Naxos MPkey: CD on the outside, eMusic on the inside?

2 minute read

Courtesy of Google News I found an interesting story in the Wall Street Journal apparently about a new Naxos initiative in partnership with eMusic. It’s behind the subscriber wall and (as a non-subscriber) I couldn’t see the full text, but I managed to get the following tidbit:

On Tuesday, classical label Naxos will unveil a dozen new albums in a line it's calling MPkey. The albums are packaged in CD-sized boxes and will be placed on store shelves at Borders. Inside each box, however, customers will find not a CD but a card with an access code and a booklet of instructions for downloading the album from eMusic, ...

Maybe someone with a WSJ subscription can tell us more, including details on pricing in particular. Otherwise we’ll have to wait til Tuesday to find out the full story. However there are a couple of points worth noting:

First, as the beginning of the article notes, this product offering is clearly aimed at people (Luddites as the story would have it) who are not yet comfortable with signing up to and using an online music service; hence the instruction booklet to walk them through the process. However this is not necessarily a simple task. It’s possible that the intent is just to download individual tracks (or perhaps the whole album as one track) through the web browser and play them in the default media player software (e.g., Windows Media Player). This might be sufficient, given that Luddites are presumably not likely to have iPods that they have to worry about transferring the tracks to.

Second, this will be an interesting test case in music pricing. Naxos has been an innovator in value pricing of music, with Naxos CDs selling well under $10 for a traditional single-CD album. On Amazon most Naxos CDs sell for $8.99, with some as low as $6.98. A typical 10-track Naxos album on eMusic sells for $2.50 or less (25 cents per track on the Basic plan), while on other digital music services like MSN Music complete Naxos albums sell for $4.95. Although in this case there’s the retailer’s margin and the physical cost of goods to be accounted for, it’s quite possible that Naxos MPKey products could be priced under $5, for example at $4.99 or even as low as $3.99 if Naxos is particularly aggressive (which I wouldn’t quite rule out). At those prices the albums will be potential impulse purchases for someone to pick up at Borders’s checkout counter.

Whatever the final story turns out to be, this is a great example of outside the box thinking by Naxos and eMusic, and definitely shows why both companies are increasing market share in their respective markets and countering the doom and gloom stories of the major labels.

UPDATE: As outlined in the Naxos press release, the product offering is basically X hours of music at a set price (3 hours for $14.99 or 6 hours for $19.99). If we assume a CD is roughly an hour of music then this corresponds to either $5 per CD for the lower priced sets or $3.33 a CD for the $19.99 sets. Thus my intuition was correct in terms of the per CD price point Naxos was aiming for (vs. their standard $8.99 CD pricing), though I didn’t anticipate the particular form the products would take.