Why the change? Simply put: membership today accounts for 74% of our revenue. Over the past two years our album download sales have declined while the unlimited downloads memberships have grown.
The two graphs below spell out a clear message from our customers:
- We don't want to buy your downloadable albums one at a time, we want unlimited access. And we're willing to pay.
here is the same data, this time charting each as a percentage of total revenue:
You can see that download revenue has decreased in both relative and absolute terms. In contrast, revenue from memberships has grown 80% in the past year alone. I don't know of any other long-lived Internet music services that are experiencing our kind of revenue growth.
We've also simplified our product offerings:
- Our CD manufacturer has become very unreliable (presumably because of financial problems) and so we've decided to stop selling CDs. They accounted for 4% of our revenue and were also declining. Most people who want CDs simply download the WAV files from us and burn their own.
- Streaming memberships are no longer being sold. The download membership, even though it was twice as expensive as the streaming membership, was chosen by 92% of our customers. People who already have a streaming membership can continue with it, but we won't be offering it to new members.
- We have decided to stop selling single-album downloads completely
- Download memberships are now a simple $15/month, and cheaper still if you choose to prepay more more than 3 months. $15.08 was the average of all the "pay what you want" download members, and the price seemed more than fair, so we choose to simplify and go with a flat $15/month.
Some things that are not changing:
- We're still not evil: we have always paid 50% of membership fees to our musicians, been DRM free, and used Creative Commons licensing. All that stays the same.
- We will continue selling commercial use licenses of our music, though in a few months we will be moving that business to a new music-licensing web site we're building (iLicenseMusic.com).