eMusic goes eUropean

3 minute read

The big news on the eMusic message boards the past day or so is that eMusic is introducing a European version of its service (currently in “beta”). There’s no press release from eMusic, and no prior communication to eMusic users. (However this move was mentioned in an eMusic submission on the topic of DRM made in January of this year to the All Party Parliamentary Internet Group in the UK.)

The plus for European subscribers to eMusic is that they should now have access to more music: Previously they were prevented from downloading albums in cases where distribution in the US was handled by a label with an agreement with eMusic, but distribution in Europe was done by another label without such an agreement. Now the eMusic UK subsidiary can do its own deals specifically for Europe.

The (major) downside is that prices have increased substantially. Currently the cheapest eMusic plan for new US subscribers is eMusic Basic at $9.99 per month for 40 downloads, for a per-track price of approximately 25 cents per track. The corresponding price for eMusic Europe is €12.99. (Note that this price includes 17.5% Value Added Tax (VAT); this is required because eMusic in Europe is now selling through a UK subsidiary.)

For August 10, 2006 the average interbank exchange rate was 1.28410 dollars per euro. The European eMusic Basic price of €12.99 is thus equivalent to $16.68 per month compared to the US price of $9.99. Even if you remove the effect of VAT the European price is equivalent to $14.20, representing a price increase of over 42%. The table below includes the figures for all monthly eMusic plans (using the exchange rate above):

Plan US price European price European price (excluding VAT) Increase (excluding VAT)
Basic $9.99 €12.99 ($16.68) €11.06 ($14.20) 42%
Plus $14.99 €16.99 ($21.82) €14.46 ($18.57) 24%
Premium $19.99 €20.99 ($26.95) €17.86 ($22.94) 23%

(Booster pack prices have increased as well. At the moment I don’t have exact pricing in euros for booster packs, so I didn’t include them in the table. I’ve also omitted discussion of the annual price plans.)

It’s interesting to note that the Basic price for Europe was set higher relative to the prices for the Plus and Premium plans. On the one hand this might indicate that eMusic Europe is trying more aggressively to get people to sign up to higher-priced plans, which offer relatively better deals. The other (and I think more likely) possibility is that this presages an increase in the US price for the Basic plan; a new US price of $10.99 for the Basic plan would mean that the European price would be 29% higher than the (hypothesized new) US price, which seems more in line with pricing for the other plans.

eMusic is allowing current European subscribers to continue indefinitely at the current US price; this corresponds to €9.14 (including VAT) for the Basic plan vs. €12.99 for new subscribers. Presumably if the US price for the Basic plan increases then current US subscribers would be offered a similar deal.

As to why the European prices were set at the levels they are, on the eMusic message boards CCRGMac hypothesized that “One reason for this may be the weakness of the dollar. The very reason that Europeans have found eMu to be a great bargain, may have become a complete lossmaker in recent years.” There’s something to be said for this: On November 3, 2003 (the date that eMusic was acquired by Dimensional Associates, the current owners) the exchange rate was 1.1451 dollars per euro. Since then the euro has appreciated approximately 12% against the dollar. (Or, to put it another way, the dollar has lost about 10% of its value relative to the euro.) The new European pricing thus “turns the clock back” somewhat to the time when eMusic redid its pricing model after the unlimited download pricing was ended, plus adds a cushion against the risk of future deterioration in the dollar’s value.

(Exchange rate values are courtesy of the FXHistory database of historical exchange rates.)