CASA - The Contemporary A Capella Society

What is Online Digital Distribution?

When I say "Online Digital Distribution," what am I talking about? I'm talking about selling your album through one of the many Digital Distribution Outlets such as: iTunes Music Store, Rhapsody, eMusic, MusicMatch, Napster, MSN Music, and dozens more. Users of these services can purchase albums (or individual tracks) and digitally download them to their computers and MP3 players. Some of the outlsets use something called Digital Rights Management (DRM) to lock down the music to your specific computer or player (ex. iTunes Music Store). Some do not use any protection for their files at all.

Handling the Licenses (for cover-tunes only)

We all know that in order to sell a CD with cover-tunes on it, we simply need to pay our "Compulsory Mechanical License" and we're all set. Digital Distribution is relatively new, and therefore has relatively new rules. The process for licensing material for digital download seems to change almost daily. I've rewritten this article a couple times since starting, because the situation has changed so quickly.

Just like for Mechanical Licenses, the Harry Fox Agency (SongFile.com) can handle all of your Digital Phonerecord Delivery (DPD) Licensing needs. Isn't it funny how they make this new name for digital downloads (DPD), but the meaning of DPD has the now antiquated word "Phonorecord" in it? Ridiculous. Simply go to Songfile.com, login, and start licensing songs. The fee is the same for Mechanical Licenses, 9.1-cents per song (per download) for songs that are 5-minutes-long or under. The kicker: you must license a minimum of 150 downloads. What this means is that you must pay for 150 downloads up front. Plus, these licenses (unlike Mechanical Licenses) are valid for one year only. Yup. So if you don't sell 150 songs through Digital Distribution in a year, you will lose those licenses and have to start again for the new year. Of course, if your album has 12 songs on it, you only need to sell 13 albums (digitally) in a year. This may or may not be easy for you.

My first question is: is that 150 download minimum a per song minimum? Meaning, if my album has 10 tracks on it (all cover-tunes), do I need to purchase 150 download licenses or 1500 download licenses? It appears from reading on SongFile.com that it means 150 download licenses, not per song. The only downside from getting your licenses through SongFile.com is that you must buy these licenses up front. As soon as you've sold the number of downloads that you've licensed, you must immediately go and buy more licenses.

The alternative is to do the licensing on your own directly with the Music Publisher for each of your songs. This means, you must find out what Publishing Company owns the rights to each of the songs you're covering, then contact those companies. You must send a separate letter for each song you wish to license. There is a specific format for this letter, that can be found at CDBaby.com. Then you basically send them licensing payments on the 20th of each month, based on the number of downloads for that month. At the end of the year, you must have a CPA certify that your accounting is correct and send another letter to the Publishing Companies that states that you've done this. It's a little more paperwork, but you don't have to pay for licenses up front, and you won't have that expiring license issue that you would have with SongFile.com.

Handling the Digital Distribution

Now that you've licenses your DPDs, how do you get your music on iTunes Music Store, Napster, et al? You must find a Digital Distributor that will submit your album to all of these outlets. You could do this on your own, but it's not worth the hassle. For example, iTunes Music Store will not work directly with an artist, only labels. They will only work directly with labels that have a significant number of album releases in a year (not just a handful). You know what? It's easier to find a company to distribute your album to many outlets anyways. Otherwise you'd have to deal with each one individually (hardly worth the effort).

So who should you use to distribute your album to digital music outlets? My top recommendation is CDBaby.com. These guys have been doing it as long as anyone out there, they charge very little in fees, and they're crazy cool to work with...imagine getting an emailed response from a distributor signed "We love you" at the bottom. Yeah, that's CDBaby .

If for some reason you don't want to use CDBaby, The Orchard is another decent company. The problem with The Orchard is that they take a much larger chunk of money from your sales, and they seem to have a lot of accounting rules (complicated to use). The upside of The Orchard is that they can sometimes get artists "preferred placement" in online stores. This is like those highlighted albums you see on the frontpage of the iTunes Music Store. I think it's unlikely that they would get this placement for an a cappella group, unless it's really something unusual (and all original).

Signing up for digital distribution with CDBaby is pretty easy. They will only do digital distribution for your album if it's also in their online store database. So sell your CDs through CDBaby (you should anyways) and you'll be fine. Go to CDBaby.com and just follow the online instructions, super-easy. Also remember, you can only do digital distribution for full retail-ready albums (can't just burn a CD-R and sell it on iTunes), and must have its own UPC code (ask your CD Manufacturer).

How Much Do We Get Paid?

Quick answer: not as much as you would think. Let's say your album has 10 tracks on it (nice round number to work with). The different digital distribution outlets will pay out a different amount to artists. iTunes is a little higher than most and will pay 70-cents per song (or $6.50 per full-album). Most of them seem to pay 65-cents per song (or $6.50 per full-album). Let's do the math here for our 10-song album (assuming someone buys the whole album on Napster:

Revenue from Napster =$6.50
CDBaby's fee =$0.585
DPD License =$0.91
You Keep =$5.00

In The End, Is It Worth It?

I think so. $5 an album doesn't sound like a lot of money, but you have to keep in mind that you're not paying anything to manufacture CDs for these downloads. That saves you like $2 a disc right there. Plus, there's a chance you could sell a lot more tunes digitally than you would sell full CDs. Personally, I think there's too little a cappella available on iTunes Music Store, Napster, and the rest.

Do I Really Need To Do This Licensing Stuff?

Yes, you do. I know in the past, many a collegiate cappella groups have been hesitant to pay for licensing, but in the case of digital distribution, be careful. It would be very easy for the RIAA to pull up a list of cover songs that are digitally distributed and then crosscheck that list with the license database at HFA. I'm not saying that it's a trivial task, but it's possible. It's also possible that in the near future, all of these systems will be linked together, to prevent artists from skirting around the licensing issue. So, don't mess with it. Pay your fees and you'll be a happier person (the universe will thank you). Remember that you're also making money from songs that someone else took the time to write. Pay them for the masterpiece you've decided to honor by covering it on your album. Pay the license fees.