Digital Audio Insider -- the economics of music and other digital content

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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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June 05, 2009

More Thoughts on the Changes at eMusic
by David Harrell
eMusic banner

In an e-mail exchange with Frank Hecker, who publishes the eMusic-focused Swindleeeee blog, he noted: "This is obviously a 'bet the company' strategy for eMusic, and it will be interesting to see how it plays out."

I agree -- the addition of the Sony content will no doubt lead to some new subscribers, but I wonder how many of the current ones eMusic will lose. Though -- to be completely cynical -- from eMusic's perspective, perhaps it's better to trade those long-time subscribers (the ones who are using every single one of their allotted downloads) for new ones who pay more for the service, but use it less.

Debcha from Zed Equals Zee pretty much nailed this idea in her comment to this Pampelmoose post:
...from a financial perspective, the perfect eMusic customer is the one who signs up, pays every month, and then never downloads anything (like joining a gym and then never going). The rabid consumers of obscure indie music who max out their downloads every month are, in this context, a liability. Ironically, eMusic wouldn't be in this position of having to choose between casual and rabid consumers if they hadn't done such a good job of attracting and retaining indie music fans.
I'll clarify that comment by adding that eMusic's revenue sharing model is such that eMusic's take remains the same, whether overall usage is 0% or 100%. Subscriber activity, however, affects how eMusic's pays labels. The health club component is there, it's just one step removed -- eMusic relies on it to boost its per-track payout amount.

My other thought here is that while the long-term, active subscribers are obviously upset, a large number of current eMusic subscribers don't use all of their downloads each month. If you routinely let half of your downloads expire each month, will a decrease in your allotment really upset you enough to cancel your subscription?

Long-term, eMusic's success will depend on its ability to significantly expand its subscriber base. To do so, adding content from the other major label groups and previous indie holdouts such as Sub Pop will be key. After July, eMusic will essentially sell digital downloads for 50 cents a track, coupled with the restrictions of an ongoing subscription, where the downloads expire each month or quarter, depending on the plan.

While 50 cents a track is cheaper than the default prices at both the iTunes store and Amazon MP3, the latter store is pushing hard with the $5 album price. In addition to daily album specials from 99 cents to $3.99, Amazon MP3 offers 50 $5 albums each month, a mix of classic albums and trendy newer acts, both indie and major.

Music fans who are seeking bargain major label content will be able to choose between an eMusic catalog that includes older Sony releases, or watch for the specials at Amazon MP3. It's not an either/or choice, of course -- I buy the occasional Amazon MP3 album special but will probably maintain my eMusic subscription. Yet for these potential customers, the relative attractiveness of an eMusic subscription will depend on the depth of the major label portion of its catalog, as compared to what's currently available for $5 or less from Amazon MP3.

One thing still remains in eMusic's favor, however, in any competition with Amazon MP3 for customers -- the ability to use a subscription to cherry pick individual tracks from albums. Amazon MP3 offers similar per-track prices via its $5 album deals, but no such deals for the purchase of individual tracks.

related: Sony and eMusic: Why the Per-Track Label Payout Might Not Change, eMusic's Per-Song Payout for Q1 2009, More On eMusic Payouts, Why Music Subscriptions Are Like Health Clubs, Treatment of Longer Songs by eMusic


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