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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February 19, 2010

Why eMusic is Like Costco
by David Harrell

I've written frequently about the health club component to eMusic's business model. For subscribers, there's the "use it or lose it" aspect--you pay for your downloads each month or quarter, whether or not you actually use them. For labels and artists, subscriber activity directly affects the per-download payout amount they receive. Because eMusic shares a set percentage of its subscriber revenue with labels, subscribers who don't use all of their allotted downloads help boost the subsequent per-track payout amount.

But there's another club comparison that seems appropriate: For music consumers, eMusic is also something of a warehouse club. That is, in exchange for buying in bulk, eMusic offers individual tracks at a per-unit cost that is less than the standard prices at iTunes and Amazon MP3, which range from 79 cents to $1.29 a track. And though the eMusic catalog has expanded in the past year to include content from Sony and the Warner Music Group, as with the warehouse clubs, the total selection is less than that available from standard retailers.

In addition, while the average track price at eMusic is less than the single-track prices at iTunes and Amazon MP3, you can often find better album prices at those digital stores, just as the sale prices at your local supermarket might undercut the warehouse club price. (I missed out on Amazon MP3's one-day special price of $3.99 for the new Spoon release and paid a higher price for it when I used 11 of my eMusic downloads for the album.) There's also the occasional release where eMusic doesn't offer "album pricing" and the required number of downloads results in an eMusic price that exceeds the iTunes or Amazon MP3 price, as well as the cost of the physical version. As is the case with Paul McCartney's Good Evening New York City album, as one eMusic subscriber observes:

2 CD set + DVD costs 13.99 on Amazon, or just downloading the MP3 costs 9.49. My emusic plan is 35 downloads for 15.89...so it costs more to download the tracks here than to buy the actual discs, rip them myself, keep the cd as backup and in addition have the DVD?

This warehouse club comparison is probably something to keep in mind when considering how eMusic competes with iTunes and other digital music stores. Few -- if any -- consumers shop exclusively at warehouse clubs. Though the discount pricing is nice, you'll still need to go other retailers to find specific items. And while an eMusic subscription is a relatively small expenditure, it's also more than some music consumers are willing to spend month in and month out. But for those who regularly purchase digital music, it can make sense to buy some of it in bulk. Rather than convincing these consumers to reject iTunes and the other stores, eMusic needs to make the case for joining the club to receive bulk-rate prices, albeit for a more-limited selection.

related: Sony and eMusic: Why the Per-Track Label Payout Might Not Change, Why Music Subscriptions Are Like Health Clubs, Welcome to the Club

tags: digital music eMusic iTunes Amazon MP3

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THE LAYAWAYS

Out Now -- "Maybe Next Year" -- The New Holiday Album:

"This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

"Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs

O Christmas Tree - free mp3 lyrics and song details
Away In A Manger - free mp3

Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.

"...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

"Their laid-back, '60s era sounds are absolutely delightening." -- 3hive

"...melodic, garage-influenced shoegaze." -- RCRD LBL

Where The Conversation Ends - free mp3
January - free mp3
Keep It To Yourself - free mp3

Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.

"The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

"Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio

Silence - free mp3 lyrics and song details
The Long Night - free mp3

Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

"These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover

Let Me In - free mp3
Ocean Blue - free mp3

Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

More Layaways downloads:

the layaways website