March 16, 2008 4:15 PM PDT
Indie labels take e-commerce into their own hands
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Merge Records became the latest to join the field with the recent launch of its online emporium, which, according to label president Mac McCaughan, features "high-quality MP3s and full FLAC (free lossless audio codec) files of recent, older and out-of-print titles, including all the early Merge singles, as well as the Superchunk 'Clambakes' series." The store will also eventually host exclusive tracks, remixes and video content, in addition to the label's catalog.
Given the wealth of options available to indies that want to peddle their merchandise online, why would a label want to sink the time and money into developing its own store? Merge wouldn't divulge how much it cost to build its online store, but it did say that most of the expenses were upfront. And whatever profits it makes will go directly to the label and bands, Merge publicist Christina Rentz said. "There is no middleman taking fees, so we are the only ones who benefit."
The ability to promote artists on label download sites is also key. Rentz said that through a "recommended artists" feature on the Merge site--similar to Amazon.com's--the label will promote lesser-known or older artists.
Such sites can also help foster a new ethic of digital-song ownership. After a song is purchased at Seattle label Sub Pop's download store, launched in fall 2007, "you can log on to your account page and download it as many times as you want," director of technology and digital development Dean Hudson said. "We are also able to do things like automatically upgrade songs without any cost to the buyer once the song becomes available at a higher bit rate. And of course, all the songs are (digital-rights-management)-free."
Perks like those aside, driving buyers to a single-label online store can be a challenge, especially if they are used to purchasing all their music from one, multilabel outlet, such as eMusic or iTunes. Def Jux, one of the first indie labels to start a download site, circumvents the problem by making its Web site and Web store one and the same.
Many other labels' digital stores are directly connected to their online physical stores as well, so that users can purchase T-shirts, CDs and MP3s all at once. "We are counting on our mail-order customers being our early adopters," Rentz said. "Our goal is to make it a real one-stop shop."
Most of those one-stop-shop customers aren't trying to replace long-lost discs from their high school years, however. In fact, label representatives say that new releases account for the bulk of their online sales.
"Our highest growth months have always been those with new releases," Def Jux general manager Jesse Ferguson said. "They tend to bring the most new people to the site."
Hudson noted a similar phenomenon: "People do dip into the catalog from time to time," he said. "But in general, the newer stuff sells."
And when the newer stuff does sell, it sells for pretty much the same price it would on iTunes. Merge will sell its tracks for 99 cents each; Def Jux's albums are $9.95 each, and Sub Pop's are $9.90. McCaughan said he chose the price structure for philosophical reasons: "Driving down the price of downloads will devalue the music."
Story Copyright © 2008 Reuters Limited. All rights reserved.
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