How does Tunecore make money?

September 20, 2008 8:14 PM

Help me understand the business model.

From what I've heard, tunecore sounds like an ideal way to digitally distribute music. However, I feel slightly skeptical about using their services until I understand just how the other side makes their money. From my estimation they probably have minimal costs (or a fixed flat cost) in being able to put songs/albums on these sales channels (iTunes, etc.) and are betting on the idea that they will be able to scale up to provide this low cost (or incremental cost) service to thousands upon thousands of users. Making profit through volume. Is there anything that I'm missing?
posted by dobie (3 comments total)

I joined about a month ago (do not know everything about it). Basically they charged me a fee per song (I will have to double check but I think I paid a total of about $45 dollars for my 10 song CD). I did have a special offer though which saved me abut $15 dollars. I signed up on the Tunecore website and thought about it for a few weeks before taking the plunge, in those two weeks I got a few special deal offers which saved me a few dollars. The other way they make money is annually every year they charge a renewal fee of I think $10 dollars (once again please check the Tunecore website, this is from memory).

I like service in general in life. I buy Apple computers because I like the experience. I am not out to save pennies, I like to get stuff done. I really liked my experience with Tunecore, it was fast and easy. Of course my music is not fully up yet (I chose to have it post to all the different music websites, the most expensive option), so far two weeks later, I have only found my music on Amazon, but that is a delay on the music sites side.

My band (The Roxies) is doing a online release party/show on Sept. 27 so we put that date in as the official release date. I just saw us on the Amazon music site so I know it is working: http://www.amazon.com/gp/product/B001F9ZJ0G/ref=dm_sp_alb?ie=UTF8&qid=1221607729&sr=102-1

Good Luck
posted by Higaininput at 7:54 AM on September 21, 2008


I was on a panel with Jeff Price from Tunecore a few years ago and he was a cool guy so I fired this question off to him to see if they wanted to say something. Peter Wells sent me this and I will now post it:
You hit the nail on the head: we make our money on single, up-front charges kept ridiculously low (we like to say "the price of a pizza and a six pack"). We cut margins tightly to make the service affordable to everyone, and we don't take any back-end (your music makes money, you keep it!) and we don't take your rights or lock you into any kind of exclusivity. The whole point is accessibility and volume. I like to think of us as the FedEx of music distribution. You pay to have your package delivered, and it's cheap and reliable and easy to use, automated wherever possible, painless. We ship it out, and ship back the information (what you sold, how much, where, when, etc.) and the money every time the stores report it. We may only be asking thirty bucks or so (average album comes to about $35 up front), but hey, FedEx was able to build a fleet of hundreds of airplanes and thousands of trucks by charging low for a package.

It's working: more than half a million tracks delivered, more than $12,000,000 cash passed back to the artists, and as Higaininput wrote below, it's easy. The hope is to make it even easier and cheaper, let people put their music into the stores and show them they can have whatever kind of music career they want. We're doing it for video and film now, too, which is fun!

You haven't "missed" anything, except maybe that we're also trying to help artists in all the other ways they need. Sort of like Expedia or Travelocity: you came for one primary service (those guys do airline tickets, we do digital distribution of your music into iTunes, Rhapsody, AmazonMP3, etc.), but hey, do you need a hotel and rental car with that? We offer just about whatever a band could need, from tour support to CD manufacturing/replication/duplication to free information on how copyright and music publishing works, a forum to talk on, lots more.

So far so good. We've grown a lot, even recently moved into new offices here in New York City. Thanks for the mention, and feel free to drop me a line any time: peter@tunecore.com

Thanks!

--Peter
(And my full disclosure: I don't use Tunecore for my stuff as CD Baby has been reliable, though I may give it a shot for whatever my next release might be.)
posted by frenetic at 11:07 AM on September 22, 2008


Thanks frenetic (and Peter!) that was exactly what I was looking for.
posted by dobie at 1:33 PM on September 22, 2008


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