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Aggregator Deals With Online Music Services
[Editor's Note: In Part One, the author discussed the emergence of content aggregators and began listing the issues to watch out for when contracting with one. Part Two continues that list of the major points of an aggregator agreement.]
Aggregator's Commission. Most aggregators take commissions of 9% to 30%, and assume little, if any, responsibility for marketing or promotion commitments to the independent artists whose content they license. Thus, the aggregators can only distinguish themselves from each other on a few benefits, commission rate being one of the most important. Assuming a wholesale price range of 62-67' paid by an online service to a content aggregator, an independent artist will net between 55.8' to 43.4', to 60.3' to 46.9', depending on the commission rate on a per-track basis.
The economics of content aggregation is a “tonnage” business. Assuming that an aggregator makes about 13 cents per permanent download, the aggregator will have to sell approximately 750,000 downloads for each $100,000 of operating costs in order to break even. Independent artists' share of subscription revenues will likely be negligible.
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