My gut feeling then was that the future of artist-fan relationships was in a personal subscription model. As part of my research, I joined Take This Oath, the Killswitch Engage fan club. There was no way to preview the content of the fan club site, but for $30/year I got a “free” tshirt and access to exclusive content. I was pretty disappointed to find 2 videos (not even all their videos available on their own main band site) and one blog post.

Recently, we have seen several new instances of labels letting Apple innovate for them, both in the space of artist subscriptions.

First was the self-release of the Presidents of the United States of America discography as an iphone app for $3.75CDN.

On the good side is the idea that The Presidents can send blog updates, exclusive content, concert dates, etc to their fans.

On the terrible side is the fact that you can only access the music on your iphone and only via that application! Nope, can’t get those tunes in iTunes. Add to that you can only stream the music, and we have a loser on your hands (especially if you are Canadian and don’t get all-you-can-eat data for your iPhone).

Even more recently is the launch of iTunes Pass. Basically, this a super-fancy podcast behind a transaction. Again, I think the idea of subscribing to a band is an excellent one, but this feels a bit too little, too late. Currently, there is only band, Depeche Mode (egads) offering this service, with surely more to follow if this does anything other than tank.

If I was still in a band, this is what I would do:

• Hire a very outgoing, super-fan friend to be your manager.
• Setup a decent, non-Flash site
• Sell fan club memberships for $10 per year
• Put everything ever recorded, shot on video or photo on the site
• In the case of KSE present a genealogy of all the bands the members have ever played in, post all media you have of these bands and links to their fan club sites
• Encourage fans at every show to upload their pictures and video to the fan site
• Have monthly contests for best fan media (club members only)
• Have a video contest where the winner becomes your documentarian for the next tour (club members only)
• Have that guy post a video once per day
• Use fan club data and tools like Demand to find out where you should tour
• Release a whole album of songs LAST.  Record one song every month or so, crowd-source feedback, post tracks to mix, post in-studio video.
• Pick the best 8 tracks, get them mixed by a pro and release in all formats.
• Package it with a cut DVD of all the stuff from the last year
• Make the regular content available via podcast
• Put the regular content on YouTube
• Don’t make a recording deal with a major
• If the major is LiveNation, disregard the last bullet and make a deal

After Googling this question a couple times, I thought I would make it easier to find the answer. The answer is yes, but not all songs. You can tell by the words “iTunes Plus” above the buy now button.

I found it particularly interesting that there was a button on the iTunes store homepage prompting me to “upgrade” to iTunes Plus. When I clicked it I was given the generous opportunity to buy the tracks AGAIN for a seemingly random price. For instance, I could upgrade the 12 tracks on A Perfect Circle’s Mer de Noms for $3.56, the 12 tracks on Audioslave’s Out of Exile for $3.00, and the 13 tracks on Matthew Good’s Avalanche for $2.40. At first, I assumed this was the new variable pricing model, but each track on each album was listed for $0.99 cents. So go figure.

I love the idea of DRM-free music. I just bought Mudvayne’s new album aptly titled The New Game, the first from iTunes since buying a vehicle with an MP3 player. However, it annoys me that I have to pay again to get the DRM taken off my existing purchases. Yes, I can strip the DRM myself, but that is a pain compared to just swiping the album via bittorrent.

Fast-forward to tonight’s news. Rumour has it that the Apple is pitching the labels on a flat license that allows owners of the iPhone free iTunes downloads. The plan is dubbed “All You Can Eat”.

Sounds great at first: lots of choice for consumers, simple process to get music, labels get paid and artists get paid (even more these days).

And maybe it will be.

My main concern is the question of who controls the catalogue? Apple could buy the major labels and use them as a loss leader to sell iPods and iPhones, so payola is out of the question.  They may threaten to withhold catalogues, but that probably won’t work either.  Hopefully, they won’t figure out how to game the iTunes system.  Nude pictures of Steve-o?

My first reaction was that this was going to be a real crap deal for independent artists and labels. If you are on iTunes, great. Not on iTunes? You’ve got a problem.

For years, the labels have been competing with free. Why pay for a CD or download when you can fill your iPod with hot tunes for $0.00? (plus broadband charges – but that’s another story)

So now anyone not on iTunes is competing with free. (plus iPhone and data charges)

If this works out, then the next logical step is for the big ISPs to offer similar offers. Get Roadrunner and get free iTunes downloads! Get Rogers and get…. nevermind. I’ll save that rant for another post.

Someone wants this to fail.

I was curious about the quality, pricing and experience, so I bought an episode of The Dragon’s Den. The specifications are 500MB, 45m, 640×320, 1.5Mbps (approximately).

Anyone with any experience with DIVX would expect the quality to be fantastic, but they would be wrong. I suspect the video was encoded in a single-pass instead of a two-pass, because the compression artifacts were quite apparent. Top marks for the oft-overlooked audio quality, however.

So after being somewhat under-whelmed by the video quality (and quite enjoying the show), my first reaction was that I would buy the next episode.

Then I got to thinking.

$1.99 for one episode? Or $19.90 for the 10-episode season? What a deal.

Let’s break this down.

Let’s say there was enough tolerable content on Canadian iTunes to justify watching one episode of one show per day (not even close, but bear with me).

That would cost about $60 per month, plus my Internet service.

Many of these are shows that can be captured at better quality with rabbit ears – for free (but not for long 1 and 2).

How much does it cost to deliver this content?

Taking Dragon’s Den as an example (a 45 minute programme).

Let’s say they are using Amazon S3 for storage and distribution.

Amazon charges $0.15/GB of storage and $0.20/GB for data transfer.

Therefore the cost of digitally distributing Dragon’s Den is about 17.5 cents, plus the time/cost to encode the video.

How about a 21-minute Comedy Central stand-up bit? About 8.5 cents.

Now, let’s assume (because data for video is not readily available) that the pricing model is similar to music tracks.

Needham’s Charles Wolf claims that,

“on a 99 cent single, Apple pays about $0.65.”"Apple incurs three variable expenses in delivering songs. One is the cost of servers. A second expense is bandwidth,” he says.

“The third major expense for Apple is credit card charges. Credit card companies charge 25 cents for each transaction plus 2-3 per cent of the amount charged.”

No doubt that the banks are bigger pricks than Apple, but if the video system works like a podcast, the broadcaster hosts the video and pays for delivery. Either way, the cost should be similar.

$0.25 (cc) + $0.06 (cc%) + $0.17 (storage & delivery) + $0.60 (Apple’s Cut)= $1.08

That makes CBC’s cut on an episode of Dragon’s Den $0.91.

So they make about a buck per episode. Nice margins.

If you buy the season:

$0.25 (cc) + $0.60 (cc%) + $1.70 (storage & delivery) + $5.97 (Apple’s Cut) = $8.52

That’s a sweet $11.38 for 10 episodes of Dragon’s Den. That’s free money!!! No DVD, no artwork, no shrink-wrap, no truck, no gas, driver, no warehouse dude, etc…

And the media industry wonders why people steal.

Maybe Apple is screwing the broadcasters, maybe the broadcasters are trying to screw me, but no matter how you slice it, I am not paying through the nose for low-quality shows.

I guess we’re just not there yet.