A little girl gets a surprise gift As chance would have it, I was inspired recently to try to start blogging again about eMusic, after a few months during which I was busy with other things and just didn’t feel the urge to expound on things eMusic-related. Appropriately enough, this post is about how eMusic can bring a little excitement back into our relationship.

As a download (as opposed to streaming) subscription service eMusic relies on the fact that a lot of subscribers aren’t necessarily that active in using the service: They don’t use their full download quotas, which raises eMusic’s revenue and profit per track and in essence subsidizes eMusic’s low prices for everyone else. At the extreme end of the spectrum eMusic no doubt has subscribers who (for whatever reason) don’t download anything at all, but just let eMusic continue to bill their credit card. Wouldn’t it be great for eMusic’s business model if everyone did that?

Well, not really, at least in my opinion. If people aren’t getting value from the service then sooner or later they’ll cancel it, and they probably won’t come back. Moreover, they may tell their friends and others that eMusic is a waste of money, helping to negate any positive word of mouth eMusic is getting from other sources. (Recall the maxim that one negative recommendation cancels out a lot of positive ones.) Also, if people aren’t downloading as much as they might then they’re not likely to upgrade to a higher-priced plan, which means eMusic is missing an opportunity to raise their average revenue per user. Thus arguably eMusic has an interest in encouraging casual subscribers to download a reasonable number of tracks per month.

What could eMusic do to help address the problem of people who don’t download very much? Besides the various initiatives eMusic already has to encourage people to try out new music (eMusic Magazine, the eMusic Dozens, and so on), I think eMusic ought to try out the principle of surprise: giving its subscribers a little something they aren’t expecting.

For example, eMusic currently offers a free daily download, to encourage people to try out new music. However the problem with this is that you have to remember every day to download it, and it’s the same track for everyone; in effect the daily download offer is oriented to the relatively small core of dedicated eMusic subscribers who are already downloading a lot and are willing to install the eMusic toolbar and pay attention to what’s displayed by it. Given this, I suspect that the free daily downloads are not used by or appealing to most casual eMusic subscribers.

Here’s an alternative proposal: offer each subscriber a free track at a random interval, with the track chosen by eMusic’s recommendation engine based on the users’ past download history and (if possible) the albums they’ve rated highly. The selected free track could be displayed to the user at the time they login to eMusic, or even just downloaded automatically to their PC when they download something else. (The new download manager could display a page informing the user of their free track, and offering more information about the artist and work.)

In designing such a free track scheme, the following principles are important:

  • The offer must be truly unexpected, with the subscriber unable to predict when they’ll get a free track. In effect this provides an intermittent reinforcement schedule that makes it more likely that the subscriber will come back for more.
  • The offer must be customized to the subscriber, as opposed to being generic. This makes it feel more like a thoughtful gift than a marketing gimmick.
  • The offer must be closely tied to the behavior that eMusic wants to reinforce. For example, if eMusic wants to encourage casual users to do more downloading then the free track should be provided to the subscriber after they elect to download other tracks.

This scheme could be improved in other ways as well. For example, in deciding when to present a free track offer eMusic might take into account how much the user has downloaded recently (e.g., with an offer more likely if the user hasn’t been downloading much), or whether the user has recently upgraded their plan (with the free track serving as a reward for upgrading and encouraging the user to actually use their new plan and not downgrade it for lack of use). eMusic could also give preference to tracks from certain labels and/or artists with which eMusic has special marketing agreements, as long as the tracks otherwise meet the criterion to be of potential interest to the subscriber based on past downloads and ratings.

I can think of other ways for eMusic to pleasantly surprise its subscribers, and also possible drawbacks to such schemes. But in general I think randomly handing out free tracks is a win-win scheme: eMusic subscribers get a nice something extra, and the eMusic marketing folks get a chance to try out operant conditioning techniques in the service of maximising whatever they’re looking to mazimize. It doesn’t involve any fundamental changes in eMusic’s business model or the design of the eMusic site, so for eMusic’s crack IT staff it should just be a simple matter of programming. (Sorry, guys, just kidding!)

mrshl - 2007-02-25 17:22

Man I wish I had access to data on the point you raise: does Emusic really rely on lapsed downloads? To some extent, all subscriber models involve some measure of lapse and underutilization; so there must be some number of users who don’t use all their downloads or use less than their allotment. But I wouldn’t think this number would be great enough to form a reliable and significant profit center. Indeed, I think Emusic’s latest subscription changes were addressing a very different problem: people who use up all their downloads fairly early in the month, but refuse to purchase the more expensive booster packs. The new plans reduced the number of downloads available for each tier (basic, plus, and premium). Obviously, that operated as a simple price increase. But the changes put some additional pressure on medium to high-utilization users. First, users who didn’t have plus or premium accounts were encouraged to upgrade to take advantage of the grandfather clause that allowed users to keep the more generous limits if they upgraded before deadline. Users who had previously been happy with their 65 downloads may have rushed to get the 90 track/month deal before it vanished. This change might actually create more lapsed downloads. It suggests that one of Emusic’s goals might actually have been to increase the number of lapsed downloads. But I think Emusic had a second goal in mind. The new limits put a second kind of pressure on our medium-to-high utilization users, especially subscribers who weren’t able to lock in the more favorable limits. Users who want to download 75 or more tracks must now buy the more expensive booster packs. These packs are now smaller than they were, and they cost about twice as much per download a track purchased via a subscription. I suppose it’s fair to say that Emusic’s recent changes alter their price discrimination scheme to affect both kinds of users: those who lapse and those who use all their downloads every month. As someone who uses all 90 downloads I have, usually in the first week of the month, it’s difficult to imagine that there are a significant number of users who allow their downloads to lapse. But I’d love to the see the numbers. I do like your idea, but I wonder whether it might be foreclosed by licensing difficulties. I’ve written about some other user-retention suggestions for Emusic here: http://mrshl.vox.com/library/post/the-future-of-emusic-what-id-like-to-see.html I like the blog. But I wish you’d update it more often. :)

Frank Hecker - 2007-02-27 05:36

Thanks for the comment! Some quick points: David Pakman has quoted figures that imply that the average eMusic user downloads on the order of 20 tracks per month, or at best half their quota prior to the (US) price plan change. See my links to Pakman’s interviews (which I need to update to reflect more recent articles). Re licensing difficulties in offering free tracks, I didn’t state this explicitly, but my idea was eMusic simply pay labels for any free tracks offered, exactly as they would have been paid if such tracks had been downloaded by users in the regular course of affairs. Thanks for the link to your comments on eMusic; I’ll take a look at them and may address them in a future post. Given my schedule it’s hopeless to try and update the blog every day; however I will try to do a new post at least every week.

mrshl - 2007-02-27 16:01

Thanks for the heads up on the interviews with Pakman. There goes the rest of my morning. I started an Emusic group on Vox: http://emusic.groups.vox.com/ Check in occasionally. I’m going there now to post a link to your site. There’s a ton of good information here for people into the Emusic. Even if you aren’t updating so often, the back catalog is worth checking out.