer a little constructive guidance to bands, provide some "creative nurturance" – not just throw new music online and take its 30-per-cent commission. "A fledgling musician at the start of a career is a delicate thing," Townshend said.

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That's one view. Jeff Price has a different take.

Price's company TuneCore simply offers artists a service. It gets them onto the world's major online stores with a few clicks of a mouse and a flat, annual fee of $9.99 per song or $49.99 per album. It's all online and automated – the antithesis of Townshend's recommendations. Yet unlike a record label, TuneCore doesn't take any percentage of sales or claim any copyrights to the music. It effectively eliminates the barriers for selling one's music.

It's part of a trend among music companies toward a straight, fee-for-service industry, in which the important task of moulding artists and shaping consumer tastes has devolved from record labels and is left mostly up to the artists themselves.

"I'm not a record-label killer. I'm not. I just provided a new business model using existing technologies," said Price, who knows the old industry well.

For 17 years, he ran the label spinART Records, which had its heyday in the 1990s. He then became one of the first employees of the pioneering online music retailer eMusic, based in New York. At that time, major labels were still reluctant about selling music downloads, so eMusic specialized in licensing the top independent labels, from Beggars Banquet to Matador. This was around five years before iTunes emerged in 2003. Interestingly, eMusic has many of the kind of curatorial features which Townshend said he'd like to see on iTunes. However, as major labels have come on board, eMusic has changed and some of the indies, such as Beggars, have left the service.

Now with TuneCore, which he founded in 2005, Price notes that artists using his service have sold 600 million units (that could be anything from a song sold on iTunes to a track accessed on Spotify). And they have earned over $300-million over the past two and a half years. The Grammy Award-winning folk band the Civil Wars is currently among the top acts using TuneCore. Sonic Youth, Keith Richards and the rapper Drake have all issued music on the service too.

A host of competitors, notably the company CD Baby, offer similar services for somewhat different fees. CD Baby also helps artists sell physical CDs, which TuneCore doesn't do, and it helps host artists' websites. However, these companies are also in the business of offering services, and services alone – not artistic or career guidance. For instance, TuneCore has another service for a one-time fee of $49.99, in which the company registers an artist's songwriting copyrights worldwide and helps retrieve royalties owed. TuneCore keeps 10 per cent of what it collects specifically for songwriting royalties. Price sees a large well of money out there for songwriters worldwide, previously untapped due to inefficiencies in the way royalties are collected. He also sees it as a way for a greater number of artists to make a living.

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"People seem to forget, it wasn't like we used to have a world where artists would just trip over money as they walked down the street. There was U2, Madonna, Gordon Lightfoot. But it was very small. The majority of the world's artists couldn't even get in [that is, get a record deal] and they certainly weren't making this money. So does it take a [support] machine [of record labels and A&R people]? It helps. Can you do it on your own? Yes. But that's the point. You now have a choice," Price said.

He added that roughly 1,000 artists using TuneCore made more than $1,000 in, say, the month of February. "I can feel pretty confident telling you that the traditional infrastructure isn't mailing 1,000 artists cheques for a minimum of $1,000 in band royalties," he added.

For Townshend, however, companies acting as a go-between like TuneCore, "are really just another form of banking."

"What creative people want to know," he added, "is that their music has been heard. They would prefer a response that was constructive, [rather] than a positive or negative review. They would prefer expertise to opinion. They would like to know that the public, if they are given a chance to hear the music, had a chance to make up their own minds." The question is whether more of a fee-for-service record industry gets a musician heard, or just throws music out to consumers.

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