amazon mp3 payments to artists?

I’ve been scouring the internet for this information, but no luck so far, so I’ll ask here in hopes something will come of it.

Amazon is charging less (in some cases significantly less) for their mp3 music service than the same album in physical media. The question is: where is that reduced cost coming from? Out of the pockets of the distributors (as a result of lower media costs), or of the artists (as a result of…?) There is at least anecdotal evidence that artists make significantly less when you buy their album from iTunes than when you buy the same CD, which is insane. Does Amazon’s mp3 service have the same problem?

I’m otherwise leaning in the direction of becoming a regular user of Amazon’s mp3 service- no DRM, increased convenience, and lower costs is exactly what should be happening to the music industry right now, and Amazon is doing all of those. But if that actually improves the position of the labels at the expense of artists… ewww. I want to pay artists for their art, not distributors for their 20th century marketing and overhead, and if Amazon makes that harder rather than easier… Not Cool.

(I realize there are issues with mp3s as a closed standard, but that’s a post for another way.)

15 thoughts on “amazon mp3 payments to artists?”

  1. Mike Smithwrote an interesting post today on Here’s a quick excerpt Amazon is charging less (in some cases significantly less) for their mp3 music service than the same album in physical media. The question is: where is that reduced cost coming from? Out of

  2. bus, I encourage you to go back and listen to the Jeff Bezos interview with Charlie Rose on November 19, which is available on the main Kindle page … Windwalker Books’ Amazon Blog – mp3 payments to artists?By Luis Amazon is charging less (in some cases significantly less) for their mp3 music service than the same album in physical media. The question is: where is that reduced cost coming from? Out of the pockets of the distributors (as a result

  3. In principle, artists could get substantially more for an MP3 sale, because all kinds of costs go away. You don’t have to manufacture and ship a physical object, and then pay for physical space in warehouses and retail stores to hold that object until it is sold. There aren’t as many middlemen to be paid.

    The problem is that the Amazons and the Apples are negotiating deals with the labels; the artists have no representation. The labels and the operators of download stores could pay artists more and still make plenty of money for themselves. But if they don’t have to, they won’t.

  4. The guy who writes the Digital Audio Insider blog has posted in the past about the payouts his band gets from various services; their albums are now available on the Amazon MP3 store, so maybe he’ll post on the payout situation in the future.

    As Joe Buck noted, it’s all about what the artists negotiated with the labels, and as I understand it a lot of label contracts, especially the old ones, don’t net artists much at all for digital distribution. I think a partial exception is artists who write their own songs; they get mechanical royalties at a fixed rate per song (a few pennies) based on the statutory scheme established many years ago by Congress, and I believe that legally-downloaded MP3s and other digital downloads get a rate equal or close to that for physical copies.

    This is not true of streamed tracks I believe, which receive less favorable treatment; ditto for so-called “tethered downloads” that are restricted by DRM so that they only play on a single device and are tied to payment of a monthly subscription fee. This is one way in which the statutory royalty system and other legacy music industry schemes distort the economics of the online music business. For example, as I understand it the fact that mechanical royalties are typically a fixed amount per legal MP3 download helps explain why no one has successfully introduced a “legalized P2P” scheme where you can download all the MP3s you want for a fixed price per month. )

    If you’re interested in this area you should definitely check out Donald Passman’s book “All You Need to Know About the Music Business”. Passman is an entertainment lawyer, and not only describes royalty structures and related topics, but also outlines exactly what artists can expect to be able to negotiate in terms of contract provisions, royalty rates, and so on.

  5. MP3? Closed standard? There are dozens of free and full implementations of both MP3 encoding and decoding. I think what you mean is patent-encumbered. And that is of no concern to end users.

  6. On the Wired interview, Thim York (of Radiohead) implies that they make nothing from sales through iTunes and similar services.

    He implies that a lot of the old contracts that artists signed with record companies were very specific about the known distribution methods at the time of signing. In a lot of these cases, record companies seem to have given themselves a loophole so that they can get away with giving nothing (or next to nothing) from online sales of audio files back to artists.

    I find it hard to imagine that Amazon is any different from iTunes, as all these sales are seen through the same legal lenses, I am sure.

    It put the writer’s strike in a whole new perspective to me. It makes me wonder, why don’t music artists have their own union, independent of the RIAA and whatnot? It looks like the writer’s guild had a pretty good idea of what was going on, but music artists are still largely ignorant, and many don’t seem to realize how skewed the business model is.

    I hope a lot people look into what Radiohead and Nine Inch Nails are doing, and maybe start a new business model, with some proper legal advice, and maybe a union to back them up and help other music groups.

    Downhill Battle ( was an interesting site (although a bit obnoxious) that discussed a lot of these problems, especially in the conext of iTunes ( They seem to be gone now, though.

  7. uh … that was *THOM* York.

    I guess my point was, if you want to make sure money is going to the artists, as a general rule you should not buy from iTunes or Amazon or any of these similar services.

    On a case by case basis, things may be different, and if you look at Radiohead’s new distribution contract, they have a much better deal, but I am not sure if it is for sale through iTunes. However, if Radiohead and NIN were getting screwed, it is hard to imagine that the other vast majority or artists are not.

    Downhill Battle had the idea for a plug in to iTunes that would tell you how much of the price you paid was going to the artists. Hard to imagine it would be something feasible to implement, but it was a neat idea.

  8. This sounds so insane…

    I just bought 2 CD’s on sale at Target each for $9.99. Now, given that if I bought them on iTunes WITH the DRM intact, it would cost the same. It would cost even more for iTunes Plus, without DRM. There is definitely something screwy with the fact that the artist receives more royalty for something that costs much, much more per copy.

    Now, this could very easily be due to the contracts between the artists and the distributors, but I think that this is exactly the question that the distributors DO NOT want people asking. Once it is found-out that their business model is no longer “optimal” (I originally wanted to type “valid” but I think that would be TOO progressive of me :-) then they face the same kinds of market pressure that OSS has provided to the traditional, proprietary software industry: once distribution of a valuable item is no longer throttled artificially, then it becomes a commodity and is subject to the pricing effects thereof.

    I think that as information, in general, becomes easier to disseminate, that anyone who banks on exclusivity or a “gatekeeper-like” function will suffer.

  9. Michael, Marcus: those were the answers I was looking for, or at least, those are as good an answer as I’m going to get.

    raul: ‘standard which cannot be implemented without permission from others’. It is a problem for end-users, as discussed here.

    John: hehe.

    Ken: given the unique aspects of music (the music of one artist is not necessarily fungible with music of another artist), and given that lots of people know that music labels border on the criminal and have known it for a long time, I’m not so optimistic that suddenly the market will magically fix the situation. But I hope you’re right.

  10. When I’ve looked into this in the past the best source has always been the people who put independent music onto the services direct without any label intervention.

    Most of these are very clear about their terms. says:

    How much do I get paid?

    Every company is different, but the average is 60 cents per song downloaded, $6.50 per full-album download, and 1 cent per listen or stream (when people listen to your song as if on a radio station, but don’t download or buy it). Remember we only keep a 9% cut of the total income, and pay you 91%.

    Note they don’t appear to have a deal with Amazon yet.

    And of course you have to remember that the 60 cents they quote goes in the standard case to a label, so god knows how much the actual artist gets from that, as little as they can get away with from the sounds of things.

    Offering discounts at their own artists’ expense sounds like exactly the kind of creative accounting that lables might get up to.

  11. dave: CDBaby is listed on the Amazon page that was linked to by Michael above, so it looks like they do have an Amazon deal. (I know they’ve got one with itunes.) I agree that all other things being equal I’d much prefer to buy from cdbaby, and I do on occasion, but of course all other things are not equal- cdbaby doesn’t have some of the artists I want to hear. Hence the poorly functioning market I mentioned to Ken. :/

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