Emusic

Harald Walker wrote me to note that eMusic seems to have changed its past policies regarding how it treats departing subscribers: Maybe something new from eMusic. As far as I know it has been possible in the past to stop the paid subscription for a while and activate it many months later without loosing your account data, which is important if you have to download tracks again (if eMusic still has them) and if you want to keep your lists. . . . ...

Yesterday I happened to read a blog post from Paul Kedrovsky containing some sage advice for companies competing in new markets: “declare victory early and often.” To quote him: Many markets are tippy—they want there to be a market leader—so you can self-servingly help things along by declaring your firm to be the chosen one. It strikes me that that is what eMusic has been trying to do, and with some success. Of course eMusic can’t declare itself to be the overall market leader in digital music—that title being reserved for Apple—but what eMusic has done is to unilaterally declare itself to be “the world’s largest digital retailer of independent music” and (more important) number two behind Apple in the overall digital music market, outpacing Napster, Rhapsody, and the rest. Some interesting points about this strategy: ...

In a comment to his blog post “The strange world of digital music,” Nicholas Carr acknowledges the role that Apple’s proprietary DRM scheme has played in fending off competitors to the iPod, but opines that, “There’s no reason that you couldn’t have a single DRM standard.” Well, yes, and there’s no reason in theory that you couldn’t have a single OS standard. However DRM schemes, like operating systems, are choke points for the respective markets of digital music and IT, and in each case companies are highly motivated to pursue proprietary approaches in the hope that they’ll be the market winners and reap the benefits thereof, including in particular the ability to extract the major portion of the value in that market. Microsoft won that jackpot in IT, and so far Apple has done so in digital music. ...

In the flood of press articles on Microsoft’s recent Zune announcement, I happened to take special note of one that appeared in The Register, titled “The iPod’s Achilles Heel? It’s er. . . Reader’s Digest.” The logic of the article appears to be as follows: Apple doesn’t offer a subscription service for the iPod. eMusic has built a successful digital music business on a subscription model. Microsoft will offer a subscription service for Zune. Therefore Zune will have a competitive advantage against the iPod. Unfortunately the article’s logic breaks down when you look at it closely. Let’s start with the confusion about what the eMusic subscription model actually entails, especially compared to other subscription-based services like Napster To Go. The article refers to eMusic’s “‘Reader’s Digest’ subscription model,” but doesn’t really explain the reference; I’m assuming that the article is using the phrase “‘Reader’s Digest’ subscription model” as shorthand for any model where people pay fixed amounts at set periods for content of some sort (magazines, music, whatever). However an eMusic subscription is very different than a Napster To Go subscription: ...

I’ve been meaning for a while to comment on the Guardian article “A musical tail of hits and misses,” which attempts to address the question of whether the much-discussed “Long Tail” effect actually operates in the real world of digital music services (most notably the iTunes Music Store). Recently David Harrell posted an interesting article “eMusic and the Long Tail” that renewed my interest in this topic and prompted me to get off my rear end and post this. ...

Well, it’s old news to us, but according to Reuters eMusic is officially launching its Europe service; it appears that eMusic is trying to take advantage of the hype around Apple’s announcements today to try to position itself as the dominant iTunes alternative in the minds of the mainstream media. Some interesting new tidbits from the article: EMusic will be the first service to launch in all 25 European Union member nations, going head-to-head with iTunes in big markets such as Germany and Britain and bringing the first legal downloading to smaller ones including Malta and Hungary. . . . ...

Stereophile just published an online article “Naxos: Classical in the Key of MP3” with more information on the MPkey collections from Naxos and eMusic. Along with providing a complete list of the MPkey collections to be released, it has some insight into the marketing strategy behind MPkey: On examining iTunes track lists for Naxos CDs, Naxos discovered that most downloaders buy The Very Best of Mozart and assorted wedding samplers rather than recordings of hardcore repertoire. . . . MPkey’s first 12 titles are thus geared toward the downloading neophyte rather than the classical aficionado. ...

I’ve added a new page to the Swindleeeee!!!!! site, “Pakman speaks,” with links to published interviews and other comments by David Pakman, President and CEO of eMusic. Thanks to Google I unearthed some interesting and lesser known items, including in particular an audio interview with Pakman very soon after he came to eMusic. I’ll keep this updated as new Pakman-related articles get published.

Public comments from David Pakman (President and CEO of eMusic) are always interesting even when he’s repeating his favorite mantras (e.g., about eMusic and Apple being the only two services that can sell music for iPods). Since I often find myself quoting from them, I thought I’d provide links to various of Pakman’s interviews, speeches, and other public comments, both for my own use and as a public service: “Music With No Strings Attached” (Forbes, April 21, 2007). A very interesting and informative interview in the wake of the Amazon rumors (to which Pakman responds “there are no talks right now with any strategic buyer”). Pakman also addresses eMusic’s market niche (“Our differentiation will not be in the format. It’ll be who we serve as customers”), notes that eMusic would be interested in only a portion of EMI’s catalog, downplays the threat of labels leaving eMusic (“We’ve got 13,000 labels on the service. Fewer than five have ever left.”), explains eMusic’s subscription model and the motivation behind the Connoisseur plan (“For us, subscription business optimization is about making sure customers are never always maxing out their plans.”), and even speculates about possible eMusic interest in “long-tail television.” A must-read interview. “Startups eye Apple-EMI pact” (Red Herring, April 2, 2007). Pakman praises EMI’s willingness to license music in DRM-free formats, and looks forward to eMusic doing a deal with EMI. “Gigs & Bytes: eMusic’s Pak Attack” (Pollstar, March 30, 2007). Pakman riffs on the standard topics: the importance of interoperability, the reluctance of major labels to experiment with their back catalogs, and eMusic as a music discovery service. Most notably, he claims the eMusic has plenty of room to grow the business (“We really do believe there are 3 million to 5 million potential eMusic subscribers just today”) and has no near-term plans to sell out to someone else. He also claims that the average eMusic customer spends $14 per month, which combined with a subscriber base of “well north of 250,000” gives a revenue estimate for eMusic of almost $50 million per year. “Apple gets behind the album offer with new format” (Reuters, March 29, 2007). Pakman reacts to Apple’s announcement of the new “Complete My Album” feature of the iTunes Store: “The premise that the album is dead is only true among the youth segment, which is really the iTunes customer.” The article also notes that “over 60 percent of all [eMusic’s] downloads were full-length albums,” although it doesn’t clarify what this actually means. (My best guess is that 60 percent of the tracks downloaded from eMusic were downloaded as part of a complete album download, rather than as individual tracks.) “eMusic CEO: DRM Will Be Dead by 2008” (The Independent, February 23, 2007). Pakman continues on his anti-DRM crusade, claims Steve Jobs was “a bit disingenuous” in his comments on DRM, and pleads that “If we’re still talking about DRM in five years, please take me out and shoot me.” “EXCLUSIVE: eMusic CEO Speaks Out On DRM And Consumer Dissatisfaction” (Hypebot, June 12, 2006). “Music Ally Debate, London: Buzz Of The Indies” (paidcontent.org, July 19, 2006). Summary of Pakman’s comments at the Music Ally event. Interesting tidbits: “Pakman said [eMusic] pays an average $5.62 per customer, per month, back to [independent] labels.” “Pakman quoted 4.5 million downloads per month and a catalog of 1.5 million tracks.” “Making money selling music without DRM: the rise of eMusic” (Ars Technica, May 22, 2006). Many Pakman comments sprinkled throughout an in-depth article on eMusic. “Q&A: eMusic’s David Pakman” (MP3.com, January 27, 2006). Interview by Jim Welte. “Why DRM Everything? A Sensible Approach to Satisfying Customers and Selling More Music in the Digital Age” (Groklaw, December 31, 2005). Article by Pakman. “eMusic’s Pakman: Does he think the iPod is holding back overall music sales?” (BusinessWeek, December 21, 2005). Interview by Peter Burrows. “5 Hypebot Questions with eMusic’s David Pakman on the Sony Rootkit Controversy” (Hypebot, November 23, 2005). “FMC: New Economics in the Music Creation and Distribution Chain” (PaidContent.org, September 12, 2005). Summary of Pakman’s comments at a conference panel discussion. “Streaming Media East 2005 Wrap-Up” (StreamingMedia.com, May 19, 2005). Summary of Pakman’s comments at the Streaming Media East 2005 conference. “eMusic updates it’s business to focus on really promoting independent labels and artists as well as merely selling their tracks” (Inside Digital Media, Inc., September 27, 2004). Audio interview by Phil Leigh, with a lot of interesting information on Pakman’s background prior to joining eMusic. Warning: requires installation of the WebEx Java client.

This is Money, a UK web site by the publisher of the Daily Mail newspaper, recently published an article “The Best Music Download Sites,” in which they rated the iTunes Music Store, Napster, MySpace, SpiralFrog, PlayLouder (a UK-specific service), the online sites for Virgin and HMV, and band and label sites in general. eMusic received the highest rating (5 stars), along with the iTunes Music Store. The article references the new eMusic UK pricing, mentions iPod compatibility (but not the use of the MP3 format and the lack of DRM restrictions), characterizes eMusic as being for “fans of indierock, modern classical and jazz,” and delivers the overall verdict “Excellent site for the true collector.” ...