Revenue Split of an iTunes Album

Below is an interesting chart I found on Neue Züricher Zeitung (NZZ - a leading Swiss national newspaper) on how revenues of an  iTunes album are split. 

NZZ researched a 17 Swiss Francs (sFR) download album. The title "Krümel für den Künstler" translates as "crumbs for the artist".

Here are the figures translated and in %:

Artist SFr. 1,30 8%
Management SFr. 1,50 9%
iTunes SFr. 9,50 56%
Label/Producer/Distributor SFr. 4,70 28%

SFr. 17,00

Short Commentary:
  • I was shocked when I saw these numbers. The artist only makes 8%. Compared to 30% fee of any app dollar that is made on the iOS Store, Apple takes 56%
  • Label/Producer/Distributor would have to be specified. My guess is that the producer will get something between 2-3%. But check some more insights here: "Lessons from the music industry"
  • Nobody remembers download services like Pressplay, Real, etc. anymore. Apple has a clear monopoly in the download sector which is currently being cannibalized by celestial jukebox streaming services like Rdio and Spotify. But as we already all know Apple is working on a music streaming service too. This space is really getting crowded with YouTube, Nokia, Sony, Samsung soon launching their own service. 


Oishii Karlsruhe - a new sushi business model

Sushi circle restaurants owners shiver everytime I enter their restaurant for the second or n time. That is because on "all you can eat days" nothing is left over. Especially, when I go there with another sushi aficionado, we almost abuse the right to order a la carte - Sashimi in particular, which does not stuff your stomach as much as normal sushi does.

Yesterday, I went to a new place called "Oishii Karlsruhe" - an "all you can eat sushi restaurant in Karlsruhe. Since there are not many good restaurants in Karlsruhe let alone Asian restaurants - this one caught my attention.

And since this blog is about innovation, I thought their business model is worthwhile discussing shortly. Disclaimer: I am not a restaurant expert, and the following thoughts are really a quick&dirty analysis.

Here is how it goes:

  • You sit at a table, equipped with an iPad + an app that serves as a mobile-order machine. 
  • You pay 22.90 Euro in total, excluding beverages. So you will end up at about 30 Euros. 
  • You are are allowed to order 10 times x 5 dishes / 10 minutes. Each dish has one piece of sushi, e.g. Nigiri etc. 
  • Each order can be made any time, but once an order is transmitted, you need to wait 10 minutes until the next order. In theory if you make use of 10 rounds, you sit there for 100 minutes continually eating.
  • Lets say, you are 4 people. This allows you to order 20 pieces max per round  of order and you need to wait 10 minutes to order the next 20 pieces. 
  • There is no price differentiation between sushi pieces. So an Amaebi, or Unagi will be the same price as a Tamago or a green tea ice cream. What matters is the number of units per order which is limited to 5 dishes per order per person.
  • So you could potentially end up eating 50 dishes of sushi for a price of 22.9 Euro
  • There is a penalty involved in case you do not finish ordered dishes. 

Pro/Cons for the user
  • Some customers prefer eating less than 22.9 Euro. However, even sushi circle restaurants a la carte will soon hit 23 Euros unless you just want to go for a mini-snack for lunch. So 22.9. Euros is quite deal. And if you order entire menus a la carte, they often actually start at 20 Euros for a decent meal.
  • You enjoy the freedom of choosing without calculating the effect of a sushi dish (grey??) on your maximum "meal-budget"  
  • You can order a la carte and do not have to stare at the circling sushi dishes giving your friend full attention.
  • You do not have to push the cook who is usually busy as hell with a begging expression on your hungry face for an a la carte order ("Can I have some salmon sashimi please"? "really, you already had 3"!)
 Pro/Cons for the restaurant
  • The place was full and I could only see a few tables being empty. Enormously high table fill rate.
  • People on average will not order more than 5 rounds which affects the the table turnover. I guess it will be quite predictable and have the shape of a normal curve with something like 1.5 hours in the middle scewing to 2 hours to the right and 1 hour to the left. 
  • Same goes for average revenue per customer which will range between [ 26 to 30] including beverages. 
  • I guess one could sum it up by concluding: high predictability regarding ARPU (average revenues per user) and table turnover. 
  • What I would be worried about is material cost. Sushi is expensive. To do the analysis, one would have to look at the distribution of ordered sushi (stuff like amebi, unagi is really expensive)
  • However as long as the number of restaurant visitors remains stable you have a good prediction of total revenues, thus can optimize profitability in a quite controlled manner. 

  • Great advantage for the user who love to eat a lot of sushi at a fixed budget
  • Therefore high fill rate, predictable table turnover rate and therefore stable total revenues
  • Profitability to be optimized in purchase and production costs. The portfolio can be optimized upon that (for instance taking away super expensive sushi won't hurt the majority, maybe sushi freaks like me)
  • Overall great idea which proves that innovation nowadays is about business model innovation.