Wesley Verhoeve

When going over our monthly Family Records digital revenue statements the first thing I tend to look for is quantity of sales per retailer. Meaning, how big is the check each individual retailer sends us, and whose is biggest. Looking at quantity helps me answer a few questions:

• Which Digital Retailers Should I Pay Most Attention To? — The bigger the piece of the pie a retailer is responsible for, the more attention I should give them, per the Pareto 80/20 Principle. We service every single digital retailer out there, through our distributor, but we can only spent time on developing a relationship with a handful of them. If someone is adding 0.5% to our monthly pie, I simple don’t have time to focus on improving that number when I could be talking to a retailer that gives us 90% (iTunes) or even 4% (Amie Street).
• Where Do Our Customers Live? — Some digital retailers are very popular in certain geographic areas, like Beezer in France and Spotify in Sweden and the UK. If we see increasing action from those stores it means awareness in those markets is growing for our artists, and we can start ramping up promotional activities there.
• What Kind Of Customers Do We Have? — Aside from mainstream mammoths like iTunes, we can see that digital retailers have their own niche. eMusic customers are more album and indie oriented, Amazon customers are a little bit older, Spotify customers are a bit more cutting edge and tech savvy. Knowing these things helps us tweak our promotional strategies for each band. The more we know about our customers, the better we can service them and find them. We’re not going to wait for the customer to find us, we have to go out and find our customers and be present in the spaces where they spend most of their time.

When going over these quantitative numbers with Erik Rutten today, he asked a smart question that opened up an additional way to analyze these digital revenue figures. How much does each retailer pay us per unit? For iTunes this means per song paid, for Spotify or Napster it’s per song streamed. Based on last month’s Pearl and the Beard sales figures we made a list of the 11 most prominent digital retailers for this band in terms of how much they pay us per unit. Some of these were rather shocking numbers. Spotify, with their deep market penetration in Sweden, ended up being the 5th highest dollar amount, but lands firmly on the 11th and lowest spot for payment per unit. iTunes handed us the biggest check by far, and also ended up giving us the highest amount per unit. What this number shows us is which retailers give us the most value per song. Ideally we’d want to drive as much traffic to those that also gives us the most per song in return. Something to consider when you’re developing relationships with retailers.

Digital Retailers Ranked By Revenue Per Song Sold*

1. iTunes $0.566
2. Amazon Digital $0.521
3. eMusic $0.282
4. Amie Street $0.185
5. Beezik $0.057
6. Napster $0.020
7. LaLa media $0.012
8. Real/ Rhapsody $0.0096
9. WE7 $0.0065
10. MediaNet $0.004
11. Spotify $0.0026

* These dollar figures per unit are calculated after both our distributor and the retailer in question takes their cut. This will be slightly different for each label, artist and situation, but typically in the same ballpark. Also note that “unit sold” sometimes indicates a song stream, and sometimes an mp3 sale. Streams are much cheaper, but also seemingly where people think the market is going, which would have a massive impact on income levels for artists.

Related Reading: An interesting infographic about a the same topic. (read) (Note: I don’t feel it’s 100% correct, especially on the label generalization, but it’s interesting as an abstract visualization of this conversation nonetheless.)