How to make money with Nopcuts
A bit more about Popcuts. I have no idea how they actually do things, so instead of talking about them directly, let’s think about a completely different service called Nopcuts (get it? Not Popcuts? …yeah, I’m not in marketing). Nopcuts sets aside a portion of each song sale to divide evenly among everyone who had already bought a copy, bd / n, where b is the base price of the song, d is the percent that’s set aside for distribution, and n is the number of stakeholders in that track. The total payout to a given user for a song, then, is:
p(b, d, w, t) = bd * (H(t-1) – H(w-1))
where t is the total number of people who have bought the song, w is when they bought, and H(k) is the kth harmonic number. Note that we use H(t-1), because the last buyer doesn’t get paid, and H(w-1), because the given user was once the last buyer. So the question is: given a particular base price, what do d, w, and t have to be before the user actually turns a profit? Here’s a plot for a few d’s (with b fixed at $0.99):
Popcuts actually shows you how much you could expect to make on a song, if it sells a particular amount. Based on those numbers from a handful of new releases, it looks like the Nopcuts model is right on, at least for some songs. The distribution percentage varies widely though; for instance, at the time of writing this, some new releases are distributing 60%, while others are down at only 15%. It looks like the songs under 30% mix things up a bit, as their reported payoffs are much higher than what the Nopcuts model would pay (maybe after a certain number of sales, the distribution percentage goes up? Or maybe early buyers continue to earn a premium over later ones? I dunno, this post is long enough, maybe I’ll try to figure it out later).