Jeff, You’re Wrong: The Music Industry DOES Care About Selling Music…

The following guest post comes from Kevin Rivers, founder of Venzo Digital, a company that automates the entire digital distribution workflow on iTunes and offers it to artists for free.  Venzo spans music, ringtones, and apps.

open-quoteA couple days ago, Jeff Price, original founder of leading distributor TuneCore and now YouTube sensation Audiam, has graced us with an article on why the music industry doesn’t care about selling music.

 December 21th, 2011: “Jeff Price: Why the Music Industry Doesn’t Care About Selling Music Anymore…

In this discussion, Jeff argues that neither retailers nor distributors care about selling music and neither do they care about the artist.  In this response, I’m going to demonstrate why the music industry does care about selling music and how it can affect their bottom line if they neglect the music in which they carry.

Music Stores/Services

Jeff explained that digital retailers don’t need to sell music or make money off of music simply because it doesn’t serve a real purpose.  In other words, digital retailers only see music as a way to up-sell other products rather than a driven focus:

“Take iTunes, currently the obvious substitute for the traditional record store.  If Apple happens to make money from the sale of the music (which, some suggest they didn’t for many years ), all the better — but, the main purpose of iTunes is to make money for Apple by selling Apple products and gaining market share for its operating system.”

Jeff Price

Now, while Jeff is indeed correct that iTunes was created by Apple to up-sell their hardware products (i.e. iPods, iPhones, iPads, iMacs, etc.), music plays a vital and critical role in Apple’s new bottom line and iTunes’ success. For example: iTunes makes on average $2 billion every quarter.  That’s $2 billion every 3 months.

And before the App Store, more than 70% of that revenue comes from music sales.

Today, music sales now account for more than 45 percent of iTunes overall revenue.  Without music, iTunes wouldn’t be the dominant player in digital retailing, people would not be buying more iPhones, iPods, iPads, and iMacs, and iTunes itself would lose significant value.

Sure, iTunes can survive off of app sales, movie sales, TV series and books.  But they would also have to cut staff and reduce their work team in order to remain a key player.  While many people who buy iPhones are buying them for apps, they are also buying them for the music.

Why? Because that’s what iTunes is known for.

This principle also applies with Amazon and Spotify.  To say that “the digital music stores and services of today (Pandora, iTunes, Amazon, Spotify, and others) can make money without ever selling — or even streaming — all the music they ‘stock’.” is like saying “a music artist can create music without sound.”

Here’s more of what Jeff said:

To reach their goal Spotify believes they must have:

(1) a huge number of subscribers, a vast catalog of artists,
(2) a user experience that customers find pleasing, and
(3) ubiquity.

Making money off the music, or having the music it carries being streamed is, at this time, an afterthought.  And when the inevitable financial exit for Spotify does come, the artists will make no money from it despite being at least half of the equation.  This may explain why the major labels, all of whom own a piece of Spotify, do not appear worried about Spotify’s royalty rates.

Their eye is focused on the true financial prize: owning a percentage of a company that gets bought for billions.

Not exactly: the major labels may not care about Spotify’s royalty rates, but they do care about Spotify’s overall revenue performance.  Spotify is losing money faster than boiling water and the majors know it.  This is the only reason why Spotify is pressured into acquiring more subscribers and reaching ubiquity.

While Jeff is right in regards to artists not receiving any payout should a financial exit occur for Spotify, the sole value of the service is the catalog.  Spotify needs those streams not only as a way to pay rightsholders (though arguably, not to artists) but also as data points to understand the performance of the service.

Ask yourselves this hypothetical question:

If Spotify had 100 million paying subscribers and not ONE of them ever streamed a song on the service, would Spotify be more or less valuable?

Distributors

Although life was not a bed of roses between the traditional labels, artists and distributors, they all had the same goal: get CDs onto the shelf of the physical retail store, get them sold and collect the money from the sale. Arguments were over how this money was split, not whether the music should be sold to make the money.

Not so for today’s digital music distributors — think CD Baby, IODA, InGrooves, TuneCore, ReverbNation etc.  There is little to no cost of failure if the music doesn’t sell.

What Jeff says here is true only to flat-fee distributors (i.e., CD Baby, TuneCore, ReverbNation, etc.) and hybrid distributors (i.e. IODA, INgrooves as they are owned by Sony Music Entertainment and Universal Music Group, respectively).  This doesn’t apply to percentage-based distributors.

Why?  Because if their catalog doesn’t sell well, it can have a significant impact on their bottom line. This is why percentage-based distributors are more likely to work towards making the artists succeed. They have to help the artist make money otherwise both parties lose.

If anything, distributors need artists just as well as artists need distributors.

This paradigm in and of itself is not the problem.  But add to it that many of the board members and management of these new companies are not from the world of the music industry; they are from the world of technology, banks, software, hedge funds, private equity or technology firms that have no background in the music industry. Their goal is to get as high a financial return as quickly as possible by taking the company public or getting bought – both of which can be done without selling the ‘product’ they carry.

There is no reason or incentive to build an artist’s career or sell the music.

Jeff’s TuneCore is a far cry from current management, which doesn’t consist of too many music industry executives.  However, in this competitive market of digital distribution, no company can be bought without the ‘product’ they carry.  It’s true for distributors, and music services as well.close-quote

 

Image by Phase Locked Loop, licensed under Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0).

22 Responses

  1. Harvey
    Harvey

    Jeff’s article really should have been titled, “Why the Music Industry Doesn’t Care About Jeff Price Anymore.”

    Reply
  2. Jeff Price
    Jeff Price

    Hi Kevin
    I appreciate you taking the time to write a response and your perspective, but I disagree based both on my experience and that of market realities
    Sadly, the new music industry is being run by people not from the music industry. Their end goals are different than the old industry as they are able to make money without needing to sell music or make money off those sales.
    Unintended consequences of revenue are a happy afterthought for the artist but the reason Apple created iTunes was not to sell music, it was to sell iPhones, tables, desktop computers, Apple TV etc. This is the purpose of iTunes. Unlike a physical retail store, the purpose of iTunes was not to make money off the sale of the music but to gain market share.
    And thats the point, the priority and goals are different than what the artist needs.
    Your suggestion that digital music services need to stream all the music they carry in order to make money is just empirically wrong and suggests you have a deep lack of understanding of the market and enviroment. This is very dangerous to artists (particularly if you are a music distributor).
    For example, look at Pandora. It had a multi billion dollar IPO while losing money on streaming music. Let me repeat that, Pandora LOST money on music but had an IPO worth billions that enriched all the investors and shareholders. The artists made nothing. WIthout the artists, Pandora would be valueluess. Same holds true for Spotify. Their CEO has stated their priority is market share, not revenue from the stream of music
    (I suppose you could state that the CEO of Spotify is not correct about the goals of his company?)
    In regards to Spotify, despite it “losing money faster than boiling water”, its value is GOING UP, not down. You will note each time it raises money, it does so at a HIGHER VALUATION. Let me repeat that, the MORE money it loses, the HIGHER its valuation is going. That’s the point. Spotify’s value goes up despite it not needing to make money off the stream of the music.
    This is the way venture and private equity money works. They dont need to make money to be worth money. Look at Twitter and/or Pandora as examples. These are companies that lost or lose money and yet they were worth billions.
    (side note, your question:
    If Spotify had 100 million paying subscribers and not ONE of them ever streamed a song on the service, would Spotify be more or less valuable?
    Is missing the mark. The idea of 100 million paying subscribers ($9.99 a month) and yet NO expenses for streaming, hosting, serving or accounting to the rights holder would be one hell of a valuable company. Im not sure this is what you meant to ask).
    And you are so so so so wrong about your suggestion that percentage based distributors need music to sell to be valuable.
    First you state CD Baby is a flat rate distributor. It is not, it takes 9% of the revenue. Its important to understand the market before you analyze it.
    Next, are you aware of who/what Dimenson Capital is? If not look it up as they bought 100% of The Orchard over a decade ago. Despite running at a loss for many many years, they were able to “exit” recently to Sony. Look at CD Baby. WHo do you think owns it? Who do you think is CEO of CD Baby? How about TuneCore. Now that they pushed all the music people out, who do you see running it: a VC, someone from an auto repait company and someone from eHarmony. How about InGrooves. Who do you think owns that? Who do you think is running it?
    The leading distirbution enitities and music services in the music space are able to make money without selling music. Their value goes up despite not selling it (or losing money).
    I understand its excting for you to try to get artists to use your service as its new, but your lack of knowledge and understanding of the space have me worried
    Your intentions may be pure, but the advice your giving, or the positions you are suggesting, are just wrong. And its this type of advice and framing that gives artists the wrong information that ultimatly perpetuates the current damaging system
    Jeff

    Reply
    • cjhoffmn
      cjhoffmn

      Jeff – an important piece to your argument would be the profitability of the revenues we’re talking about. Your argument is similar in concept to the “razor blades” examples – give away the handles for free and sell lots of razor blades. Except its backwards. You are saying Apple has pulled off a switch here and are selling they music at a price so low, that people keep buying blades in order to want the handles.
      I’m of the opinion that there really is something to your argument, but I happen to be a weird case. I’m a musician, who then went off and had a successful business career as a banker / investor / operator of companies. I have had very broad experience, including buying and running a global creative brand that faced interesting challenges similar to music. Now I’m looking at the music industry in amazement of what’s going on.
      So here’s my question for you Jeff on this argument: Is iTunes breaking even, or losing money on the music sales? The reference above to $2b a quarter – is that revenue or profits from the division? If it is true that they are making $2b of revenue and breaking even or losing money – but making it up elsewhere – THAT is very interesting about motivation for the music. That will mean the economic forces will continue to support driving the price of music creation as low as possible to make the profits elsewhere.
      It is truly amazing that people are still valuing money losing networks positively. Pandora / Spotify etc – I am stunned they are “worth” so much just because of their future user base, especially when the fundamental asset in the system (the music) has been devalued so rapidly by ubiquitous free availability, low prices, and a lack of profit assessment.
      So to think about Kevin’s question about the value of a business with a $100mm subscribers and no streaming activity – I think you can look at many other subcription based business plans over the last 10 years and see that investors give lots of value to companies based on the potential future. Sadly, the objectives of investment don’t always align with the objectives of industry participants. I think there is some merit to the idea that this is going on in the music industry now for sure.
      Just some thoughts on the topic and glad to see this discussion – good to hear multiple thoughts on the topic.

      Reply
      • AnAmusedGeek
        AnAmusedGeek

        “It is truly amazing that people are still valuing money losing networks positively.”
        I agree whole heartedly! In tech, this was the ‘build it and they will come’ mantra – Twitter being a great example (how many years before they started monetizing ?)
        Anything venture backed these days is about ‘exit strategy’ – no-one wants to _build_ a company any more – they just want to _sell_ or _ipo_ a company.
        Sadly, the days of building a business and passing it down to your kids is over.

        Reply
    • Kevin Rivers
      Kevin Rivers

      Hi Jeff,
      Glad you can chime in. However, you’re wrong on many levels. You’ve said:
      “Sadly, the new music industry is being run by people not from the music industry. Their end goals are different than the old industry as they are able to make money without needing to sell music or make money off those sales.
      Unintended consequences of revenue are a happy afterthought for the artist but the reason Apple created iTunes was not to sell music, it was to sell iPhones, tables, desktop computers, Apple TV etc. This is the purpose of iTunes. Unlike a physical retail store, the purpose of iTunes was not to make money off the sale of the music but to gain market share.
      And thats the point, the priority and goals are different than what the artist needs.”
      You’ve misunderstood me Jeff. I’ve already stated that I agreed with you in regards to iTunes being created to upsell Apple’s hardware product. However, I disagree with you that iTunes doesn’t need music to make money or gain market share. It’s because of the music is why iTunes even have a market share.
      Now if you want to get more technical, iTunes true purpose was not just to upsell Apple’s hardware. iTunes was also created to seize an opportunity of a collapsing music industry due to the rise/demise of Napster.
      As for the artists community, I can safely say that I’ve yet to see any artist make a complaint about iTunes royalty rates and why iTunes priorities and goals are affecting their career.
      Secondly:
      “Your suggestion that digital music services need to stream all the music they carry in order to make money is just empirically wrong and suggests you have a deep lack of understanding of the market and enviroment. This is very dangerous to artists (particularly if you are a music distributor).
      For example, look at Pandora. It had a multi billion dollar IPO while losing money on streaming music. Let me repeat that, Pandora LOST money on music but had an IPO worth billions that enriched all the investors and shareholders. The artists made nothing. WIthout the artists, Pandora would be valueluess. Same holds true for Spotify. Their CEO has stated their priority is market share, not revenue from the stream of music”
      How do you think Pandora even had an IPO to begin with? You can’t seriously explain to everyone that Pandora simply skated their way into a multi-billion dollar IPO without the need of their catalog and/or streaming performances.
      Same goes for Spotify. Of course Daniel Ek wants to gain market share. What company do you know of that doesn’t want to gain market share in the industry (and other industries) that they are in? Please name one.
      Also another note that you’ve failed to remember is that the reason why streaming services are losing money on music is not because of the streams/music catalog themselves. Streaming services are losing money due to the lack of paying subscribers needed to reach ubiquity.
      Jeff. You’ve created Audiam so that you can not only help artists monetize their music on YouTube but also gain market share of a different segment of the industry. Can you cleary say to me that you can gain market share without the need of your artists catalog? And if so, how?

      Third:
      “In regards to Spotify, despite it “losing money faster than boiling water”, its value is GOING UP, not down. You will note each time it raises money, it does so at a HIGHER VALUATION. Let me repeat that, the MORE money it loses, the HIGHER its valuation is going. That’s the point. Spotify’s value goes up despite it not needing to make money off the stream of the music.
      This is the way venture and private equity money works. They dont need to make money to be worth money. Look at Twitter and/or Pandora as examples. These are companies that lost or lose money and yet they were worth billions.
      (side note, your question:
      If Spotify had 100 million paying subscribers and not ONE of them ever streamed a song on the service, would Spotify be more or less valuable?
      Is missing the mark. The idea of 100 million paying subscribers ($9.99 a month) and yet NO expenses for streaming, hosting, serving or accounting to the rights holder would be one hell of a valuable company. Im not sure this is what you meant to ask).”
      Jeff. You’re forgetting the address the point everyone here is waiting for. That is the reason why Spotify’s evaluation is going up. It’s not going up because they are losing money. It’s going up because of:
      1- size of the catalog (i.e. the need of getting everyone’s music on the service).
      and
      2- increase in number of paying subscribers vs. freemium subscribers.
      Also you’ve missed the point of my question. Even if Spotify have 100M paying subscribers, they would still have to pay the rights-holders. Jeff, I know you’ve known this by now. Do you know that the majors are paid advances even if their music isn’t streamed? Do you honestly believe that Spotify wouldn’t pay the major labels if none if their content was streamed? And because they still have the catalog, they would still have to pay for hosting fees.

      “And you are so so so so wrong about your suggestion that percentage based distributors need music to sell to be valuable.
      First you state CD Baby is a flat rate distributor. It is not, it takes 9% of the revenue. Its important to understand the market before you analyze it.
      Next, are you aware of who/what Dimenson Capital is? If not look it up as they bought 100% of The Orchard over a decade ago. Despite running at a loss for many many years, they were able to “exit” recently to Sony. Look at CD Baby. WHo do you think owns it? Who do you think is CEO of CD Baby? How about TuneCore. Now that they pushed all the music people out, who do you see running it: a VC, someone from an auto repait company and someone from eHarmony. How about InGrooves. Who do you think owns that? Who do you think is running it?”
      Not true. CD Baby is a flat-fee distributor. Any distribution company that charges a upfront fee to distribute music is a flat-fee distributor (regardless if they take a percentage or not). You should know Jeff, you’ve helped shape this concept.
      Secondly, I’m fully aware of Dimensional Capital (aka Dimensional Associates). I know they’ve bought the Orchard years ago as well as they owned eMusic. I know who owns CD Baby (AVL Group). Of course we can’t forget Opus Capital you owns your founding company TuneCore.
      As for INGrooves the last time I’ve checked Robb McDaniels (Founder of INGrooves) is still running the show (unless I’ve missed something). Now does he fully own his company? Of course not. Everyone knows Universal and Shamrock Ventures own a huge stake in the company. Nevertheless, hes still a music executive in charge.
      Not ALL distributors are being runned by VCs, Banks, Technology firms, etc.

      Kevin Rivers
      CEO, Venzo Digital
      http://www.venzodigital.com

      Reply
    • Geoff
      Geoff

      Jeff- You are correct and backed up by the history of the music business. The first recordings were made by record player manufacturers because they realized if they there was no content, they weren’t going to sell any gramophones.
      GE, Westinghouse and RCA formed NBC for the same reason. They knew they needed better content if they were going to sell any radios. The examples go on and on throughout the 20th century. It really wasn’t until the 1930s that record companies stood on their own and even then is was a tenative existence. Sony got into the content business only after it got burned with the betamax losing out to VHS (everythough Betamax was better) because Sony didn’t control the content.
      Apple and iTunes is the same thing.
      Do these companies want good music? Sure, but is it their number one concern? No. And that is the point.
      I remember being at CRS in 2003 when the head of BMG records chastised an executive from Clear Channel about Clear Channel not playing a sufficient number of new artists to maintain or expand the country music fanbase. The head of BMG closed with, “afterall, we’re all in the music business.” The Clear Channel executive turned to him and said, “I’m in the advertising business and if I can make more money by changing to news talk, or sports rather than music, I’m going to do it.” There was an audible gasp in the room and the room stopped.
      I think what Jeff is saying is exactly related to what happened at CRS. You are in trouble when your success is dependent on people who have an agenda that doesn’t align with yours. The goal of Spotify is to make a profit from an IPO or sale to a larger media company and whether that benefits the creators of their content isn’t really of any concern of the owners of Spotify. It isn’t immoral or illegal, it’s just a fact.
      If the music business is depending on people who don’t have a vested interest in the financial well being of those who create the content then there is a big problem. The business is healthier when there is a mutually assured destruction between those that create content and those who profit from it when either one of them fail.
      Geoff

      Reply
  3. wallow-T
    wallow-T

    The way I’ve phrased it is: The major music RETAILERS no longer depend on the sales of music for their existence. (Maybe Spotify is the exception, if one counts it as a major retailer.)
    This trend got underway towards the end of the CD era, the 1990s, when the big-box stores (Wal-Mart, Target, Best Buy) moved into music retail in a big way and damaged a lot of specialty retail with loss-leader pricing on hits.
    This means that the retailers, as a whole, no longer play a role in keeping the public interested in music. It also is a sign that music recordings have turned into a commodity, because commodities are what general retailers sell.
    The high stock values of startups like Spotify and Pandora are based on the investor belief that somewhere, somehow, the public interest and the cash flow of the 1970s-1990s CD-retail model will be restored, except it will be on the Internet and we’ll all Profit!! This has to be seen as the gamble it is. Many investors in Radio in the 1920s got pummelled, even though radio turned out to be pretty big and important.

    Reply
  4. GGG
    GGG

    Why’s everything have to be so all or nothing with so many commenters on here and in the industry. You can acknowledge recorded music is still an important revenue stream while understanding it might not be the primary one to the extent it used to be. Everyone spends so much time dwelling on one part of the puzzle and trying to discount other parts. STREAMING IS BAD! TSHIRTS ARE BAD! LIVE SHOWS ARE BAD! No, none of them are. Everything is just far more equally important now because of how much recorded revenue has dropped.
    Why’s everything have to be so all or nothing with so many commenters on here and in the industry. You can acknowledge recorded music is still an important revenue stream while understanding it might not be the primary one to the extent it used to be. Everyone spends so much time dwelling on one part of the puzzle and trying to discount other parts. STREAMING IS BAD! TSHIRTS ARE BAD! LIVE SHOWS ARE BAD! No, none of them are. Everything is just far more equally important now because of how much recorded revenue has dropped.

    Reply
    • FarePlay
      FarePlay

      I agree with GGG, the discussion about music is beginning to sound just as polarized as today’s politics.
      My thinking is if streaming can lead to physical sales, at some worthwhile level, than music might survive. The problem I see is that investors and wall street are basing their investment decisions on the number of listeners and not paid subscribers. Can these businesses be profitable? And if not will they simply make it impossible for super talented mid-level professional artists, like a Marc Cohn for instance, survive?
      Sorry everybody, music has value and that’s the conversation we need to be having with the fans.

      Reply
      • Kevin Rivers
        Kevin Rivers

        GGG and FairPlay,
        This is exactly the message that I’m conveying. I’m not saying that Jeff is 100% wrong. I do agree with him on certain points. However, I just can’t believe that the value of music is that bad to where digital “music” retailers + digital “music” distributors can thrive without having to sell their catalog.
        Kevin Rivers
        CEO, Venzo Digital
        http://www.venzodigital.com

        Reply
  5. Makell Bird
    Makell Bird

    Hey Kevin Rivers. I would like to bury the hatchet with you. Whether we like it or not, we are both in the music distribution business and it looks like neither one of us is going anywhere.

    Despite what happened between us (business wise) in the past. I am willing to lay that aside. So, let’s make an agreement: I won’t say anything bad about your company if you don’t say anything bad about mine, whether it’s under your real name or a fake name. No more calling each other scam artists.

    We BOTH have bigger fish to fry because (like you said) neither one of us is like TuneCore (now) or CD Baby (now). They are currently controlled by Venture Capitalists who could truly care less about the artists. People like Derek Sivers (founder of CD Baby) and Jeff Price (founder of TuneCore) have already made their millions by selling their stake in the company and can ride off into the sunset. We BOTH are providing a service to artists that is desperately needed but we both do it in a very different way.

    With Venzo Digital (formerly WaTunes) you offer to put up artists for “free” in exchange for 20% of their royalties. Whereas my company – ADED.US Music Distribution – is geared towards being an artist service(s) company. We take a monthly or annual fee and that fee depends on the level of service the artist wants. But the artist gets 100% of their royalties. We also do a lot of side jobs such as social networking promotion and personal app development.

    Smaller companies like us should be gunning for CD Baby and TuneCore’s spot instead of wasting time arguing with each other. Let the artists decide which service is best for them.

    A funny side note: When I was in business with Kevin Rivers he told me about how someone from RouteNote (Mr. Finch) (another distributor) would hit him up personally to talk sh!t. As soon as I started my own distribution company, that same guy tried to hit me up to talk sh!t. It was pretty amusing. I was also hit up by someone from Ditto Music and he wanted to talk sh!t to.

    THIS IS THE PROBLEM guys: We (the smaller distributors) are arguing with each other when we should be taking down CD Baby and TuneCore.

    Personally, I love Spotify. Even though I champion iTunes efforts, Spotify STILL has the best platform for streaming music (from a user’s standpoint). When it comes to a-la-carte sales, iTunes is king. They operate more fluidly and their payment system is great and faster than the others. This is where they shine. But when it comes to STREAMING, Spotify wins because they offer more freedom to create playlists and stream more than 30 seconds of a song without putting you in a trial choke hold.

    So, let me end this on a positive note: Any artist that wants to sell your music on itunes check out ADED.US Music Distribution.

    Reply
    • Kevin Rivers

      “Hey Kevin Rivers. I would like to bury the hatchet with you. Whether we like it or not, we are both in the music distribution business and it looks like neither one of us is going anywhere.” – Makell Bird

      Hi Makell,

      Glad to see you’ve finally decided to put aside our differences. Now you’re talking like a “real” CEO. I accept your truce. While I can’t speak for you. I can certainly speak for myself when I say that my companies are thriving.

      “Despite what happened between us (business wise) in the past. I am willing to lay that aside. So, let’s make an agreement: I won’t say anything bad about your company if you don’t say anything bad about mine, whether it’s under your real name or a fake name. No more calling each other scam artists.” – Makell Bird

      Agreed.I’ve stopped attacking you a years ago. I have no intention (neither do I see it worth the time) to attack you consistently and have us go back & forth.

      “We BOTH have bigger fish to fry because (like you said) neither one of us is like TuneCore (now) or CD Baby (now). They are currently controlled by Venture Capitalists who could truly care less about the artists. People like Derek Sivers (founder of CD Baby) and Jeff Price (founder of TuneCore) have already made their millions by selling their stake in the company and can ride off into the sunset. We BOTH are providing a service to artists that is desperately needed but we both do it in a very different way.” – Makell Bird

      Now this is where our views our different. See, unlike you, I’m not in this business to try and overthrow TuneCore or CD Baby. In fact, I don’t see CD Baby has a competitor to my overall strategy at all. For me, it’s about creating the best product available. My philosophy has changed dramatically since the old days of WaTunes.

      “With Venzo Digital (formerly WaTunes) you offer to put up artists for “free” in exchange for 20% of their royalties. Whereas my company – ADED.US Music Distribution – is geared towards being an artist service(s) company. We take a monthly or annual fee and that fee depends on the level of service the artist wants. But the artist gets 100% of their royalties. We also do a lot of side jobs such as social networking promotion and personal app development.

      Smaller companies like us should be gunning for CD Baby and TuneCore’s spot instead of wasting time arguing with each other. Let the artists decide which service is best for them.” – Makell Bird

      What separates Venzo Digital from ADED.US, TuneCore, CD Baby, RouteNote, ReverbNation, Ditto Music, and any other company is that Venzo is NOT a distribution company. We’re not. We’re a platform business.

      Distributors today are companies that distributes content to multiple stores (i.e. iTunes, Amazon, Spotify, etc. all under one umbrella). Venzo Digital is an award-winning iTunes platform that helps artists take full advantage of what iTunes has to offer. Powered by the world’s most highly advanced technology available, we enable our customers to easily manage their music, ringtones, and iPhone apps for free!

      People who use Venzo are serious artists, record labels, aggregators, and publishers who are looking to expand their content reach on iTunes. We offer feature placements, marketing/promotions, extra features, and more. We are the only platform on the planet that offers iTunes Daily/Weekly Trending Reports free (automatically), iTunes Financial Reports (automatically), and more.

      Nevertheless, I commend you Makell on entering into this business. While it is very competitive, it can also be very rewarding. What’s really important is not about bashing other companies or your competition. It’s all about the artist and helping building their careers and taking their content to the next level.

      Kevin Rivers

      CEO, Venzo Digital

      http://www.venzodigital.com

      Reply
      • mdti

        Hi Kevin,
        I was looking at your website for info about the business part, but didn’t find anything. It looks like the only service is aggregation for free (20% of sales) but that’s it ?

        Reply
        • Kevin Rivers

          Hi mdti,
          Correct. Currently Venzo Digital provides users the ability to fully take advantage of what iTunes has to offer by distributing music, ringtones, and apps for free!
          We will be providing a premium service for new iTunes formats that will empower the artist to expand their content reach on the iTunes Store and earn even more money.
          Definitely stay tuned and keep watch for us as we launch some amazing new features and services next year. 🙂

          Kevin Rivers
          CEO, Venzo Digital
          http://www.venzodigital.com

          Reply
  6. Bobby

    Very small note, Paul, your date on the link back to Jeff’s original article is quite a bit off.

    Reply
  7. Jyri Forsström, Music Kickup

    That’s funny,
    “The following guest post comes from Kevin Rivers, founder of Venzo Digital, a company that automates the entire digital distribution workflow on iTunes and offers it to artists for free. Venzo spans music, ringtones, and apps.”
    This would suggest that Venzo’s distribution is free, when infact on their front page they already inform us that you give away 20% of your royalties. That’s not free. Try Music Kickup. Keep 100% royalties and rights.

    Reply
    • Kevin Rivers

      What I find funny is that you’re using a business model I’ve already invented years ago. What you’re doing is nothing new. This absolute free model doesn’t work and won’t last. It’s a very unsustainable model. If you’re not charging your artist a upfront fee or percentages how are you making money? How can you assure artists your model will provide them security?
      One day you may realize that it’s not about who is the most cheapest but the most sustainable. Artists would rather go to companies like TuneCore, Venzo Digital, ADED, Reverb, etc than Music Kickup due to the fact that your model is too good to be true.

      Kevin Rivers
      CEO, Venzo Digital
      http://www.venzodigital.com

      Reply
      • Antti Silventoinen

        Hi Kevin. Just a quick note here. I find your responses surprisingly hostile towards comments and they impose a level of arrogance that I see as very off putting. Jyri’s comment about false marketing is valid. Your comment and the claimed understanding of our business model shows that you did not even have the courtesy to look into it before taking in an opinion by just a top level view.
        I’m not sure why I bother, but let me try to explain.
        Music Kickup is a technology and artist representation company. We have 5 products either in the market or entering the market.
        Our direct artists products are Music Kickup Records and the soon opening Kick Distribution.
        Music Kickup Records has a subscription based model with a clear multi faceted income structure, that goes way beyond just the subscription payments. It’s been in private beta over a year and now for a bried period in soft launched beta. It will be hard launched early next year. As part of our artist contract for Music Kickup Records our artists have access to our direct contracts with multiple DMSs and our own content ingestion technology with the fastest delivery times in the business. Music Kickup Records is showing massive demand and is proving to be very succesful in providing artists a substantial opportunity to do business globally. It is providing artists with unpresedented levels of market analysis, marketing help and business connections to take them to the next level. Our artists have grown from a few “demo” songs to stadium live shows in a matter of months, they’ve found awesome partnerships and sponsorships from large brands and have penetrated markets they’ve never before seen any sales from and been able to tour these markets as well. All this is done by performance based analysis of current market and market potential – not by pre-contracts with brands or services and offering them as opportunities. This is why it’s so effective. And this is why the demand and word of mouth is so strong.
        But to get back to Kick Distribution – the crux of this topic. So all the technology for the ingestion-feedback loop is already built and the contracts are in place with the service fully operational as it is – sustaining itself perfectly. We’ve been able to design the process from scartch utilising the best and most cost-efficient ways to build the ingestion-feedback loop, for instance getting rid of local storage. So all the costs to manage Kick Distribution are already incurred in Music Kickup Records financial performance – which is very sustaining and proving great performance.
        Kick Distribution is a natural extension of our policy to get rid of unneccesary middleman costs from the industry – to allow the maximum amount of money to flow back into the industry for better productions, better A&R, better services, better education, better tours and shows and ultimately better music for fans.
        So Kick Distribution is not out to make money, and it does not need to – it extends our company policy that already stands on very firm legs. This helps us achieve our goals on how the current industry can move to a more profitable future with artists reiging on an equal level no matter what their background is – a situation where good content wins, not the amount of people you’ve shook hands with.
        Antti Silventoinen
        CEO/Co-Founder, Music Kickup

        Reply
        • Kevin Rivers

          Hi Antti,
          Glad you could chime in. First off, I didn’t mean to sound off a too harsh. However, Jyri was stating false accusations against my company. Judging from the fact that you’ve only launch this service in 2011, and I’ve been in this business much longer, I should note why Jyri is indeed wrong.
          You see, Venzo Digital operates on a “freemium/percentage” model. This means that users who signs up doesn’t have to “pay” anything upfront to sell content. So in a way what we have on our site stands true and valid. Simply because users doesn’t pay a premium to use the service when they upload.
          In Jyri’s case, the reason why he deemed what we had was falsed was due to the fact that he was implying that we are using what I call the “absolute freemium” model.
          Where in this model, users doesn’t have to pay anything upfront + receive 100% royalty returns. Again this is a model that has already been invented years ago by me and I can tell you by experience that operating on that model isn’t a easy task if you have intentions on preserving your business.
          That being said, having gone over your response thoroughly to my previous comments, you’ve also beg the question as to how you plan to build security for the artist community using the “absolute freemium” model? As this model doesn’t provide any level of security in case you go out of business?

          Kevin Rivers
          CEO, Venzo Digital
          http://www.venzodigital.com

          Reply
  8. jw

    Good lord. Get your act together, guys.
    All of this anti-technology nonsense is just that, nonsense. The recorded music industry made a killing off of Wal-Mart & Best Buy during it’s heyday. Neither of those companies had any intention to get rich off of music or to make artists rich, they were more interested in selling refridgerators & big screen tv’s. Last I checked, it wasn’t Cat Stevens (or whatever he’s going by now) in charge @ Best Buy. Hell, Wal-Mart forced artists to compromise their art in order for them to stock it. But ask Irving Azoff who did what for his artists… Best Buy bankrolled Chinese Democracy & Wal-Mart bankrolled the Eagles reunion.
    The way I see it, these “music guys” who supposedly had artists’ best interests in mind (LOL!) have had their chance. For a decade they’ve fumbled the ball & fumbled the ball & fumbled it again. Someone should ask those guys what their REAL opinions are… ask LA Reid or Clive Davis or Doug Morris what they truly think about artists. Who is more important? Who comes first? The artist you signed yesterday or yourself? The music makers or the executives? We all know what the answer to that is. And we see it playing out with how the Spotify deals are structured. And let’s see some posts about THEIR real estate holdings. I say kick the fat cat executives out of their penthouses. And if you can’t get Jackson Browne or Tom Petty or someone who knows music & is actually worth a damn, then give it to someone who knows how to not run an industry (any industry!) into the toilet. So often I read arguments against change & in favor of the status quo, & that is absolutely the last thing the industry needs.
    We’re in a transitional period & will be for some time. But the tech guys are the only ones trying to make a better way. Some ideas may work, others may not. We’ll have to see. But the one thing that’s certain is if the recorded music industry is left in the hands of the usual suspects, it will continue to shrink until no qualified individual gives enough of a damn about it to resurrect it. There is no upside to the status quo.
    It’s pretty unbelievable how the music industry has positioned itself as the artist-friendly good guys against the evil tech pirates. EVERYONE is just SOOOOOO artist friendly, & everyone is a “music” person & not a tech person or a profit person.
    Yeah right.
    That’s how I see things, anyhow.

    Reply

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