I’m a long-time listener to new music, have several years of experience in the open source trenches (mainly on the policy and governance side), and have an interest in new organization forms and business models. Thus I couldn’t help but be interested when I learned of Subvert, a new organization that’s seeking to create a Bandcamp-like service organized as a cooperative venture. It’s a venture you can join as a regular supporter (not just as a musician or label), and I did exactly that, contributing $100 to become supporter #1,000.

Subvert was born out of immediate frustration with Bandcamp’s journey from indie darling to corporate concern, but also out of a long-term vision of how the structure of the music business could change:

Imagine a music marketplace where the community owns the code, controls the decisions, and shares in its success.

Subvert is a Bandcamp successor that is collectively owned, stewarded, and controlled by its community, with 100% of its founding ownership reserved for its artists, community, and workers. We’re building a platform that has artists’ interests, collective ownership, and democratic governance hardwired in its very DNA.¹

In pursuit of that goal the Subvert organizers have produced a 134-page document that lays out a business and governance model for Subvert.². The core idea is to create a two-part organization: a cooperative entity (jointly owned by workers, artists, labels, and supporters) to develop and operate the service and a cooperative-owned corporation to own the intangible properties (trademarks, source code and other copyrights, etc.) and attract investors.³

It’s clear that a lot of thought went into this plan, and it’s well worth reading in full. For those with less time or interest there’s also a general information and FAQ page that hits the high points. I’m not going to rehash those documents, but I did want to add some comments of my own.

First, the Subvert proposal and the broader vision behind it share an unspoken assumption that capitalism in some form or other is here to stay—that it’s as nonsensical to speak of “late capitalism” as it is to speak of “late agriculture.” The task is rather to try to find new ways of organizing businesses that mitigate the worst aspects of present-day capitalism. Doing so requires “applying . . . audacious thinking to the systems at the foundation of our economy” and fighting against “hardened cynicism, a belief that meaningful systemic change is unattainable or that individual interests are irreconcilable with beneficial collective outcomes.”⁴

Why would creating a “collectively owned Bandcamp successor” be a good first step in doing this? As the plan outlines, Bandcamp has a proven business model, a model that should be replicable as the basis for a financially-sustainable cooperative. Bandcamp and similar businesses are also in a favorable spot for “subverting” the existing corporate paradigm: they are not highly capital-intensive or technologically complex, and they have relatively weak network effects.⁵ (For example, since Bandcamp sells music in DRM-free formats, people can easily switch to buying music from another service.)

In the longer term (the next 50 years) Subvert seeks to replicate the success of the Mondragon network of cooperative ventures in Spain.⁶ Just as the Mondragon network started out as a single employee-owned business and later expanded into other ventures, so Subvert could serve as the “pioneer species” for a new ecosystem of cooperatives supporting musicians and the music industry.⁷

The Subvert plan takes note of many of the ills of the present-day music business and capitalism in general, including economic inequality resulting from traditional corporate models: “Ownership confers wealth, and the concentration of ownership creates wealth inequality.”⁸ But one factor it does not mention, and which the plan could help mitigate, is inequality among artists themselves. If the experience of artists on Subvert is anything like that of artists on Patreon, artists’ earnings from the platform will be extremely skewed, with the top artists making multiple orders of magnitude as much as less popular ones.⁹ This skewed distribution is likely something Subvert has no influence over, emerging naturally from the fact that the popularity of an artist is due to the multiplicative interaction of several relatively independent factors.¹⁰

However, the proposed structure of Subvert could help ensure that the most popular artists—those who therefore generate the most revenue for Subvert—do not exercise undue influence over the platform: The “one person, one vote” scheme for electing the Board of Directors and making strategic decisions gives less popular artists more influence, since they will form a larger proportion of Subvert’s user base. Other channels for providing feedback to the Subvert board and management also give less popular artists an opportunity to “punch above their weight” by making compelling arguments in favor of their positions and recruiting others in the Subvert community to support them,

Finally, the Platform Shares scheme could be used to compensate less popular artists somewhat more compared to the most popular ones, since there is no inherent reason why Platform Shares for artists need to be granted in strict proportion to their sales. In effect, Platform Shares could be used as a form of redistribution from the most popular artists to less popular artists, helping to build loyalty to the Subvert platform among the mass of less popular artists and strengthening their position as full members of the Subvert community.

In this and other ways Subvert has great potential to spark a change in the music business, and possibly more changes beyond it. It has a well-thought-out plan, and seems to be making a good start on attracting support. If you’re a musician or other artist, you should definitely check it out. If you’re not, but can afford a Subvert membership, I strongly recommend you consider joining as a supporter.

[This post was originally published on Cohost.]

I recently contributed to a (ultimately successful) Kickstarter campaign for a new music service, Mirlo. I’ve also been reading off and on articles on the furialog blog, written by Glenn McDonald, who used to work at Spotify before he was laid off, and who (among other things) created the Every Noise at Once site mapping musical genres. McDonald’s latest post, “10 aspirational rules for the moral operation of a music service,” is particularly relevant to Mirlo and other would-be alternatives to Bandcamp, Spotify, etc.

You can read the full list yourself, but I was particularly struck by #3, “The feature goal is to connect individuals to communities. Music is a social energy.” This echoes things the folks in 65daysofstatic have been saying to the effect that music is always and everywhere a community phenomenon, in contrast to the view of music as “content” that LLMs can generate as well or better than people. It also reminds me of McDonald’s own comments that “[musical] genres are communities” that cannot be adequately captured by machine learning algorithms looking at sonic similarities.

McDonald has a book coming out later this month, You Have Not Yet Heard Your Favourite Song: How Streaming Changes Music. It looks interesting; I’ve preordered it.

[This post and its associated comments were originally published on Cohost.]

I’m not sure whether I’ll make a habit of writing posts like this. But after importing Megan Carnes’s discography into Apple Music and seeing who came next in alphabetical order in my music collection, I got the urge to once again listen to one of the most important groups of the 1980s post-punk British music scene, Mekons.

Mekons have at least two essential records. In the first, Fear and Whiskey (released in 1985), they had the brilliant idea of combining country music with 1980s leftist post-punk. Along with Meat Puppets II (released the previous year), it’s often credited with creating the genre of alt-country.

But Mekons were (and are) much more than an alt-country band. Their genius was taking the Christian idea behind much country music, that we are all sinners living in a fallen world, and recasting it in a Marxist context, in which the original sin was the creation of capitalism. Fear and Whiskey is haunted by the failure of the 1984 coal miners’ strike (see, for example, “Darkness and Doubt”), while The Mekons Rock ’n Roll (released in 1989, and more rock than country, as the name implies) looks upon Thatcherism and Reaganism triumphant. (“Empire of the Senseless” in particular namechecks Iran-Contra and Section 28—and takes its title from Kathy Acker’s 1988 experimental novel.)

Mekons are still going strong, almost 40 years later, and have lots of albums on Bandcamp. Give one or both of these a listen, and let me know what you think!

M. Campbell (@voidmoth) - 2024-04-09 18:01

such a cool band

Frank Hecker (@hecker) - 2024-04-09 19:19

And to think, they were only one of the great bands that came out of the University of Leeds in the 1970s. (I think I’ll post about another one in the coming days.) Thanks for commenting!

[This post and its associated comments were originally published on Cohost.]

I had uninterrupted time this afternoon to sit down and watch the BD of the 2020 film Last and First Men. If you like

• the science fiction of Olaf Stapledon
• the music of Jóhann Jóhannsson (who also directed)
• the voice of Tilda Swinton
• brutalist architecture
• stately black-and-white cinematography on 16mm film stock

then I think you’ll agree with me that this film is pretty darned great.

Lucas Moura (@DrTeflon) - 2024-01-21 16:22

This movie is SO FREAKING GREAT

Frank Hecker (@hecker) - 2024-01-21 17:57

Isn’t it though?!

Mightfo (@Mightfo) - 2024-01-27 11:48

Ill check this out! Also, thanks for sharing the poetry as always!

Frank Hecker (@hecker) - 2024-01-28 18:00

You’re quite welcome! I’m glad you’re enjoying the Sunday night poetry series; it’s great fun to research and write.

[This post and its associated comments were originally published on Cohost.]

The past few days I’ve been going back and relistening to some of the early minimalist pieces I used to love. A lot of these are available on Bandcamp, so I thought I’d highlight some of my favorites here in case there’s ever a Bandcamp Friday again and you’d like to pick one or two of these up.

A word of advice: some of these pieces are very minimal, and if you’re not familiar with this style of music you might find yourself bored or annoyed or both. One of the keys to appreciating them is listening for the subtle changes and shifts that occur over the course of a piece. I find it helps to listen to them using headphones or ear buds, and to walk while you listen (I’m doing this every morning now); the slowly changing landscape matches the slowly changing music.

Also: the “low Kolmogorov complexity” thing is sort of a joke but also not: several of these pieces can be specified by a page or two of sheet music plus a few additional instructions describing how to repeat and vary the musical phrases.

So without further ado, some recommendations:

I’ll start with Philip Glass, probably the most famous of the “minimalists” as far as the general public is concerned, though by his own admission he hasn’t been a minimalist in the strict sense since 1974, when he completed Music in Twelve Parts (below).

Cluster Ensemble Plays Philip Glass. This includes five early Glass pieces from 1969 and 1970, which build from the extreme simplicity of Two Pages to the longer and more varied Music with Changing Parts.

Philip Glass: Music in Twelve Parts. This piece is from the early 1970s, and builds on the earlier pieces, in particular by introducing vocal lines using solfège (i.e., “do-re-mi” syllables.) This recording is from 1993; Bandcamp also has a more recent recording of Music in Twelve Parts from 2007, but I haven’t listened to it and can’t offer a comparison.

Next is Steve Reich, typically spoken of in the same breath as Glass; they were born only a few months apart, and Reich’s Piano Phase (below) influenced Glass’s turn to minimalism.

Piano Phase (Spotify link). Unfortunately Bandcamp doesn’t have any good recordings of this 1967 Reich piece, which features two identical piano lines going in and out of phase to interesting effect.

Music for 18 Musicians. One of the best-known recordings of this classic 1978 Reich piece, played by the Steve Reich Ensemble. Unfortunately, Bandcamp doesn’t have the version that I think is the very best, the original 1978 recording by the Steve Reich Ensemble (Spotify link).

Terry Riley and La Monte Young complete the list of the best-known minimalist composers, both born a couple of years before Reich and Glass. (And I should pause here to note what a blessing it is that all four are still alive.)

In C. Riley’s most famous piece (composed in 1964), here in a recording by the group Bang on a Can. There are a number of other recordings of this on Bandcamp, but I haven’t listened to them. The piece admits a fair bit of freedom of interpretation and instrumentation, so different versions can sound very different. I therefore encourage you to also check out the other ones.

A Rainbow in Curved Air (Spotify link). Another of Riley’s best-known pieces, here performed by Riley himself.

The Well​-​Tuned Piano in the Magenta Lights. This is a very long, slow, and contemplative piece, over six hours in length. Like Riley, La Monte Young was another notable early minimalist who predated Reich and Glass. Among other things, he’s known for having influenced John Cale of the Velvet Underground.

Now we come to some lesser known minimalist composers, one of whom (Dennis Johnson) has been claimed as the first person to pioneer the style.

An Hour for Piano. Exactly what it says on the tin: R. Andrew Lee’s performance of this 1971 Tom Johnson piece clocks in at 60 minutes to the very second. Bandcamp also has performances of this piece by Nicolas Horvath and Kai Schumacher. My introduction to the piece was the original 1974 recording (not on Bandcamp) by the composer Frederic Rzewski; at less than 55 minutes it runs a bit short but I think benefits from the slightly faster tempo.

November. This very early minimalist piece by Dennis Johnson (no relation to Tom Johnson) was composed in 1959, recorded in partial form in 1962 on cassette tape, then reconstructed over forty years later by the composer Kyle Gann. It is very contemplative and very long: over four hours in total in this recording. As with An Hour for Piano, a recording of November by Nicolas Horvath is also available on Bandcamp; it’s over seven hours in length.

Schlingen-Blängen (Spotify link). To finish off this post I thought I’d give you a break from piano music. This is a 1999 one-hour-plus organ drone piece by Charlemagne Palestine.

If you’re interested in more minimal music available on Bandcamp, see their “Masterpieces of Minimalism” article from last year, which includes several of the releases I mentioned above, and more besides. Enjoy!

Voyage (@Goyavoyage) - 2023-10-20 20:34

As a person who does math stuff that sometimes involves Kolmogorov complexity for a living, I was kind of mindblown - I did not expect to find these words here, just like that. That’s a really good title :’D

Thank you for the recommendations - I only know a little of Philip Glass’ works among all this, I think - but this makes me want to dig into more of these!

Frank Hecker (@hecker) - 2023-10-20 21:07

Thanks for stopping by to comment! You see, the thing I love about cohost is that I can title a post like this and be confident that a goodly fraction of the people who follow me will get the reference. But… I could kick myself for not putting it in a tag.

Everyone does it, and I will too: Some quick year-end thoughts on things I read, watched, or listened to this year, and liked well enough to write about them here. Where appropriate I’ve included links to the official source material. (I avoid scanlation sites because as a practical matter I want to encourage publishers to translate more works into English and distribute them as widely as possible.)

I don’t do rank ordering or numerical scores, these are just in semi-random order, starting with my top 5 yuri manga:

• Yuri Is My Job! (10 volumes in English, ongoing). This started out as a parody of class S tropes as filtered through Maria Watches Over Us, but has become deeper and more interesting over time, both as a story and as metatextual commentary on the yuri genre. It will be interesting to see whether the upcoming anime adaptation does it justice.
• How Do We Relationship? (7 volumes, ongoing). Unlike many yuri works, this manga doesn’t end when the main couple gets together; in fact that’s just the starting point, and now the main couple isn’t even a couple any more.
• Even Though We’re Adults (5 volumes, ongoing). The most adult yuri manga around, not in the “adult video” sense, but in the “adults having problems only adults have, and working through them as adults” sense. This is Takako Shimura’s best work published in English thus far.
• I Can’t Believe I Slept with You (3 volumes, complete). Another work which considerably transcends its (somewhat dubious) premise.
• She, Her Camera, and Her Seasons (5 volumes, complete). One of the better depictions of a love triangle around, and one which avoids a pat resolution. It also deftly uses photography as a running theme: taking photos is so central to two of the main characters’ lives that they do it even in—really, especially in—their most intimate and vulnerable moments.

Other non-manga yuri works worthy of note:

• Otherside Picnic light novel (7 volumes, ongoing). What really sells this work is the narration by and interior monologue of Sorawo, one of the two protagonists. I watched one episode of the anime, which was unexceptional, and am skipping the manga.
• Yurizen! Salon—Shirayuri’s Comforting Food Therapy super-light novel (23 volumes, complete). This is another entry in the genre of yuri works involving food, here made more interesting by featuring traditional Chinese medicinal recipes.
• GAP: The Series live-action TV series (6 episodes, ongoing). This Thai production features a rather clichéd trope—romance between an overbearing and emotionally cold boss and her younger naïve but spunky subordinate—but it’s more than redeemed by the incredible chemistry between the two co-stars. I wrote about this one as an example of the growing creation of yuri/GL works outside Japan. (There are several more upcoming yuri live-action series from Thailand, although Thai GL works are still far outnumbered by Thai BL works.)
• She Makes My Heart Flutter live-action web series (5 episodes, complete). This Korean work is a sweet “love comes late” story, featuring two generations of lesbians and their different perspectives.

Finally, some other things I enjoyed this year:

• Anime: I watched all episodes of well over a dozen series this year. These were my top 5, in no particular order: Mobile Suit Gundam: The Witch from Mercury, Akiba Maid War, Birdie Wing, Kaguya-sama: Love Is War, and My Dress-Up Darling.
• Film: Everything Everywhere All At Once. Unlike some, I didn’t think this was a masterpiece, but I enjoyed it well enough, and it’s good to see Michelle Yeoh get more recognition.
• Music: This was the year of DJ Sabrina the Teenage DJ. According to Spotify I listened to over 125 hours of DJ Sabrina tracks (including over 80 replays of “Lose Myself”), and I probably listened to that much or more on the Apple Music app after I bought all her albums on Bandcamp.
• Books: Almost all of my reading was done as research for my book. Other than that I don’t think I read an entire book “for fun” all year, which is rather unusual for me. However I’ve started reading poetry in earnest again; right now I’m halfway through H.D.’s Selected Poems.

Finally, while (unlike some) I won’t do a “worst of 2022” list, I did want to mention two works that I found disappointing, and for which my opinion is somewhat of a minority one:

• I’m in Love with the Villainess light novel. If this series had ended with volume 3, I would have been perfectly happy (well, except for the stupid and unnecessary incest subplot). The last two volumes felt like the author was writing to satisfy the expectations of fans and the publisher for more material. I thought the conclusion of volume 5 in particular was an ass-pull that for me at least strained my suspension of disbelief to the breaking point.
• Spy x Family anime. There’s nothing inherently bad about this series, but I found myself continually putting off watching the latest episode, until finally I dropped it.

Thanks for reading, and here’s wishing you a Happy New Year!

Yesterday I ran across a post (chost?) talking about the indie pop band Wild Pink. They sounded intriguing, so I tried out one of their albums on Bandcamp (Yolk in the Fur), loved it, and bought it. And then I went to recall who posted about Wild Pink, so I could thank them for the recommendation, and for the live of me could not remember who it was. I even looked back through all the posts appearing on my feed in an attempt to track it down, with no luck. Tried searching the “Wild Pink’ on the site, again no luck—apparently whoever posted the reference didn’t include a tag.

A few comments:

First, if you are reading this and are the person who posted about Wild Pink, thank you! You helped me find a new band that I enjoy listening to.

Second, it would be great if the cohost search function searched for words inside posts. In the meantime, cohost peeps, please be generous in your tagging practices! It’s the best way for other people to discover what you write.

Finally, this reinforces once more the reality that the number of talented artists out there greatly exceeds the number of artists that receive significant recognition. Wild Pink isn’t exactly obscure (Pitchfork has reviewed several of their albums), but I’m a reasonably eclectic listener and I had never previously heard of them.

I have more thoughts about that, but they will have to wait for a future post.

tl;dr: With the 38th Annual Korean Festival happening tomorrow, it’s a good time to highlight Korean indie folk/pop singer-songwriter Fromm.

Howard County is known for having a large Korean-American population: according to the US Census about 12,000 people out of about 300,000, or about 4% of Howard County residents.¹ In Ellicott City (where I live) the Korean-American presence is even more pronounced, with over 7% of the population and a string of Korean restaurants, shops, and other businesses along Route 40.

Korean culture in the form of popular music (“K-pop”) and television dramas (“K-dramas”) has been making major inroads in other countries around the world, but not so much in the US. As it happens tomorrow (Saturday, September 19) is the 38th (!) Annual Korean Festival put on by the Korean Society of Maryland at Centennial Park in (where else) Ellicott City. To celebrate the event I’m taking the opportunity to promote my own favorite bit of Korean culture, the music of folk/pop singer-songwriter Fromm (프롬).²

But before I get to Fromm, some brief context: We can think of the popular music of South Korea as comprised of three levels, at least as far as the US is concerned. At the top level is the rapper Psy, he of the recently ubiquitous novelty hit “Gangnam Style”. At the next level are the superstars of high-gloss high-energy hip-hop-flavored K-pop: Girls’ Generation, 2NE1, Exo, Big Bang, and so on. Finally there’s everything else produced outside vertically-integrated entertainment companies like JYP, SM, and YG: traditional rock, heavy metal, electronic, folk, “alternative,” etc., all lumped together under the label “k-indie.” That’s where we find Fromm.

Enough words, let’s listen to some music. The first track, “Like You” (좋아해) from Fromm’s first album Arrival, is probably my favorite from that album. Fromm’s other fans must have liked it too, because she released an alternate version of it as the last song on her second album, Moonbow.

The next track, “Moon Says” (달, 말하다) from Arrival, reminds me of Sarah McLachlan just a bit:

Finally, “A Spring Day Out” (봄맞이 가출), released on the EP Under the Daylight Moon and then on Moonbow, is a fun song that features some nice harmonies among Fromm and her backing vocalists.

This is where I would usually attempt to be an amateur music critic, but in this case I’ll decline. Even beyond my lack of critical skills, I just can’t be objective about Fromm’s music: I love almost all of her songs and have listened to them dozens of times, while I’m working, while driving in my car, and even while I’m falling to sleep.

But here’s a test I did to try to gauge whether or not I was being overly partisan toward Fromm. Several months ago VH1 (yes, I know) published an article “The 10 Best Up-and-Coming Female Singer-Songwriters You Need to Know” that I happened across while researching this post. So I decided to check all ten of them out by going to Spotify and listening to their five most popular tracks.

Granted, all these artists are pretty good singers. The problem is with the “songwriter” part of “singer-songwriter”: none of them had more than one or two songs I wanted to listen to all the way through. In contrast Fromm has a very high batting average; when listening to all twenty songs she’s released (not counting alternate versions and remixes) I’m typically only tempted to skip through one or two.

My conclusion: If you can get over the fact that she sings in Korean, the best up-and-coming female singer-songwriter you need to know is Fromm.

For further exploration

All of Fromm’s releases (the albums Arrival and Moonbow, the EP Under the Daylight Moon, and the digital singles “Moonlight Dancing” and “In Her Sea of Happiness”) are available for streaming on Apple Music and for download through the iTunes Store. In addition Bandcamp has Arrival and Under the Daylight Moon available for streaming and for download (including in the high-quality FLAC format). (Sorry, Spotify users: No Fromm for you.)

You can also find lots of Fromm on YouTube. Searching for “fromm mirrorball” returns official music videos put out by Mirrorball Music, while queries for “fromm nanjang” and “fromm onstage” return a number of professionally-recorded live performances.

If you’re interested in Korean independent music beyond Fromm I recommend koreanindie.com, which posts video and audio clips from a wide range of genres. The site also has a number of articles featuring Fromm. The MTV Iggy article “Anti-Idols: 8 Alternative K-Indie Females Slaying K-Pop” focuses on Korean indie female singer/songwriters specifically, with Fromm again getting a nod.

eMusic has gone through many business models over the years, but at the time I joined it was a would-be solution for people who wanted to listen to lots of music, especially music out of the mainstream, but had only a limited budget to pay for it. Operating in the post-Napster era, eMusic focused on people who wanted to download tracks and albums as MP3 files, and would commit to pay at least $10 a month for the privilege. Initially the service allowed “unlimited” downloads for one fixed price. This was after the major music labels had sued Napster into submission for offering a similar service at no charge (and without authorization by copyright holders, of course), so even with the promise of payment no major labels were willing to sign up. The offering was thus limited to independent music labels, and even then much of the music available was only marginally appealing (to put it politely).

eMusic’s history since then can be summed up as adapting to the realities of the music business by compromising on the original vision of “all you can listen to, one fixed price.” First, people who tested the limits of “unlimited downloads” were put on a diet—eMusic’s obligation to pay per-track royalties meant that heavy downloaders cost more to eMusic than their subscription fees brought in. Then (after being acquired by a private equity firm) eMusic put fixed limits on the number of tracks that could be downloaded per month. Even with the download limits per-track prices were still well under what mainstream services like iTunes and Amazon were offering, so major labels still refused to participate and eMusic was still focused almost exclusively on independent labels.

That focus was blurred when eMusic was finally able to attract major label releases by Sony, at the expense of imposing a major price increase on users. At the time only older releases were available, not current releases, but later eMusic further revamped their pricing, including the introduction of “album pricing” (i.e., purchasing an album at a fixed price and not track by track), in an ultimately successful attempt to persuade more major labels to offer more releases on eMusic. Today most albums on eMusic are only slightly less than what they cost on Amazon or iTunes.

Through all of this I maintained my eMusic subscription. So why am I quitting now? First, eMusic’s business model no longer worked for me: I was paying over $10 per month for a subscription, and per eMusic’s traditional “use it or lose it” subscription model I was paying that whether I downloaded anything or not. More and more I just didn’t have time to evaluate which albums I wanted to download; a couple of months I forgot to download anything at all.

Second, eMusic’s original vision of “all the music you want, one fixed price,” the vision that was so attractive to avid listeners and then so compromised by business realities, has now been realized in the form of streaming services like Spotify. In the Napster era advances in broadband networking made it possible to download music tracks as MP3 files as an alternative to buying CDs, and the convenience of getting instant access to music drove adoption of digital music. Continued advances in networking make it possible to stream music straight to devices (even mobile devices on cellular networks) as an alternative to downloading MP3 files, and the ability to listen to (almost) any track instantly without an additional purchase is driving adoption of streaming services.¹

Thus as soon as I cancelled my eMusic subscription I upgraded my Spotify subscription from the $5 per month “unlimited” level (which I used for ad-free listening on my laptop while at work) to the $10 per month “premium” level, which provides ad-free listening on all devices, including smartphones and tablets. The major remaining barrier to widespread streaming for myself and others has been the fear of blowing through cellular data plan limits while listening in the car or otherwise away from home. One carrier, T-Mobile, is trying to remove that barrier by exempting selected streaming services from data limits; it’s no coincidence that I’m considering switching to T-Mobile in the coming months.

However even if I switch I’ll still be stuck in the past to a certain degree, since unlike many nowadays I actually pay for the music I listen to: The “new normal” for young people is to listen to ad-supported streaming services, whether in the form of the free Spotify plan, “Internet radio” services like Pandora, and iTunes Radio, or music tracks uploaded to YouTube. What this trend means for the music industry in the future is a bigger story; maybe I’ll come back to it another day. In the meantime I’ll reserve my MP3 purchases (just as I’ve been reserving my CD purchases) only for music that’s special to me, or that I can’t get any other way.

splaestro - 2014-09-28 15:25

The timing of your decision is interesting–just this weekend (26Sep2014) eMusic announced that they’re “going back to [their] roots” in independent music: http://www.emusic.com/messageboard/viewTopic.html?topicId=317945#1687706 Apparently this means dropping major label catalogs but not bringing back the fixed-price-all-you-can-download model (that’s never gonna happen, as you’ve pointed out). It’s not yet exactly clear which parts of their catalog are going away. Like you were, I’ve been a long-time subscriber but increasingly have less and less time to download MP3s. For me part of it has been how annoyingly Windows-centric the interface between their website and download managers has become. There were some things about the major label acquisitions that I liked, and this latest change may be the end of my subscription.

hecker - 2014-09-28 22:15

Thanks for stopping by! i too got the letter from eMusic about the change in direction. I honestly don’t see how they’re going to make money under the new model, but I do see why they made the change: Streaming services have basically killed the market for MP3 downloads of major label popular music–I mean, if iTunes downloads are going down (as I believe they are) then eMusic has no hope of success in that market. I guess their plan is to go after the people who still want MP3s, people who are more likely to listen to music from non-mainstream acts and labels. I think that’s a very small market, but maybe if they cut costs to the bone they could make it profitable.

Piixl (piixljewels@yahoo.com) - 2014-10-12 03:53

I am pretty upset about the changes. I have been a subscriber since 2008 and the Sony catalog thing shocked me but I ended up liking it. I was working on my digital collection of classic stuff that wasn’t available before. So many albums that I had on my save list disappeared. I too am considering whether or not to keep my subscription. I am also surprised that not more people are talking about it or that eMusic didn’t elaborate more.

hecker - 2014-10-13 14:19

Thanks for commenting! Regarding people talking about the changes, I suspect those eMusic subscribers who actually pay attention to eMusic goings-on are burned out from all the changes in strategic direction, and most non-subscribers to eMusic have forgotten about eMusic entirely. I’m actually surprised that the latest strategy change got some press in the New York Times.

Flahute (flahute2004@gmail.com) - 2014-10-19 18:57

I’ve also been a long, long-time subscriber … and I too am considering dropping my subscription. The biggest problem for me, however, is the way eMusic implemented the dropping of major labels. Apparently, to them, this includes dropping independent labels whose only tie to the majors is distribution … so they’ve dropped catalogues from independent labels like Epitaph, ANTI-, Hellcat, Burning Heart, Minty Fresh and many other independent labels distributed through the Alternative Distribution Alliance, which happens to be owned by WMG. Unfortunately, they haven’t even implemented this policy consistently. Other labels distributed through ADA are still available, at least in part, from labels like Saddle Creek and Mute, which arguably have bigger, more “mainstream” artists like Conor Oberst/Bright Eyes, Nick Cave & the Bad Seeds, Erasure, amongst others.

hecker - 2014-10-19 19:37

Thanks for taking the time to comment! The choice of labels is I suspect one of those things that likely makes sense in terms of the way eMusic licenses tracks; for example it may be that dropping major-distributed indie labels is an unfortunate side effect of terminating an overall agreement with that particular major label. However I completely agree that this makes no sense in terms of serving the actual customer, namely you and other remaining eMusic subscribers. I’m guessing this might be yet another example of how the music industry has been one of the most “customer-hostile” businesses around.

Not you (mm500@hotmail.com) - 2014-10-20 04:40

I’ve been with emusic for a long time but this change burns me up—they gave NO notice! At first it was a great way to find new bands. When they expanded their catalog I added a ton of artists into my que and stuck with them because of this–it was a nice mix of indie and established bands, but now it seems even some indie bands aren’t there anymore. If I knew this was coming I’d of had a chance to download a couple of discs before the change. They REALLY must dislike their loyal customers. I’ve been thinking of how much easier streaming is. Is Spotify better than Pandora?

hecker - 2014-10-20 12:57

Thanks for commenting! eMusic has never been great on communicating changes to the service, both in terms of adequate notice and in terms of explaining exactly why they are making the changes and how. Recall what happened when they brought on Sony as the first major label. Regarding Spotify vs Pandora: I don’t use Pandora so I can’t offer any useful comments there. I think though that Pandora is primarily a radio-style streaming service, and doesn’t offer you the option of on-demand listening, i.e., listening only to a particular album like Spotify does. Which is better depends on what you’re using it for. Radio-style streaming is good for listening in your car (if you have a data plan for your phone that is suitable for that), on-demand listening I think is better for when you have to listen to that one track or album and won’t settle for anything less.

David Armstrong - 2014-10-28 04:08

I absolutely HATE the new move on the site… the new catalogue is utterly worthless to me. I told them I was canceling my account and they gave me like $80 credit to apply to music to stay. I agreed to try and you know what? I’ve still got about $75 to spend… NOTHING LEFT ON THEIR SITE INTERESTS ME!!! It’s just thousands and thousands of bad covers, karaoke cuts and random never-heard-of crap. Just my opinion, feel free to disagree, but they’ve lost my business for good… I hope iTunes appreciates their new customers.

hecker - 2014-10-29 00:05

Thanks for commenting! “It’s just thousands and thousands of bad covers, karaoke cuts and random never-heard-of crap.” This reminds me of the original days of “unlimited” downloads, when the pickings were pretty slim.

Here’s a sampling of what I’ve been listening to lately; unless otherwise indicated album links are to Spotify, track links are to YouTube:

• Blows Against the Empire (Paul Kantner and Jefferson Starship). This is a relic of that just-past-the-60’s time when NASA was still landing men on the moon and techies and hippies alike thought we would soon be living in space colonies at the L5 points or (in the case of this concept album) would “hijack the starship” and flee both the solar system and the Man. The players include members of Jefferson Airplane (caught halfway between “White Rabbit” and “We Built This City”), the Grateful Dead, and Crosby, Stills, Nash, and Young, and musically it’s about what you’d expect from that combination.
• Einstein on the Beach (Philip Glass). Written half a decade later, this opera (really a combined dance/theater piece) is more revolutionary, at least in musical terms, than Jefferson Airplane/Starship ever were. (In fact, if you’re a teenager who wants to really annoy your parents with your musical tastes, skip the gangsta rap and play this for a while.) For the full experience check out YouTube for excerpts from live performances.
• The Campfire Headphase (Boards of Canada) (not on Spotify). The influence of minimalist music like that of Glass and others spread throughout popular culture in the 1980s and beyond, in particular influencing electronic dance music (EDM) and so-called intelligent dance music (IDM). Boards of Canada is an interesting example of homage to 1970s minimalism: They favor the sound of that era’s analog synthesizers and even occasionally incorporate counting numbers into their tracks (see for example “Aquarius” on Music Has the Right to Children), echoing the opening of Einstein on the Beach. Continuing today’s theme, in an interesting footnote to Felix Baumgartner’s recent parachute jump from near space several people paid homage to the official video for “Dayvan Cowboy” (which features an earlier record-setting jump) by resetting the track to footage of Baumgartner.
• The Hawk Is Howling (Mogwai). Minimalism of a sort came to rock in the form of “post-rock.” The basic recipe: keep the guitars and drum, ditch the vocals and the verse-chorus-verse song structure, stretch the song out to two or three times the normal length, and give it a nonsensical and/or pretentious title. Mogwai is one of the best-known post-rock bands, and this is a representative album; for a taste of the musical results performed live check out “I’m Jim Morrison, I’m Dead” or (continuing my chosen theme) “Thank You Space Expert.”
• Recomposed by Max Richter: Vivaldi, The Four Seasons (Max Richter). Taking a break from space, I conclude with Max Richter’s “remix” of one of the most over-played classical pieces of all time. The opening “Spring” tracks illustrate the method: Richter ditches the famous opening melody and focuses on just one of the phrases that occurs halfway through the original, repeating, modifying, and amplifying it.

A little history by way of background: I was around when the Internet was first being commercialized, and I had the opportunity to register hecker.com for myself if I really wanted to. However I passed because I didn’t have a server to associate with it and I thought I needed to be running an actual server in order to register the name (though I’m not sure that was the case even then). When I finally got around to having a personal server in the late 1990s I found that hecker.com had already been taken by a company that registered thousands of surname domains so that they could offer a shared domain service in which multiple people could have their own personal subdomains under a top-level domain: jane.smith.com, john.smith.com, and so on. So I settled on the next best thing and registered hecker.org instead for use as my primary domain, at the same time registering frankhecker.com (as well as the .org and .net variants) to prevent anyone else from getting it.

When I first started a blog I hosted it at hecker.org using custom blogging software. I later got tired of the management hassles involved, and moved my blog to WordPress.com, using the subdomain blog.hecker.org because I was still hosting other things at hecker.org and couldn’t afford to dedicate the entire domain just to my blog. Since then though the blog has assumed more importance as my public face to the world, and I regretted having a somewhat unusual domain name for it. I’ve therefore decided to adopt the conventional approach and use frankhecker.com as my primary blog name. (As noted above the old name of blog.hecker.org will continue to work, thanks to the magic of HTTP redirects.)

Note that my primary personal email address remains hecker@hecker.org; I have no plans to change that. However I can also receive email at frankhecker.com, so for example sending email to frank@frankhecker.com will get to the same inbox as hecker@hecker.org. I may switch over completely to frankhecker.com for all uses in future, but in the meantime there’s no need to update your address book.

In other news, I’m now on Google Plus so you can add me to one of your circles if you’d like. I’ve been meaning to try Google Plus out before now, but I use Google Apps for my email and related services, and Google Plus wasn’t added to Google Apps until this week. I’ll publish notices of new blog posts to Google Plus, and maybe some other stuff from time to time.

One of the most interesting questions is whether the mainstream classical music community will at some point link up again with the main strands of contemporary culture, or whether it will continue to be isolated and eventually risk collapse into irrelevance as its audience dwindles, perhaps to be replaced by a new community that springs up around what Sandow calls the “alt-classical” scene. You can see echoes of that question in the comments by Jerome Langguth and Sandow on the post announcing the riff.

I’m of two minds on this. On the one hand, I’ve already expressed the opinion (near the end of my “music and the theory of disruptive innovations” post) that the “alt-classical” or “indie classical” movement will not likely give birth to a complete new community/tradition/movement, but instead will be co-opted into the general indie rock/pop movement as it continues to move up-market aesthetically. From that perspective the mainstream classical music community will remain isolated as it is today and will eventually see itself completely disrupted by whatever the indie movement evolves into.

However it’s also possible that the mainstream classical movement community could disrupt itself, as it were, and give birth to new institutions, musical forms, performance practices, business models, and so on that are relevant to today’s culture but still recognizably grounded in the classical tradition (while partaking of other traditions as well). This certainly seems to be what Sandow is working towards.

Not being that familiar with the nitty gritty of today’s classical music world, I can’t speak to all of Sandow’s ideas and whether they’re practical or likely to have the desired effect. However from a high-level perspective some of Clayton Christensen’s ideas may be relevant here, especially those discussed in The Innovator’s Solution regarding how established companies can renew themselves and avoid being disrupted by more nimble competitors. Of particular relevance is Christensen’s recommendation that companies avoid trying to force wholesale changes in strategy at the level of the entire organization, and instead establish quasi-independent spin-offs that have the freedom to experiment with new business models, product strategies, and branding approaches without having to incur the burden of the cost structure and differing priorities of the parent organization.

In the context of classical music this would correspond to, for example, having symphony orchestras fund groups of performers that wanted to do new music performance, not simply in the form of one-time events or special series under the orchestra’s aegis, but as autonomous subsidiaries that would be free to bypass the orchestra’s bureaucracy and rules where appropriate and establish their own “products,” brands, audiences, and funding sources and mechanisms. I’ll be interested to see to what extent this is being done today and whether Sandow’s book will address this and related ideas.

Sources said eMusic’s backers . . . are also seriously considering adding a streaming component in a bid to build upon its recent growth. . . .

According to sources, the streaming component would be a value-added feature for premium subscribers.

The thinking is that the economics of a download-only model and a streaming-alone model don’t work on their own, but putting them together in a tiered system could help retain subscribers.

I think adding a streaming option would be a great idea, not as a substitute for downloading but rather as an easy way to “audition” albums before deciding whether or not to spend my (limited) downloads on them. I wrote a lengthy blog post on this topic back in October (“Should eMusic offer streaming?”) discussing the pros and cons of this. I doubt my post influenced (or was even read by) anyone at eMusic, but it’s nonetheless gratifying to see eMusic apparently considering integrating streaming capability into the service.

I’m curious as to whether anyone else subscribing to eMusic shares my opinion on this, or whether people are looking to Spotify or other ad-supported or “freemium” services to provide your streaming fix. In this connection it’s unclear what any potential eMusic streaming service would look like. Here are some open questions along with my speculations and opinions to supplement my earlier thoughts:

Standalone service vs. tied to current eMusic service. The New York Post article claims the proposal is to offer streaming as an add-on to the current service, not as a standalone service. I think this is the best way to approach it—position eMusic streaming as a useful option to enable easier music discovery for eMusic subscribers, not as a competitor to Spotify, etc.

Extra-cost option vs. bundled into existing plans. The New York Post article is unclear on this point; however the phrase “value-added feature for premium subscribers” implies that streaming would be bundled into the overall eMusic subscription price for the higher-priced plans, and not offered at all for the Lite, Basic, or (maybe) Plus plans. I think bundling makes sense if streaming were positioned as a aid to music discovery for people who listen to and download a lot, and not as a substitute for downloading.

Right now I’m paying for a combination of the eMusic Basic plan (annual) and a $5/month Napster subscription for streaming (and some extra downloads – though remembering to actually download them is a PITA). If eMusic were to offer streaming I’d happily drop Napster and upgrade my eMusic plan to a Plus or even Premium plan. (I skipped getting a Plus plan when the recent price increases hit because of concern about wasting the extra downloads on stuff I wouldn’t like that much. Being able to “try before I buy” via streaming helps alleviate that concern.)

Unlimited streaming vs. a cap on streamed tracks. Of course I’d like any eMusic streaming option to not have a fixed limit on streams per month. However if eMusic has to pay streaming royalties on a per-track basis then it might make sense for it to impose a monthly limit on streams per subscriber. Since I’d be using streaming primarily to try out stuff before I download, I could probably live with a maximum cap of (say) 10 times the number of my download credits, e.g., 500 streamed tracks per month to go with a Premium plan offering 50 download credits.

Streaming tracks vs. (only) streaming albums. Would eMusic allow streaming individual tracks without restriction (other than a possible cap on streams per month), or would eMusic and/or the labels try to bring into the streaming world the concept of “album only” tracks (i.e., not allowing you to stream particular tracks unless you streamed the entire album)?

If eMusic allowed streaming individual tracks on an a la carte basis then labels might see this as a way for subscribers to evade the “album only” restrictions, especially for albums with a small number of tracks. (Don’t download that 2-track electronic release for 12 credits, just stream it instead.) On the other hand, to my knowledge no other streaming service implements “album only” restrictions of any kind, and I suspect the business and royalty model for streaming is different enough to make such restrictions unnecessary or at least not desirable.

Tied to PC vs. available on smartphones. The conservative approach would be for eMusic to implement streaming only in the context of the current web-based download service. For example, if you had the streaming option then the “Listen to this album” and “Listen to this song” buttons on an album page might be configured to play the full (streamed) album or track instead of just 30-second samples (as at present).

eMusic might also offer a standalone streaming app for smartphones, like the various iPhone apps for Spotify, etc. However I doubt that eMusic is eager to compete directly with (or be compared to) the streaming-only services, and there would be a number of non-trivial business issues that would have to be dealt with in creating an eMusic offering for mobile devices. Also, I think mobile streaming is more useful as a replacement for terrestrial and satellite radio than as an adjunct to a download service. I think that if eMusic does offer streaming that it won’t be for mobile devices, at least initially.

So, my final prediction: Sometime in 2010 eMusic will offer streaming as a bundled feature of the Premium and Connoisseur plans (but not Lite, Basic, or Plus). It will not cost anything extra, however introduction of streaming may occur in conjunction with a further round of (relatively small) plan price increases, possibly associated with adding more major label content. For those eMusic subscribers who have streaming, it will happen transparently using the existing “Listen to this album” and “Listen to this song” buttons on album pages. Such subscribers will be able to stream any album or individual track on eMusic, without any restrictions except possibly for a cap on total streams per month that is tied to the number of plan downloads.

There will not be an option to stream to smartphones or similar mobile devices (e.g., e-book readers with wireless capability), with the possible exception of devices that connect via wifi and have web browsers that provide equivalent support for eMusic downloading and streaming to that of standard PCs. (However even this may be restricted in some cases for business reasons.)

Your thoughts?

Brian King - 2010-01-02 20:58

I canceled my eMusic subscription a couple of months ago and moved exclusively to Spotify. Unlimited streaming for ~12 EUR a month just seems better value and more convenient, not to mention a better catalog than eMusic (sure I understand the aim for different business models). The Spotify iPhone app is not available in my region, but that is not a deal-breaker for me as I listen to music mostly in the office and not on the go. Apple is rumoured to be adding streaming to itunes as well, so it is definitely a shift in the industry. With eMusic it seems like a case of follow to survive.

hecker - 2010-01-02 21:18

@Brian: Thanks for your comment. I myself am not yet ready to fully “cut the cord” in terms of moving away from downloading to streaming (and of course I don’t have access to Spotify to help me along). Because of business issues and technological shortcomings I think we are looking at a transition period of at least 5-10 years before streaming almost totally replaces downloading for “mainstream” consumers. For non-mainstream consumers (from whom eMusic draws its subscriber base) I think it will take longer, since I think many people will want the security of having the downloaded file and the quality of a higher bit-rate (even if this is more of a perception than a reality for most music). However I do agree that offering streaming is something that eMusic needs to do for competitive reasons, since a download-only service is not sustainable for much longer.

Ross Gardler (Rgardler@apache.org) - 2010-01-03 11:45

Streaming as “preview” would be great for me if they get the pricing right. I want my music everywhere I go but I also want to pick random tunes from random bands to see if I like them.

Daljit - 2010-01-03 15:00

I’ve been using a subscription to Rhapsody as my audition service (just like you described!) for years now. I actually originally started with a subscription to them, and was on the verge of cancelling it, but then I discovered eMusic. It gave my Rhapsody sub new life! If eMusic did add streaming, I’d probably drop Rhapsody entirely, or at least down to one of the basic plans (I’ve found some stuff on there over the years that I like that isn’t on eMusic). I wonder how they’d integrate streaming on psuedo-grandfathered plans like mine. If they don’t add streaming to all their plans, I’ve a suspicion that they would give us the shaft and state cost reasons (again) as the reason they can’t provide us with streaming service. This would distress me greatly. On a more general note, I’m not thrilled with the trend towards streaming that things are taking. Maybe I’m old fashioned (?!), but I like to have a local digital copy that I can store and play independently of whatever the company I bought it from is doing. I don’t want to introduce extra points of failure for the products I buy (or rent, as in a streaming model). If my ISP or the streaming source goes down, so does my ability to enjoy whatever music and/or video I purchased/rented. Maybe I’m just paranoid, but I’ve had drops in my internet service enough where this seems like a valid concern to me.

TonyRz (yourhumblepuppy@aol.com) - 2010-01-12 18:20

Re: $5/mo for Napster. I suggest that you opt for Napster’s quarterly plan going forward. It’s the same price ($15/quarter), and you get your download credits (15) all in one hit. Never having more than 5 non-rollover credits means you never get to buy an album. And, IMHO, going quarterly means you’re less likely to completely space out and lose your downloads because - whoops - it’s the end of the month. I went for it on day 1 of my New Napster sub because of my generally positive experience on emusic with quarterly billing/refill instead of monthly.

hecker - 2010-01-13 01:37

@TonyRz: Great suggestion, thanks! I didn’t even know about that particular Napter option.

• Eve Beglarian, “Far Off Country (Four),” performed by Maya Beiser, from Almost Human. I like this album but have a bit of aversion to spoken-word accompaniments to classical tracks, like those here.
• Neutral Milk Hotel, “Two-Headed Boy Part 2,” from In The Aeroplane Over The Sea. This album is legendary among people who know it, but I have to confess I feel more admiration for it than love.
• Mogwai, “I’m Jim Morrison, I’m Dead,” from The Hawk Is Howling. I’m a major Mogwai fan, but on first listen I thought this was relatively minor Mogwai. I’ll have to give it another try.
• Arvo Pärt, “Nunc dimittis,” performed by the Estonian Philharmonic Chamber Choir, from Da pacem. I’ve been a big Pärt fan ever since picking up Litany (based on a recommendation in Wired, oddly enough).
• Tristania, “Angellore,” from Widow’s Weeds. An experiment on my part in venturing into the “melodic metal” arena; not bad, but I’m still not that interested in metal.
• M.I.A., “Fire, Fire,” from Arular. I was dining at Fatburger, which features a free jukebox with a net connection, when someone played “Paper Planes” from Kala. I decided to reciprocate by playing “Galang Galang” from this album.
• Eve Beglarian, “Far Off Country (One-Two),” performed by Maya Beiser, from Almost Human. iTunes put two tracks from this album onto the list; I have no idea why.
• Dumptruck, “Better Of You,” from For the Country (not on eMusic). In my opinion this is one of the best non-country country albums ever recorded, right up there with Meat Puppets II.
• The Fall. “An Older Lover etc,” from Palace of Swords Reversed (not on eMusic). I have lots of Fall albums; this is one of the better ones.
• Johann Johannsson, “Englabörn,” from Englabörn. I like Johannsson but don’t recall liking this album as much as IBM 1401: A User’s Manual.
• Amiina, “Saga,” from Kurr. Another Icelandic production, not in the league of Bjork or Sigur Rós, but well worth listening to.
• Team Dresch, “Hate the Christian Right!” from Personal Best (not on eMusic). The Butchies have their charms but are no substitute for this band. Supposedly Team Dresch have reformed and are (maybe?) recording a new album; I always worry about this sort of thing but am definitely looking forward to it if it ever happens.
• The Wedding Present, “I’m Not Always So Stupid,” from George Best Plus. I listened to this album only once; it was a bit too much of its time for me.
• Super Furry Animals, “Patience,” from Rings Around The World. Another album I listened to only once, and need to try again.
• “Bocuma,” Boards Of Canada, Music Has The Right To Children (not on eMusic). CollabNet didn’t really take off as a company, but I have to say that my co-workers there (who recommended this to me) had great taste in music.

Ever since its founding eMusic has been repeatedly discovered by people who either don’t get the concept (“Hey, where’s Britney Spears?!”) and/or have severe difficulty using a computer and the Internet; these people also often seem to have a fuzzy grasp on such matters as grammar and spelling. And thus on August 11, 2003 (a date which will live in infamy), after experiencing problems with downloading music mrcat first uttered those immortal words, “E Music is SWindle.”

Despite the helpful replies of various eMusic customers mrcat’s problems continued unabated, and he soon resorted to repetition to add urgency to his pleas: “I still Cannot Download Music, WHYYYYY???? . . . Bring BAck my Money,E Music is SWindle. Bring Back my moneyyyyyyyyyyyyyyyyyyyyyyyyyyyy.” After a final message from mrcat (“Emusic Swindle, just swindle. I am not happpyyyyy.”), Buddha-Of-Siberia was moved to reply, “hey mr.cat who cries swindleeeeee. . . . . . Stop Your Subscription and log out. . . and stay outeeeeee.” And thus a new word entered the world, and every subsequent user complaint or pseudo-complaint regarding eMusic was heralded with the ironic cry “eMusic is swindleeeee!!!!!!”

The Swindleeeee!!!!! FAQ

I just know you still have some questions . . .

• How do you pronounce “swindleeeee”? Like the question of which end to open an egg or whether the sign of the cross should be made with two fingers or three, this is a matter of bitter controversy; wars have been fought over less. Some (including myself) believe that it should be pronounced like “swindle,” but prolonging the final ‘l’ sound: “swin-duhhhhhl.” Others believe that it should be pronounced it as “swind-leeeee,” i.e., converting the normally silent ‘e’ into a long ‘e’ on the second syllable. Still others compromise on a hybrid pronounciation: “swin-duh-leeeee.” Feel free to choose whichever side you please, but be prepared to accept the consequences. For more information check out the eMusic message board thread “Poll - do you prefer SwindULLLLL or SwindLEEEEE?.”
• How many ‘e’s are in “swindleeeee”? This varies from person to person. As noted above, the original coinage had six ‘e’s, but in my opinion five are sufficient to get the point across, unless you happen to be feeling especially feisty.
• How many exclamation points should I use? In general I think it’s good practice to have as many exclamation points as there are ‘e’s.
• Can I use “swindleeeee!!!!!” in referring to digital music services other than eMusic? Yes, but know that the correct use of the term is in the ironic sense (real irony, that is, not the Alanis Morissette kind#Linguistic_controversy “Alanis Morissette misuses the term “ironic””)); thus you should not use the term with respect to a competing service unless you feel that it is not in fact a swindle.

I found public comments from David Pakman (formerly CEO of eMusic) always interesting even when he was repeating his favorite mantras (e.g., about the futility of DRM, eMusic as number two to the iTunes Store, and so on). Since I often found 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. Now that Pakman has left eMusic I’ll continue to maintain this page as I have time, both as a sort of memorial to Pakman’s time at eMusic, and also because I suspect he’ll have more interesting things to say in future.

• “How eMusic hopes to keep Its groove” (Fortune, July 16, 2008). An article about eMusic’s web site enhancements, with a quote from Pakman on the perennially popular subject of whether eMusic will ever offer major label content: “If we never get any major label content, this is still a very successful company” (of course, he would say that).
• “@ Needham Digital Media Con: Interview: David Pakman, CEO, eMusic: “Adults Still Buy Music”” (paidContent.org, May 8, 2008).
• “eMusic CEO on DRM and iTunes” (Washington Post, February 28, 2008). Pakman brags on the Random House decision to drop DRM after a successful experience with distribution through eMusic. He also notes that the average age of the eMusic subscriber is 39 years old, and that 60 per cent of all eMusic downloads are as part of complete albums.
• “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.

Before getting into my own proposal I should address two possible answers to this question that reflect conventional wisdom. The first is simply to assert that streaming is the future way music will be delivered to listeners, and that services like eMusic that offer downloads are ultimately doomed. One sees this attitude reflected in the hype around Spotify, for example, as embodied in comments from Bob Lefsetz and others.

On the other hand, streaming services face a variety of obstacles both from a consumer point of view and from an industry point of view. As a listener my concern with relying solely on a streaming service is twofold: First, I’ll want to listen to music in contexts where there’s no network through which to stream. This concern can be addressed to some degree by offline caching of tracks; this is essentially what Spotify offers as part of its premium service.

However note that for various reasons such offline use is typically implemented using a DRM scheme that expires tracks if your subscription ends. (Spotify is no exception in this regard.) This restricts portability (you can use only “approved” devices) and doesn’t address a second concern: That I’ll lose access to my favorite music due to the actions of the service, the labels, or others with a legal interest in the music. Recall the recent controversy over Amazon deleting copies of 1984 and Animal Farm from users’ Kindles: what a DRM-based content service giveth, a DRM-based content service can taketh away.

From a music industry point of view the problem with streaming services is that they don’t yet have a viable business model. Even Spotify, the great hope for streaming, has people predicting its imminent death, with its founder begging the music industry to change its ways in order to help make Spotify and similar services sustainable for the long-term. This concern is well-founded; details on Spotify’s business model are hard to come by, but a reasonable analysis concludes that royalties and licensing costs for Spotify are extremely high, and that it’s able to survive for now only through special deals with labels.

My conclusion is therefore that traditional streaming services remain unattractive from both my own perspective (which may be shared by others) and a business perspective. My own concerns can be addressed by the possibility of getting DRM-free downloads, and the financial concerns might be addressable by a business model that eliminates either free-to-consumer streaming (requiring that all customers have a paid subscription) or “all you can eat” streaming (putting a cap on total number of streams per subscriber per month) or both. As it happens, eMusic subscribers are already required to pay a monthly fee and also have a cap on their use of the service; what they don’t have is access to streaming via eMusic.

This brings us back to the question we started with: Should eMusic add streaming? The second snap answer is that eMusic is by its nature a download service, that eMusic users don’t need or want a streaming service, and that eMusic couldn’t make a success of such a service.

Regarding the first objection: As I stated in my previous posts, I personally need a low-cost way to preview music for my permanent collection, and streaming services offer the most convenient way at present for me to do that. However the lack of such a service at eMusic means that I now have to use a minimum of two services. This is inconvenient for me and in the long run at least is bad for eMusic, since it takes subscribers like me away from the site and lessens our loyalty to the service. I suspect my experience is representative of many eMusic users.

As for the second objection, some might point to the present incarnation of Napster, which at first glance seems to be offering the same thing as a hypothetical eMusic+streaming service: a paid subscription service offering a combination of streaming and MP3 downloads. Yet Napster is seen as “gasping” in the face of competition from Spotify. Why should an eMusic+streaming service be any more successful?

The answer is that eMusic would not be trying to compete directly against Spotify. Rather it would simply be trying to better serve the existing eMusic subscriber base and offer a more attractive value to prospective subscribers, while doing so in a manner that is consistent with eMusic’s business model. Thus streaming in the context of eMusic would not be positioned as a primary service; instead it would be positioned (at least initially) simply as a way for subscribers to try out releases before they download them—an extension of the current “Listen to this album” function on every eMusic album page that plays 30-second samples of tracks.

(In the longer term eMusic could also offer “standalone” streaming, most notably in the form of an app for mobile devices such as the iPhone; this would allow eMusic subscribers to also audition releases in their cars and on the go, again without having to switch to a non-eMusic service. It may be better for eMusic to wait on this until it can offer the complete eMusic experience in a mobile context, including over the air downloads; however for business reasons, including existing eMusic contracts with wireless carriers, that may not be possible for quite some time.)

In order to minimize the impact on its existing cost structure and business model, eMusic could and (in my opinion should) put fixed limits on the number of tracks a subscriber could stream per month. For example, we can imagine an eMusic Basic plan that would offer 24 download credits (the same as today) along with the ability to stream up to 100-200 additional tracks (or 10-20 albums) on demand. How big could this limit be? It’s very hard to tell. Royalty arrangements for on-demand streaming are fairly complicated, with separate royalty streams going to labels and to songwriters and publishers (mechanical royalties). In some cases these royalties are paid on a per-track basis, and in some cases they are calculated as a percentage of revenue. (This discussion thread gives a good feel for the confusion occasioned by streaming royalty arrangements even among people involved in the music industry.)

I’ll leave it to others to figure out exactly what level of streaming service eMusic could offer profitably, and at what price point. Streaming capability could be offered as an extra cost option to the current plans, or bundled into future versions of the standard eMusic subscription plans (for example, as part of some future round of price increases). The important part is not the exact pricing, it’s offering a service that is well-integrated into the current eMusic offering, financially sustainable for eMusic, and perceived as a good value by its customers.

In this regard the division between downloads vs. on-demand streaming vs. automated streaming (Internet radio) is an artificial one from the point of view of customers. At heart eMusic is not a download service per se; it is a music service that delivers a particular type of experience to a particular type of customer. The first paragraph of “the eMusic story” says nothing about MP3 downloads; it talks about “a more immersive, authentic music experience,” “better prices than mass market digital music retailers,” “the most musical context,” “subscription-based pricing that rewards discovery,” and other aspects that eMusic thinks are key value propositions for the service. If adding a streaming component (or for that matter an Internet radio component) would enhance those aspects then eMusic should seriously consider investing in such improvements.

In the end there are two general ways forward for digital music services. The first is exemplified by Spotify today and by (the original) Napster in the past: attempts to remake the music industry through high-profile, potentially high-reward, and (to one degree or another) high-risk business strategies. The problem is that in a fundamental sense the music industry doesn’t want to be remade: There are multiple actors with their own interests, an attachment to traditional ways of operating, and both legal precedent and political clout to back them up; even with general consensus that the industry is in crisis the collective action problem is daunting. In the long term the structure of the industry may indeed change as new genres and industry players emerge, but this may take 10-15 years or more (as I’ve previously argued). In the meantime services like Spotify may achieve some measure of success, but it’s equally likely that they’ll just crash and burn as they run out of cash.

The second approach is the one that I think is most suited to eMusic: To work within the realities of the music business as it exists today and then to do what one can to serve customers best within those constraints, aiming for consistent profitability and growing the customer base organically (being “patient for growth but impatient for profits,” as Clayton Christensen puts it). To use a sports analogy it’s like hitting for singles in baseball instead of swinging for the fences, or having a consistent ground game in football vs. throwing the long bomb.

It’s an unexciting strategy to be sure, but then eMusic at present is an unexciting company. With the collapse of the rumored acquisition of eMusic by Amazon eMusic’s owner Dimensional Associates lost any immediate prospects for selling eMusic at an attractive valuation. Now with eMusic’s subscriber base relatively stagnant and the company’s image damaged by the Sony PR debacle, eMusic’s only hope in my opinion is to execute well, become consistently profitable, and achieve long-term sustainability. At that point eMusic may become an attractive acquisition candidate for someone looking for a nice boring business with steady cash flow and some plausible prospects for growth.

TonyRz (yourhumblepuppy@aol.com) - 2009-10-12 15:19

It doesn’t quite baffle me that a company doesn’t want to get into the streaming-on-demand business, with its onerous licensing situation, but OTOH, it’s always baffled me that emusic doesn’t offer up at least streaming radio for its registered customers, built solely on tracks they have up for sale, so people can really hear what they have for sale. They already have their own technology for establishing recommendations and “neighborhoods” based on the collected download sales data of all members. They already have a private “Save for later” list. Almost all of the necessary technology for a really nice experience is already in the bag. A 1-click mechanism to put a currently streaming song into their own proprietary wish/buy lists probably wouldn’t run afoul of any patents. But still, they resist. Weird. I personally think that emusic should seriously consider on-demand streaming for its paid customers, because, given their relatively competitive price point, they can reasonably put strong limits on the number of times any song can be streamed for free. (Three plays?? Buy it, already. It’s only 50 cents…) But I won’t hold my breath. I rely on $5/month to Napster to get a taste (crappy sound, IMHO) of songs I end up buying on emusic. I don’t know if I’d pony up more cash to emusic at this point for radio, but hopping around from site to site is getting tired.

hecker - 2009-10-12 15:43

@TonyRz: I don’t know why eMusic doesn’t add streaming either. I too pay Napster $5/month to try out albums for possible download through eMusic, but Napster has a crappy interface and I’m always forgetting to download the 5 tracks I’m entitled to. Regarding the licensing situation, I think the relevant distinction is between on-demand streaming, where the user selects a specific track (or album) to hear, and and Internet radio-style streaming where the user can select only a particular channel, style, or artist. I think on-demand streaming makes most sense in the context of eMusic. eMusic is already investing time and money in handling licensing arrangements for digital downloads; I don’t think it would be *that* onerous to negotiate similar arrangements for on-demand streaming. It’s no different than what other services like Napster have done.

Hal Halvorsen - 2009-11-29 03:09

eMusic should simply be another option to Spotify purchases, ie addition to buying from 7digital (and other future sources) there could be a “download track on your Spotify Premium+ eMusic” quota. Spotify and eMusic then to do the revenue sharing between them.

Rather than have Swindleeeee!!!!! join the millions of other blogs that have dribbled off into nothingness, I’ve decided to give it a dignified exit. More specifically:

• I’ve moved all my old Swindleeeee!!!!! posts over to this blog under the “music” category, in case you ever have occasion to read them or link to them.
• If you subscribed to Swindleeeee!!!!! using a newsfeed reader (e.g., Google Reader, NetNewsWire, etc.) and you want to see my future posts on similar topics, please subscribe to my music-related posts on this blog using the new feed URL [/category/music/feed/][catego].
• As time permits I will redirect I’ve redirected all permalinks for the old Swindleeeee!!!!! site to the corresponding posts on this blog, so that the old URLs will still work for anyone who’s referenced them in a blog post or other context.

Thanks to all of you who read and commented on Swindleeeee!!!!! posts. Please continue reading this blog if you’re interested in what I might have to say on eMusic and the music industry.

However with the recent price increases and the introduction of “album pricing” I suspect that eMusic is consciously moving away from reliance on digital breakage. One problem of eMusic’s model from the labels’ point of view is that the per-track payouts were in no way guaranteed: If a greater percentage of eMusic subscribers happened to use their full monthly quota of downloads then per-track payouts would inevitably decline. The vast majority of the reported disputes between eMusic and labels, including those labels who’ve left eMusic, revolved around this issue.

I’ve previously criticized labels for the single-minded focus on per-track revenue and profit as opposed to total revenue and profits, but labels have at least two reasons for their position:

• While per-track payouts might fluctuate, labels typically have fixed costs they need to cover per track, most notably for mechanical royalties paid to songwriters and music publishers. If the per-track payout becomes too low then labels lose money on every track distributed through eMusic, with no way to “make it up on volume.”
• As CD sales continue to decline labels are under pressure to maintain their revenue and profits. All other things being equal, the simplest way for labels to survive, at least in the short term, is to try to hold the line on pricing of digital tracks and charge as much as the market will bear. In theory they may be giving up some revenue and profits by pricing tracks too high and thus forgoing sales to more price-sensitive buyers, but (at least based on a recent Billboard analysis) it may be that in practice higher prices do not hurt sales enough to offset the benefit of higher per-track payouts.

One obvious way to increase per-track payouts is for eMusic to increase the price of subscription plans and/or reduce the number of monthly downloads included with a plan. This is essentially what eMusic did with its recent price increases; the eMusic Basic plan had a reduction in number of downloads, while the Plus and Premium plans had a price increase as well. These changes had the effect of fixing a minimum per-track price of about $0.40. However the per-track payout would still vary based on the behavior of eMusic users and the amount of digital breakage in a given month.

Enter album pricing, which as implemented by eMusic in cooperation with Sony and other labels can be thought of as a way to achieve the same effect as breakage while eliminating (or at least minimizing) the element of chance associated with breakage. For example, consider a user on the Basic plan who has a monthly download quote of 24 tracks. In the absence of album pricing the user might in a given month download an album of 4 (long) tracks and another album of 8 tracks, and then not use the remaining 12 downloads. The breakage is thus 50% of the user’s quota, and the effective per-track price is about $1.00 per track ($11.99 divided by 12). However in another month the user might download 18 tracks, corresponding to 25% breakage and an effective per-track price of $0.67, and in a third month might download all 24 tracks in the monthly quota, resulting in a per-track price of only $0.50 and no breakage.

However under album pricing purchasing many albums with less than 12 tracks actually requires 12 “download credits,” as noted by many eMusic messageboard posters and discussed in a Billboard analysis of eMusic’s recent changes. In our example, instead of using 12 downloads of 24 to download two albums of 4 and 8 tracks respectively, the user could well have to spend 12 credits per album, thereby using up the entire quota of 24. Strictly speaking there was no breakage (i.e., the user spent all the credits to which they were entitled) but the resulting per-track price of $1.00 is the same as under the old plans with 50% breakage.

As more and more albums move to album pricing, it becomes increasingly difficult for a user on a Basic plan to buy more than two albums per month, and if they use eMusic at all it’s like they’ll buy at least two, and thus have no breakage in the traditional sense. In effect album pricing allows labels to remove the element of chance involved in user behavior and manipulate the per-track price themselves (i.e., by designating a particular album of less than 12 tracks as requiring 12 credits, and designating particular tracks as album-only) according to their business objectives.

It’s correct that the per-track price is effectively reduced when an album with more than 12 tracks is sold for 12 credits under album pricing. However in practice this most likely doesn’t matter, since per-track costs such as mechanical royalties typically are not any higher for albums with more than 12 tracks than they are for 12-track albums. (For the full and gory details see the “maximum rate per album” discussion in chapter 16 of Donald Passman’s All You Need to Know About the Music Business.)

So the labels win in the case where albums have fewer than 12 tracks, and don’t lose in the case where they have more. eMusic keeps the labels happy, and if some users don’t download even the few albums they can now afford (and thus help raise the average per-track price even higher) then it’s just icing on the cake.

Kyle Gann (“composer, musicologist, writer, educator”) recently wrote a blog post, “The Epistemology of Elitism,” that posited a way to get beyond sterile debates on whether some types of music are objectively better than other types (e.g., the “classical vs. pop music” argument). To quote Gann at length:

John [Luther Adams] and I put together a registry of musical virtues that was isomorphically analogous to a classification of audiences.

For instance: there are people for whom the best music must involve innovation. These people are likely to value Varese, Partch, Cage. There are others who value craftsmanship above all else. These people tend to like Hindemith, Sessions, perhaps Ligeti. Other people feel that music should be, above all else, emotionally true; perhaps they gravitate toward Barber, Vaughan Williams, maybe Messiaen. There are people who love music for its sonic lushness and sensuousness, who may relish Takemitsu and Feldman. There are people who value clarity, who value simplicity, who value intellectualism, who value memorability, who value physicality, who value theoretical rigor. Most people value several of these virtues, and we could create Venn diagrams of audiences who love different new musics because of the specific virtues they possess. The innovation + emotive sincerity intersectors love Ives. The intellectualism + sensuousness people love Takemitsu. That’s what John and I were coming up with.

I think these virtues could be categorized, and I think it would be a worthwhile and revealing musicological exploit. I think it could become the prolegomena to a sociology of new-music (and other) audiences.

I happen to have a weakness for aesthetic theories, and commented on what I thought were some interesting implications of this one, including what I thought was an possible point of intersection with Clayton Christensen’s theory of disruptive innovation. Gann replied positively to my comments and added “It’d be great if we could use findings from other fields to lay out the groundwork for all this.” That was all the encouragement I needed to write at length about this topic (though needless to say Gann bears no responsibilities for any excesses or errors I’ve committed).

A framework for a possible theory of aesthetic innovation

Let me first say that I am definitely not the person to construct an aesthetic “theory of everything.” The best I can do is try to explain Christensen’s theory and point out possible analogies and connections with how aesthetic and related changes occur in music and other arts. Consider this the barest sketch of a possible theory of innovation in the arts. Others can either take this further (if they think it’s a potentially fruitful approach) or demonstrate that it’s total poppycock (if they don’t)

What I like about Christensen’s theory as applied to this context is that it offers a theoretical framework that is rich enough to include all the actors within an aesthetic movement—not just artists but also the audience, critics, patrons, etc.—and to also account for historical and technological factors. I think this is an advance over theories that posit that art evolves in some autonomous manner (e.g., in inevitably repeating cycles of innovation, elaboration, and decadence) or that focus solely on artists and their reactions to each other (e.g., as discussed in Harold Bloom’s Anxiety of Influence).

What should we look for in such a theory? In the context of business Christensen’s theory purports to explain (among other things) why established companies fail to capitalize on particular types of innovation, how new entrants to markets can successfully compete with and (in many cases) displace incumbent vendors, what characteristics truly innovative vendors, products, and business models tend to have, and how such innovative vendors, products, and business models tend to evolve over their lifetime in the market. In the aesthetic realm a variant of Christensen’s theory may function similarly, providing insight into how aesthetic innovations and artistic movements are born, received initially, evolve over time, and (in some cases) successfully compete with and displace existing artistic works and movements.

In the discussion that follows I focus on music, but to the extent it works at all the framework is general enough to be applied to other artistic endeavors. My explanations of Christensen’s theory are drawn from the book Seeing What’s Next: Using Theories of Innovation to Predict Industry Change (SWN), Christensen’s most comprehensive treatment of his ideas, including both a useful summary of his various theories (as an appendix) and several informative case studies. Those interested in Christensen’s ideas should also consult his earlier books, The Innovator’s Dilemma and The Innovator’s Solution in order to see the evolution of his thinking.

Artists and their markets

Christensen’s theory of disruptive innovation was originally formulated in the context of technology-based businesses (e.g., computer companies), and thus our basic strategy is to equate the world of art with the world of business at a fairly deep level. (If this offends you please stop reading now.)

We start with vendors selling products to customers; a set of similar vendors providing similar products to a set of similar customers constitutes a particular market. In the simplest model applied to music we can identify composers with vendors, compositions with products, and listeners with customers. The “price” paid to composers for their products may be in the form of patronage (direct or indirect) or simply in the form of sustained attention to and engagement with their works.

Note that Christensen’s theories can be applied to individual companies or to groups of companies providing similar (though not necessarily identical) products as part of an overall market. Similarly in our analogies we’ll sometimes deal with individual composers and sometimes with groups of composers who are associated with particular aesthetic movements.

Note also that in the full Christensen theory vendors are part of “value networks,” defined as “[a firm’s] upstream suppliers; its downstream customers, retailers, and distributors; and its partners and ancillary industry players” (SWN, 63). In our musical example components in the value network could include performers, critics, promoters, instrument makers, and others. For now we’ll ignore these others for purposes of our analysis, but we’ll come back to them later. In particular, we assume for the moment that performers simply transmit composers’ intentions faithfully, and we lump critics and patrons (including institutional patrons) in with listeners in general.

Finally, note that (as with other art forms such as painting, poetry, etc.) “products” may outlive their “vendors,” so that composers today are competing for listeners not only with their contemporaries but with past composers as well. I’ll come back to this topic later as well.

Jobs to be done

The next key component of Christensen’s theory is the concept of “jobs to be done.” In Christensen’s formulation, customers “hire” products in order to accomplish a particular “job” (SWN, 281). Jobs to be done can be very straightforward: for example, most customers hire cell phones to do the job of enabling them to make and receive phone calls while out and about. Jobs to be done can also be more complicated, and not necessarily apparent based on the surface nature of the product. For example, I make more use of my iPhone to access the Internet, including reading blog posts, than I do to make voice calls. A large part of the job I am hiring the iPhone to do is to provide a source of information and entertainment in contexts where I have nothing better to do (e.g., waiting in line at a store).

People also hire music for certain jobs to be done. For example, religious music helps intensify the ritual of worship, chamber music can be used as an aural background for social occasions, opera provides an entertaining spectacle, and so on. Jobs can exist within a specific cultural context; for example, the original job of rock music was to provide teenagers a compelling vision of rebellion and excess. Christensen notes that in general the job that customers may hire a product to do may differ greatly from what the vendor intended them to use it for. This is true for music as well; for example, many people listen to religious music for purely aesthetic pleasure, outside the context of a worship service.

In the context of music the jobs to be done concept allows us to address both sociological and psychological aspects of music—i.e., that music has particular social uses and also fulfills certain human pyschological needs. I haven’t read a lot in the relevant literature, so I won’t be concerned too much about what exactly these uses and needs are. (See Daniel Levitin’s This Is Your Brain on Music: The Science of a Human Obsession and similar works that attempt to address these questions.) For the purposes of this analysis I simply assume that such uses and needs exist, that there are a multiplicity of them, and that a particular composition may satisfy each of them to greater or lesser degrees. This leads us to our next topic.

Dimensions of performance

When customers seek to hire a product to do a certain job for them, they evaluate the product based on certain “dimensions of performance” (SWN, 277). (“Performance” here is used not in the musical sense but in the sense of how well products do their jobs.) For example, a mobile phone may be judged on its weight and voice quality, among other characteristics.

In the case of music the dimensions of performance can be identified with the various aesthetic virtues discussed by Gann, perhaps augmented by certain aspects of music that relate to its social uses and are not captured by the purely aesthetic virtues. Thus, for example, people may judge a composition by how “emotional” it is, how “deep” it is (i.e., requiring repeated listening for maximum appreciation), the degree to which it exhibits novelty in its form (what Gann refers to as being “innovative”), and so on.

Note that some of these virtues refer to points along a single spectrum; for example, we can contrast a deep musical piece with one that elicits immediate appreciation. Others are wholly or partially orthogonal to each other; for example, Gann describes Toru Takemitsu’s music as being simultaneously intellectual and sensuous.

Sustaining vs. disruptive innovations

Now we come to the most important and well-known component of Christensen’s framework, his disruptive innovation theory (SWN, 277–79). Christensen divides innovations into two general types:

• “sustaining” innovations directed to demanding customers in an existing market, or
• “disruptive” innovations directed to less demanding and more price-sensitive customers in an existing market (“low-end disruption”) or to new customers or new uses by existing customers (“new market disruption”).

Thus, for example, when mobile phones were first introduced they were a disruptive innovation relative to traditional phones, as they enabled people to make calls in new contexts. Since then mobile phone vendors have been producing sustaining innovations for demanding customers who want lighter phones, phones with longer battery life, etc.

Note also that disruptive innovations can be in the form of new technologies or new business models. Pre-paid mobile phones leveraged existing technology in the context of a new business model that represented a low-end disruptive innovation, enabling people to afford basic cellular service without the need to sign up for an expensive plan.

Returning to music, we can imagine composers creating (for example) “deep” works to which certain audiences respond appreciatively, and in response inventing new compositional techniques to make their works even deeper. Such new techniques would count as innovations, though in this case they are sustaining innovations only. (Note that I am here using the word “innovation” in a slightly different sense than Gann.)

At some point in time other composers may begin writing music of a different type, one that appeals to other listeners; for example, such composers may eschew depth and pioneer different compositional techniques that create music with a clear audible structure that audiences can immediately apprehend and appreciate. From the perspective of the prior composers and their works this would count as a disruptive innovation, and in particular a new-market disruptive innovation, since it is directed at new “customers” not being well-served by the “incumbent” composers.

As noted above, in the context of music and other arts the “price” may not be (only) in money, but may also be paid in terms of attention, engagement, and the level of effort required to experience the work. If a given work can provide a reasonably satisfying aesthetic experience at least comparable to (though perhaps still inferior to) that of a more “expensive” work (i.e., one demanding more attention, engagement, and effort to experience properly) then it can be considered a low-end disruptive innovation. For example, the 3-minute pop song may have functioned in this way vis-a-vis longer works.

Investing in sustaining innovations directed at demanding customers

Christensen’s theory of disruptive innovation originated in his desire to explain why so many successful and innovative companies missed out on the creation of important new markets and were eventually displaced by new market entrants. For example, DEC was blindsided by the success of the PC and the rise of Intel and Microsoft, while Microsoft did not foresee the strategic importance of search engines like Google’s.

Christensen’s explanation for this “innovator’s dilemma” is that companies invest in innovations that are consistent with their capabilities, business models and processes, and overall priorities in serving their existing market. Christensen refers to this as the resources, processes, and values (RPV) theory (SWN, 279). For example, if a cellular company owns its own network and is expert at managing it, and has customers that put a high premium on (and are willing to pay for) market-leading reliability and ubiquity of cellular services, then that company will tend to invest disproportionately in innovations that improve the quality of the network, at the expense of innovations that might reduce the cost of cellular service, enable new applications, etc.

In musical terms the RPV theory implies that “incumbent” composers (i.e., those who have already achieved some measure of success) will innovate based on the stock of compositional techniques that they have already learned and mastered, in the social and institutional context in which they are already situated, and for the same types of rewards (tangible or non-tangible) as those to which they have become accustomed.

In many cases a company’s priorities in pursuing new innovations are driven by its most demanding customers, those for whom the company’s products are not yet “good enough”—i.e., they fall short of customers’ needs and preferences along whatever dimensions of performance are most important in the market served by the company. The most demanding customers are typically the most vocal in their complaints and product feature requests, and also typically those most willing to pay a premium for products most nearly meeting their needs.

If our analogies hold we would expect a similar phenomenon in music: Composers would strive to innovate in furtherance of the particular aesthetic virtues valued by their most demanding listeners, i.e., those who have the most sustained engagement with the composer’s work.

Note that this does not mean that composers do not or cannot create autonomously. Composers can themselves be their own most demanding listeners, just as (for example) developers of open source software are known for “scratching their own itch,” i.e., developing software for themselves to use, and enhancing it to improve its fitness for their own particular needs. As with open source developers, this can lead to accusations that composers are not offering anything of interest to ordinary users (audiences), as I discuss in the next section.

Overshooting customer needs

People often speak of aesthetic movements in music or other arts as being “played out” or as having “exhausted the possibilities,” which seems to put the blame on the composers or the materials with which they’re working. On the other hand we have the cliché of the composer who complains that “audiences don’t understand what I’m doing.” Can we reconcile these two views?

In the context of Christensen’s theory one major problem in satisfying the most demanding customers is the danger of overshooting customer’s needs, i.e., investing in sustaining innovations that improve products along dimensions of performance that most customers no longer see as most important. In the technology-based industries originally discussed by Christensen, this occurs when the pace of technological progress is faster than the rate at which customers can absorb it. (This is illustrated in the diagram in this discussion by the contrast between the line marked “sustaining innovation” and the line marked “performance that customers can utilize or absorb.”) For example, steady improvements in integrated circuit technology have translated into regular increases in the processor speeds of the CPUs in personal computers. However except for the most demanding users (e.g., PC gamers) customers have not needed such speed improvements for their typical tasks (e.g., email and web browsing).

Is it possible to overshoot customer needs in a similar way in the artistic realm? Certainly in the case of music human physiology sets certain limits on the range of pitches we can hear, the minimum pitch differences or maximum number of notes per second we can distinguish, the softest sounds we can hear and the loudest tolerate, and so on. Evolution can change such limits over time, but only relatively slowly. Similarly, cultural evolution can result in people being more familiar with and accepting of new musical forms and techniques over time, but this does not happen overnight.

Given that musical compositions are essentially information products (e.g., like software) there would seem to be no inherent limit other than human ingenuity to the extent to which composers could produce new compositions that improve on prior compositions with respect to one or more aesthetic virtues (dimensions of performance). This is especially true if composers are working in parallel in the context of a particular school or genre, all trying to advance their compositions along the same or similar aesthetic dimensions, since they have the advantage of being able to build on and leverage each others’ compositional (sustaining) innovations.

What then accounts for the sense that the work of composers within a particular musical movement is producing diminishing returns from the point of view of audiences? If we take the diagram referenced above as an accurate model, and focus on the main aesthetic virtue or virtues exemplified in the products of a particular musical movement, earlier in time there is a relatively large gap between what audiences want and can appreciate and what composers are producing, and any progress in closing that gap is welcomed. As composers steadily advance in their ability to produce works that embody that virtue (or virtues), the difference between what audiences want and can appreciate and what composers produce goes from large to small. Beyond that point further incremental improvements in the aesthetic virtue(s) in question may be appreciated by those most engaged with composers’ works (including the composers themselves), but leave all others cold.

Creating disruptive innovations to compete against non-consumption

What happens when customers’ needs are overshot? One possibility is that vendors continue to advance their products along the same dimensions of performance as before, chasing the needs and wants of an ever-smaller group of the most demanding customers. This scenario is very much analogous to the by-now-familiar caricature of modern (or more precisely, modernist) composers. However there are two other general possibilities, corresponding to the two types of disruptive innovation discussed above.

In low-end disruption some vendors find ways to offer new products that satisfy most customers’ needs and preferences along the same or similar dimensions of performance as before, but at significantly lower cost. An example from the world of finance is the invention by Vanguard of mutual funds tied to market indices (e.g, the S&P 500). Index funds offered similar investment opportunities to traditional actively-managed mutual funds (including the ability to target particular regions or sectors) and were perceived as roughly comparable products by investors, but had expense ratios (i.e., costs to customers) that in some cases were almost an order of magnitude lower.

In the world of artistic endeavor we’ve characterized “cost” as not only an issue of monetary price (i.e., how much people must pay to experience a work) but also as related to the level of attention, engagement, and other effort the audience must devote to experiencing the work. In this sense the introduction of recorded music was a major low-end disruptive innovation, allowing people to experience music without the monetary cost of concert tickets and the non-monetary costs in time of getting to the concert hall. Listening to recorded music was inferior to listening to live music in several respects—sound quality, immediacy of the experience, the social aspect, and so on—but audiences were willing to overlook that in exchange for the reduced cost and increased convenience. This trade-off is characteristic of low-end disruptive innovations.

With new-market disruption some vendors find ways to offer new products that enable new uses by either existing or new customers, and that typically address customers’ needs and preferences along different dimensions of performance than before. As noted previously, mobile phone service was a disruptive innovation relative to traditional phone service, allowing existing phone customers to make calls in situations where this was previously impossible. The very first mobile phone customers cared relatively little about voice quality (traditionally among the most important dimensions of performance for telephony) and much more about new dimensions of performance: the size and weight of the handset itself, the geographic extent of the service areas, and the relative convenience of roaming between cellular networks.

I’ve already alluded to minimalist music as a disruptive innovation with respect to the modernist idiom that was prevalent in the late 1950s and early 1960s. Another interesting example of disruptive innovation in music occurred in the early 1990s in the context of the popular musical genre electronic dance music (EDM). With roots in disco and related genres, EDM (as the name implies) was created for listening in nightclubs, at raves, and in similar social contexts, and the prioritized dimensions of performance were those like simple song structure, a steady and pronounced beat, and rapid tempo that were conducive to dancing. (These were also present in many minimalist compositions, of course; in The Rest is Noise Alex Ross notes the influence of composers such as Steve Reich on EDM.)

Sustaining innovations within EDM (e.g., increasing the beats per minute) produced improvements along existing dimensions of performance relevant to social dancing, but overshot the needs of listeners who wanted to listen to electronic music at home or in other solitary contexts. Intelligent dance music or IDM, while recognizably grounded in EDM, emphasized different qualities of the music—for example, more variations in timbre and more experimental song structure—that were more important and valued in the context of home listening. IDM allowed EDM fans to listen to variants of their favorite music in the home instead of in clubs, and also attracted new listeners who were not previously going to clubs. By thus supporting new uses and users IDM was a classic new-market disruptive innovation relative to existing EDM works.

Note that new-market disruptive innovations do not compete directly against existing products in the exact same markets addressed by those products. Instead they “compete against non-consumption” as Christensen puts it. Translated into the world of music this means that we should not necessarily expect disruptive musical innovations to compete for and win the loyalties of existing audiences in existing contexts; instead new music would typically give rise to new audiences, or at least new contexts in which existing audiences might experience that new music.

Overlapping vs. independent value networks

Following on from the preceding point, disruptive innovations don’t just give rise to new markets. Truly successful disruptive innovations simultaneously both depend on and give rise to entirely new value networks (defined above as “[a firm’s] upstream suppliers; its downstream customers, retailers, and distributors; and its partners and ancillary industry players”).

For example, early transistor radios were a disruptive innovation relative to traditional tube-based radios (SWN, 157): They were both cheaper and lighter than existing radios (albeit inferior in sound to tube-based radios), and so could be adopted by new users like teenagers for new uses like listening to radio outside the house. (As Christensen notes, “Even the poorest of sound qualities delighted teenagers, because for most of them, the alternative was to have no radio at all.”) Tube-based radios were typically sold by specialty appliance stores that were equipped to provide the post-sale service that such appliances required. Such stores had no interest in selling cheap radios that were designed to be replaced rather than repaired in the event of a problem. However transistor radios were perfect for the newly emerging discount stores (e.g., K-Mart) since they could be sold cheaply in high volumes and required no post-sale maintenance.

If the value network for a disruptive innovation overlaps too much with the value network for existing products then the disruptive force of the new innovation may be blunted “When there are overlapping suppliers, distribution networks, sales forces, or ancillary providers, firms can face severe pressure to create something that makes sense to the [incumbent] competitor’s value network and hence makes sense to the competitor.” (SWN, 63) This overlap allows incumbent vendors to either directly impede new market entrants (e.g., through particular “choke points” controlled by incumbents), or to compete with new entrants by co-opting particular features of the new products into their own.

In the context of music the value network associated with composers and their works includes performers (both individual and ensembles), critics and musicologists, music schools (teaching both performance skills and compositional techniques), performance venues and the organizations that control them, concert promoters, record labels, individual and institutional patrons, prize committees, and so on. Kyle Gann’s writings on the “downtown” and “uptown” music scenes offer a classic picture of one value network resisting disruptive innovations, with attempts to create a new value network in response.

Integrated vs. modular solutions

The association of successful disruptive innovations with new value networks is related to another aspect of disruptive innovation, namely the extent to which successful disruptive products are created in a vertically integrated fashion, with a monolithic (as opposed to modular) architecture. As noted previously, disruptive innovations are typically objectively inferior to existing products when judged against the prevailing criteria: they are designed to be cheaper at the expense of lower performance and/or are designed to meet an entirely different set of criteria. In order to be successful disruptive innovations must be designed to be as good as they possibly can be given the cost targets they must meet and the new contexts in which they’ll be used.

The best way for a vendor to do this is to develop, manufacture, and distribute the product in an integrated manner, controlling as many of the aspects as needed in order to achieve the desired customer experience. This point is at the core of the “value chain evolution” (VCE) theory, the third component of Christensen’s overall theoretical framework (after disruptive innovation theory and the resources, processes, and values (RPV) theory):

The [VCE] theory suggests companies ought to control any activity or combination of activities within the value chain that drive performance along dimensions that matter most to customers. Directly controlling, or integrating, an activity gives companies the ability to run experiments and push the frontiers of what is possible. . . .

Consider IBM’s early mainframe computers. IBM needed to improve the mainframe’s overall performance. It integrated the design and assembly processes for individual components and the entire computer. Complete control gave IBM the design freedom to experiment and improve mainframes to meet customer needs. A modular, nonintegrated strategy would have produced an underperforming product that customers would have rejected. (SWN, xix)

This integrated approach is also characteristic of newly-introduced disruptive innovations in music and other arts. For example, we see innovative composers exercising control over as many aspects of the overall musical experience as needed to achieve success for their innovations: designing new instruments or making their own idiosyncratic uses of existing instruments, creating their own ensembles, embedding their works within a larger philosophical framework, prioritizing live performances over recordings or written scores, or even building their own performance spaces.

This reach for control could simply be laid to the personality of particular artists; however it can also be thought of as a practical response to the problem of creating disruptive aesthetic innovations. Also, control need not be total—it need extend only to those aspects of the work that are most critical to improving performance along the dimensions that are most important to demanding customers (remembering again that the artist is often the most demanding customer of all).

Christensen contends that over time the need for complete integration lessens as companies learn to modularize products and outsource some aspects to others:

Modular architectures that facilitate (or permit) disintegration sacrifice raw performance in the name of speed to market, responsiveness, and convenience. This sacrifice allows companies to customize their products by upgrading individual subsystems without needing to redesign an entire product. They can mix and match components from best of breed suppliers to respond conveniently to individual customers’ needs. (SWN, xx)

Modular architectures are made possible by the creation of standard interfaces between components that allow specification of the desired inter-modular behavior, verification that the behavior is as designed, and predictability that the correct behavior will always occur (SWN, 283). In the context of music modularization of the aesthetic experience has been made possible by the invention of various forms of musical notation, the invention of various tunings and their eventual replacement by the “equal temperament” system, the invention and standardization of new instruments and types of instruments, the classification of voice types both at the gross level (e.g., bass, baritone, tenor) and with more specificity (e.g., by Fach), and the invention and standardization of various types of ensembles (e.g., the string quartet or the symphony orchestra), among others. All of these form the context within which sustaining musical innovations can be created.

As implied by the term “value chain evolution” the introduction of modularization can change the nature of an industry, most notably by allowing perceived value (and the consequent economic rewards) to migrate from one part of the value chain to another. For example, in the PC industry the introduction of standard “IBM-compatible” hardware interfaces and the MS-DOS operating system APIs allowed the perceived value and realized profits to shift from the manufacturer of the PC itself (IBM) to the suppliers of the microprocessor (Intel) and the operating system and major applications (Microsoft).

In the field of music this tendency is accelerated by the fact that composers’ works live on past their own deaths and in the limit pass into the public domain, at which point they have no economic value in and of themselves. The focus then shifts to others in the value chain: While there is no possibility for further evolution in the works of (say) Beethoven, individual performers and ensembles can compete to produce new interpretations of Beethoven, and the most successful (according to the prevailing standards of taste and virtuosity) will be rewarded accordingly.

In the extreme case of the industrial-era symphony orchestra almost all value accrues to the conductor / music director as the “systems integrator” of the aesthetic experience, as almost every other component in the musical value chain becomes fungible. The focus then shifts to the ability of the conductor to elicit a high level of performance from the orchestra, create novel interpretations of individual works, and combine multiple works into an interesting program.

Asymmetric skills and motivations in competitive battles

What happens when new market entrants introduce a disruptive innovation into existing markets? Assuming that the new market entrants do not fail due simply to poor execution, there are two general possible outcomes: The new market entrants and their disruptive innovations thrive and perhaps even displace the incumbent vendors, or the disruptive innovations get co-opted by incumbent vendors.

Success and even displacement due to disruptive innovation can occur when new entrants are protected by the “shield of asymmetric motivation” and are able to wield the “sword of asymmetric skill,” as Christensen puts it (SWN, 43–45). Asymmetric motivation occurs when incumbent vendors view disruptive innovations as having limited market opportunities, a potential customer base that is undesirable relative to the incumbents’ current customers, and no potential for profitability given the incumbents’ current business models. Protected by the unwillingness of incumbents to exploit the disruptive innovations, new market entrants can then develop asymmetric skills, i.e., unique ways of doing things that incumbent vendors cannot match, and that can potentially be used to compete with incumbents:

A company’s skills come largely from its processes. A process comes from repeatedly solving a particular class of problem. . . . Asymmetric skills arise when one firm, through repeatedly completing the same task, has developed a unique ability to do something that its competitor is uniquely unable to do. (SWN, 44)

For example, in the late 1900s Western Union was focused on providing long-distance telegraphy for business and was not motivated to worry about telephone service, which at that time was local only and primarily for personal use. Protected by this lack of motivation, telephone companies, most notably AT&T, were able to build critical skills in network operations, billing, and so on.

Kyle Gann’s “Breaking the Chain Letter: An Essay on Downtown Music” offers an example of this in the aesthetic realm:

Quite often, Downtown composers are lacking in skills that a European conservatory would consider essential to a composer’s education: orchestration, counterpoint, 12-tone set manipulation. Downtowners, however, have their own sets of skills—just intonation, sound processing, South Indian rhythmic cycles—that are more intimately relevant to the music they’re trying to create.

In essence Downtown composers developed a unique set of compositional techniques and processes in the course of repeatedly attempting to solve a particular class of musical problems; these were asymmetric skills in relation to those of Uptown composers.

Downtown composers and others working in similar spaces were then able to use these asymmetric skills over time to create works that addressed dimensions of performance similar to those addressed by traditional modernist composers. For example, early minimalist music was criticized for its lack of depth (though of course in historical context this was more a virtue than a failing). However over time composers working in such idioms as postminimalism and totalism were able to build on minimalist techniques and produce works of comparable depth to traditional modernist compositions.

In the case of telephony companies such as AT&T were eventually able to leverage their asymmetric skills to move from providing local service to providing long-distance service, and eventually displaced Western Union as the dominant provider of long-distance communications for businesses. An analogous example of displacement in the aesthetic realm is the rise of hip-hop and its competition with rock to become the most popular musical genre in the US and elsewhere.

In the decades since rock and roll’s creation in the early 1950s rock artists used a standard set of compositional techniques (originally derived from the blues), instrumentation (most notably the electric guitar), ensemble structure (the classic rock band featuring lead guitar, rhythm guitar, bass, and drums), and other aesthetic innovations to become the dominant popular music genre and achieve worldwide success. As part of that process rock artists were able to move up-market to satisfy the needs of more demanding listeners, in the process almost totally displacing existing genres like jazz.

When hip-hop was invented in the 1970s hip-hop artists used a much simpler set of aesthetic resources than their rock contemporaries, at heart just a beat and spoken words. As an outgrowth of urban dance culture hip-hop initially addressed a much different market than that of rock (traditionally focused on white suburban teenagers and the adults they became). It was also evaluated along different dimensions of performance (e.g., the quality and novelty of beats and samples, cleverness in rhyming, and verbal facility and “flow”) and gave rise to a separate value network (e.g., new distribution mechanisms for hip-hop releases that bypassed the traditional major recording labels)—all hallmarks of a classic disruptive innovation.

Because hip-hop did not compete for the same audiences and share the same value networks as rock, traditional rock artists were not motivated to competely directly with hip-hop in its initial market. Under this shield of asymmetric motivation hip-hop artists were then able to develop asymmetric skills—for example, the ability to achieve aesthetic depth through building a dense collage of samples (as in Public Enemy’s releases).

As hip-hop evolved (most notably with the advent of gangsta rap in the 1980s) it was eventually able to take over the original (and still relevant) job of rock, namely to provide a compelling vision of rebellion and excess to white suburban teenagers. In this context hip-hop can be seen as a low-end disruptive innovation that could accomplish the same job as rock but in a simpler (in our context, “lower cost”) manner, both from the point of view of producers (since hip-hop could be produced by a single person working alone) and consumers (since hip-hop’s elements were stripped down and thus arguably required less engagement to produce an aesthetically satisfying effect on the listener). Thus hip-hop was able to displace rock in many of rock’s traditional markets.

However would-be disruptors are not always successful. In many cases incumbent vendors are able to fend off competitive threats by co-opting disruptive innovations, i.e., incorporating them in some manner in their existing products and business models. For example, as noted above mobile phone service was originally a disruptive innovation relative to traditional wireline telephony, enabling users to make calls in new contexts, and as such was pioneered by new market entrants (e.g., McCaw Cellular), not the incumbent service providers.

However in the end incumbent vendors were able to co-opt wireless telephony and incorporate it into their service offerings, either through acquiring existing cellular providers (as AT&T did with McCaw) or by building their own cellular networks through dedicated subsidiaries (e.g., Verizon Wireless). As Christensen and his co-authors note (SWN, 64), this co-option was made possible in large part because of overlapping markets and value networks: Wireless providers focused on integrating their own offerings with the existing landline networks and with those of other wireless providers, so that wireless service came to be seen by consumers as simply an extension of traditional phone service. This in turn enabled incumbent telephone companies to leverage their traditional strengths in network operations and interconnection, billing, and so on, to provide wireless services as good as or better than what new entrants could provide.

Analogous attempts to co-opt disruptive innovations can occur in music and other arts. In some cases attempts at co-option are really just “cramming” as defined by Christensen: “trying to stretch an underperforming disruptive innovation to meet the needs of demanding customers in a mainstream market” (SWN, 292). One thinks for example of many of the early lame attempts to incorporate rapping into rock music, or the more risible experiments in enlivening orchestral performances by including rock musicians. In other cases attempts at co-option can achieve some success but still not protect incumbents against displacement. For example, the attempts by Miles Davis and others to incorporate elements of rock into jazz spawned the relatively popular “fusion” subgenre but did not ultimately prevent rock displacing jazz in overall popularity.

In general successful co-option is more likely when incumbents are motivated to respond, when they have resources, processes, and values similar to those of new entrants, and when the respective value networks overlap. As an example, many contemporary classical composers and performers are attempting to go after new markets by introducing more informal performance practices, playing in more casual venues, organizing in smaller and more flexible ensembles, and the like—essentially trying to attract many of the same listeners who currently make up the audience for indie rock and pop.

I think this is a great idea, and I myself am a fan of several of these artists; however I’m not sure that “indie classical” will ultimately be successful as an independent movement. After all, rock has already successfully incorporated practices such as creating extended instrumental compositions (as in post-rock), using classical instruments and orchestration (as in chamber pop), and others traditionally associated with classical music. It’s not out of the question that rock could incorporate even more classically-derived elements.

The value networks for indie classical and indie rock also overlap significantly: they appeal to many of the same listeners, are played in some of the same venues, reviewed in some of the same publications, and so on. Many contemporary classical artists also perform or collaborate with indie rock artists. If I were a betting man I’d lay odds that the majority of what we know today as the contemporary classical (or “new music”) scene will not survive as an autonomous movement but rather be absorbed into the broader indie rock genre as rock (or at least certain segments of it) moves relentlessly up-market in response to competitive pressures from below.

Suggestions for further research

This concludes (finally!) my sketch of the possible connections between Clayton Christensen’s ideas and aesthetic innovation in music and other arts. When all is said and done this might simply be an example of muddled thinking and forced analogies carried out to absurd length. However if there are any useful insights at all contained within this post, it’s worth taking a moment to outline some ways in which this picture could be filled out:

• One could do a full treatment of the “jobs to be done” by music and other arts. As I noted previously, I think that some of the answers here are to be found in human physiology and psychology, and other answers in sociology and economics.
• One could also construct a reasonably comprehensive list of the dimensions of performance against which aesthetic experiences might be evaluated. This would essentially be a formalization and expansion of the ideas on aesthetic virtues and their combinations discussed by Gann, supplemented perhaps by some other dimensions of performance relevant to music’s social and economic aspects.
• An investigation of the historical evolution of music or other arts could identify candidates for sustaining or disruptive innovations. Such an investigation would look at the exact techniques used by artists to create sustaining innovations, as well as the ways in which disruptive innovations were characterized by new dimensions of performance and new uses and users. A full treatment would also address how disruptive innovations were either co-opted by existing movements or eventually succeeded in displacing them, including the effects of the value networks associated with particular artists and artistic movements.
• Finally, if the overall theoretical framework seems robust based on the historical evidence then it could be used to predict future developments in the arts, including identifying areas where nonconsumption presents opportunities for new disruptive innovations, and projecting whether nascent artistic movements are likely to be successful or not.

If this outline is indeed of interest to anyone then perhaps they’ll be willing and able to take it further. For myself this will be the last word, as I’ve gone much further than my very limited knowledge might justify and have exhausted anything useful I might have to say on this general subject.

Glyn Moody (glynmoody) ’s status on Sunday, 06-Sep-09 08:20:46 UTC - Identi.ca - 2009-09-06 08:20

[…] /2009/09/06/music-and-the-theory-of-disruptive-innovation/ a few seconds ago from Gwibber […]

Links 09/09/2009 (9/9/9): Debian switches to Upstart, Palm introduces Pré junior | Boycott Novell - 2009-09-10 01:13

[…] Music and the theory of disruptive innovation Christensen’s theory of disruptive innovation was originally formulated in the context of technology-based businesses (e.g., computer companies), and thus our basic strategy is to equate the world of art with the world of business at a fairly deep level. (If this offends you please stop reading now.) […]

Quite coincidentally eMusic’s recent deal with Sony will shortly result in Michael Jackson’s back catalog being available on eMusic, at prices ranging from about $0.41 per track to $0.50 per track on the new eMusic plans. Since Michael Jackson died before his releases hit eMusic, Sony has a period of a few weeks during which it can sell Jackson’s releases in digital format at full price to buyers who are not price sensitive, after which more price-sensitive buyers are free to buy them through eMusic at significant discounts. For example, an eMusic buyer who doesn’t care about bonus tracks should be able to snag a copy of Thriller for $3.69-4.50 on the standard plans (9 tracks at $0.41-0.50 per track), representing a 50-63% discount relative to Amazon or the iTunes Store.

By having such a delay Sony can maximize profits by avoiding offering lower prices to buyers who are very price-insensitive and must have the albums as soon as possible after Michael Jackson’s death, while still being able to get sales from price-sensitive buyers who don’t mind waiting a bit. (See my earlier blog posts on the economics of the Sony-eMusic deal and optimizing eMusic vs. non-eMusic sales for more on price discrimination in the eMusic context.) It’s essentially the same strategy Sony is employing by holding current releases back from eMusic until two years have passed, only with a much shorter release window for the full price version.

By looking at iTunes and Amazon sales figures before and after Michael Jackson’s albums show up on eMusic, Sony should be able to get a pretty good idea of the extent to which sales through eMusic are cannibalizing sales through other digital music stores. If it turns out that offering Jackson’s releases through eMusic has little or no effect on iTunes or Amazon sales, that would be an argument for Sony reducing the two-year delay for offering other Sony releases to eMusic customers. If this indeed happens it would be an oddly providential side effect of Michael Jackson’s death.

One final thought: My comments above might seem cold and calculating, but they would not have been foreign to Michael Jackson himself, who famously counted his friendship with Paul McCartney as less important than the opportunity to acquire publishing rights to the Beatles catalog. The King of Pop understood that as far as the major labels are concerned the true value of music is simply the present value of that music’s future sales.

UPDATE: As it turns out, the Michael Jackson catalog on eMusic is being sold under the new “album pricing” plan, which is really just variable pricing under another name. In particular an eMusic customer would be charged 12 download credits for downloading the album Thriller despite it having only nine tracks. Thus the eMusic price for Thriller for US customers would be somewhere between $4.92 and $6.00 on the standard plans, or between a 40-51% discount off the standard Amazon or iTunes price. Still a substantial discount, but not quite as attractive—more like the Amazon “50 for $5” promotion except all the time.

wuntun (rafiesterson@gmail.com) - 2009-07-02 23:58

Actually, Thriller will cost between $4.92, and $6.00 under the new ‘Album Pricing’ fiasco. You have to spend 12 credits to get the 9 tracks.

zidni01 - 2009-11-02 00:09

Here is what I think about Michael, and I truly feel like this in my heart. I honestly feel that Michael was the most talented and entertaining angel in heaven. And being that God loves us all so much,(no disrespect to others who have different religiongs) that he wanted to share Michael with us. I bet you he said before Michael left “wait until they see”! We were granted 50 golden years with his angel, and while Michael slept he took him back, maybe that way because he knew if he was awake Michael might ask if he could stay a little longer because he loved us-humanity- so so much. Michael loved this earth and everything that was pure in it. For that alone I love him back, the talents he possessed were just icing on the cake. I am extremely thankful for Michael and also that I lived in HIS era and got to see his light which produced magic with my own eyes. So are just starting to realize who we had, and thats O.K., as long as love comes out of it. We who love him feel like we had him only for 50 short years, but I know in heaven it had to be the longest 50 years ever. They missed him then like we miss him now, hes adored and loved in and out of this world. Thank You Michael for everything, we loved and enjoyed every single minute that God granted us to have with you. You could never be forgotten cause you live in all our hearts, and definetely in your amazing music and art. You are the best gift I have ever been given, and you inspire me to be a better like you. Its definetely do-able, you have shown us that and laid the blueprint on how to make this world a better place “for you and for me”. LOVE YOU MORE MJ…

Burton Haynes - 2009-11-28 00:30

Michael Jackson was one in a million, he was such a legend in every right. Here’s to wishing his heart and love live on forever. Long live MJ!

1. Casual listening to familiar music at my computer.
2. Casual listening to familiar music when I’m offline.
3. More focused listening to a) familiar and b) less familiar music while driving.
4. Auditioning music for inclusion in my core collection.

Here’s how my jobs to be done match up with various digital music products and services being offered today:

• Since I listen to my core collection of music both online (job 1) and offline (job 2), downloaded MP3 files (or other download formats playable on an iPod or iPhone, such as AAC or FLAC) are the best choice for jobs 1 and 2. They also satisfy job 3a, that part of job 3 that involves listening to familiar music.
• Either satellite radio stations or Internet radio stations (i.e., using the iPhone to connect over 3G) will work to satisfy my need for novelty in listening while driving (job 3b). (Terrestrial radio stations are useless given my taste for non-mainstream music.) For my purposes I don’t care if the stations are human-curated, or auto-generated based on either genre (like Slacker) or similarity to a particular artist (like Pandora). Note that while driving I can’t afford to distract myself by frequently fiddling with controls, so Internet radio features like song rating or skip-ahead are overkill from my point of view. (In Christensen’s terms they “overshoot” customer needs, at least in my case.)
• Auditioning music for my collection (job 4) requires listening to whole tracks (not 30-second samples) and ideally being able to listen to a whole album all the way through without being interrupted by ads or having to explicitly hit the “play” button again. Since I normally audition music while I’m using my laptop and I’m online, job 4 can be done by an on-demand streaming subscription service like Napster or Rhapsody that is ad-free and can play whole albums with a single click. If I don’t mind occasional ads I could also use a free ad-supported service like Imeem (which also supports whole album plays).

Under my previous eMusic plan I didn’t worry too much about downloading things I might not like. With 40 tracks I could download the equivalent of three or four albums per month, and it was OK if some turned out to be clunkers. I don’t have time to listen to all that much music, and can’t readily absorb more than one or two albums per month into my core collection of things I listen to frequently.

Unfortunately eMusic’s new higher prices discourage this sort of experimentation (as many current eMusic subscribers have commented). In order to maintain a roughly comparable monthly expenditure on digital music I’d have to switch to an eMusic Basic Annual plan (at about $10.83 per month for 24 tracks) or an eMusic Lite plan ($6.49 per month for 12 tracks). With only 12 or 24 tracks per month I feel more pressure to make sure that every downloaded album is one I’ll want to listen to more than once.

In the short run I’m looking at the following possibilities, in order of increasing cost:

• Subscribe to the eMusic Lite plan and then use Imeem or a similar ad-supported on-demand streaming service to audition candidate albums for possible downloading via eMusic. Total cost: $6.49 per month for 12 downloaded tracks, or $0.54 per track.
• Subscribe to the eMusic Basic Annual plan ($129.99 per year for 24 tracks per month) and supplement it with Imeem as discussed above. Again I would have to listen to Imeem ads while I’m auditioning an album, and would also be locked in to my eMusic plan for a whole year. Total cost: $10.83 per month for 24 downloaded tracks, or $0.45 per track.
• Do a combination of the eMusic Lite plan and a paid Napster subscription for on-demand streaming; for $5 extra per month this eliminates ads and gives me an additional 5 MP3 tracks a month. Total cost: $11.49 per month for 17 downloaded tracks, or $0.68 per track (averaging across the two services).
• Do a combination of the eMusic Basic Annual plan and a paid Napster subscription. Total cost: $15.83 per month for 29 downloaded tracks, or $0.55 per track (averaging across the two services).

For any of these strategies I can add access to Internet radio stations to address job 3b, listening to new and unknown music while driving. There are a number of choices here, including the iPhone apps for Imeem, Last.fm, Pandora, Slacker, and others. Of these Slacker probably meets my needs best, since it features easy access to genre-based stations—this gives me a bit more novelty than basing a station on a particular artist. I may also continue listening to satellite radio in the car, since it’s more convenient than hooking the iPhone up to the auxiliary input port and a car charger.

(Note that at this time there does not appear to be any service offering on-demand streaming to the iPhone. I’m guessing that this is due to Apple and/or AT&T blocking such access. This is not a major problem from my point of view, but it is yet another annoying aspect of today’s music industry.)

In the end I’ll likely go with the combination of an eMusic Basic Annual plan for downloads, Imeem for on-demand streaming, and Slacker for Internet radio. This should take care of me for the near-term, assuming that Imeem, Slacker, and other music services are able to continue in business offering free services. We may also see Spotify in the US at some point, which would provide another option.

However I can’t help thinking that this is much more complicated than it needs to be. It would be great to be able to “hire” one service to do all of my musical jobs to be done, at a price that’s reasonable. Would such a service be possible? What would it look like? What would it cost? These are questions I’ll address in my next post.

David Brady (david@ferriel.com) - 2009-06-16 04:23

Didn’t realize this was your blog until just a moment ago. I was the Tandem/Altsig founder way back in the day. (Everytime I play MBV, I think of our conversations about the band…) Still way into music - most of it supplied by eMusic for the last 6 years. My eMusic track count is just short of 10000 today. I’m looking through my iTunes play count for the tracks and it is clear that I’m not investing quality time in the music. (And that’s not including the 25000+ tracks from my CD collection…) I’m seriously considering taking a collecting hiatus, and swapping my gathering time for enjoying the collection I’ve already accumulated. Have you considered, perhaps, 6 months of devoted listening to your collection? Rediscover the music you already have? That might be the simplest thing of all…

hecker - 2009-06-16 17:28

It’s great to hear from you after all these years. The Altsig list was my introduction to online discussions about music; thanks again for starting it! In response to your point, I actually do a lot of re-listening to stuff I’ve downloaded in the past. That’s one reason I went for a 40-track-per-month plan a couple of years ago when I could have gotten a higher-end plan at grandfathered prices. However I do have an ongoing desire to hear at least some new music, which is why I’m thinking of continuing at least on a 12- or 24-track per month plan.

J.H.M. (jmalerman@comcast.net) - 2009-07-12 12:33

Hello, there… I found your blog recently, and I’m quite happy about that. It has been very informative. Personally, until recently, I was on the Connoisseur Plan, and exceedingly content. The recent change has really put a damper on many of my downloading plans, as I tend to buy long experimental albums with few tracks, originally amazingly cheap on eMusic, but now variably expensive. One slight perk is that they’re adding a free month or something to my account, whilst docking 78¢ from my monthly Premium Plan; Plus, several of the artists I like remain a bargain (I can still get Merzbow’s “Age of 369/Chant 2” for under four bucks, which is a somewhat hard-to-find 2-CD). Nonetheless, annoying as hell. Despite the clichés here… Fight the power!

For a long time now I’ve been a fan of “disruptive innovation” theory as pioneered and popularized by Clayton Christensen and his colleagues. One of the key concepts in Christensen’s theory is that people “hire” products because they have certain “jobs to be done.” To quote the folks at Innosight (a consulting firm co-founded by Christensen):

Using the jobs-to-be-done concept requires first understanding the problems a customer faces—whether at work or in daily life. We find it helpful to push for as much specificity as possible when describing a job. Complete a job statement that looks like the following:

[Customer] wants to [solve a problem] in [this context]

Identifying the context is particularly important. For example, trying to access the latest news while you are on an airplane is a fundamentally different problem than trying to access the latest news while sitting in front of your television or commuting to work.

Thus, for example, when it comes to music and music-related content I have at least four separate jobs to be done:

1. Occupying my mind while I work, do spare-time writing like this, or surf the web. For this purpose I typically prefer to listen to music I already know (to avoid encountering unfamiliar songs that might break my concentration) and to listen to full albums (to prolong the time before I need to select something else). In this context I’ll typically be using my laptop and have an Internet connection.
2. Occupying my mind while I work or read on plane or train trips. My listening patterns are the same as with job 1, but I’m typically using my iPod (or the iPod app on my iPhone) instead of my laptop, and (at least on planes) have no way to connect to the Internet.
3. More actively listening to music while I’m in the car driving. Sometimes my listening patterns are the same as in jobs 1 and 2; other times I prefer to listen to random music chosen by others, to avoid having to distract myself by choosing what I want to listen to, and also to increase the novelty factor. (I’ll refer to these are jobs 3a and 3b respectively.) In this context I have a choice of satellite radio, my iPod (no network connection), or my iPhone (Internet connection over the AT&T 3G network).
4. “Auditioning” music for jobs 1 and 2, i.e., deliberately seeking out new music and actively listening to it in order to determine whether I want to make it part of my core collection of things I listen to on a regular basis. I typically combine this type of listening (which I do on my laptop) with reading music reviews on eMusic, Amazon, or other sources, or looking for recommendations on 17 Dots or the eMusic message boards. Since I tend to listen to albums I typically audition entire albums and not individual tracks.

Note that the above simply reflect my personal uses for music, and are far from exhausting the range of possible jobs to be done involving music. For example, one might listen to music to accompany exercise, to pump oneself up for a sports event or a big presentation at work, to establish a mood for a date or other occasion, or to serve as a marker signaling ones’ membership in a social group or subculture (e.g., “Williamsburg hipsters”). However since I’m part of eMusic’s target audience (“music lovers in the underserved 25-54 demographic”) I suspect that many eMusic subscribers share at least two or three of my jobs to be done.

There are a couple of other factors to take into consideration; again I suspect I share these with many eMusic subscribers:

• I am price-sensitive, but not extremely so. On the one hand, I’m not willing to buy music at the typical present-day price points, e.g., $0.99–1.29 per track or $9.99 for an album. On the other hand, I have little or no interest in spending extra time tracking down free downloads (whether authorized or not), buying or trading for used CDs, or waiting for periodic sales (e.g., Amazon’s “Daily Deal” or “50/$5” promotions).
• I pay little or no attention to current mainstream pop, rock, or hip-hop, and am content to buy primarily from independent labels or (to a lesser extent) from major label back catalogs.

Given the above, what types of music products and services should I “hire”? More on that in my next post.

The first is from Billboard columnist and Coolfer founder Glenn Peoples, who welcomes the fact that Sony is now “pricing for profits, not margin.” In other words, rather than trying to maximize its margin or profit per sale (i.e., by selling only at relatively high prices), Sony is now looking more seriously at maximizing its profit overall: “The goal is not to maximize per-unit margin but to reach more consumers and gain incremental revenue and profits.”

How will Sony do this? By practicing price discrimination to identify and sell to more price-sensitive buyers:

A person who doesn’t want to pay more at iTunes may be willing to shop elsewhere to save money. How does Sony find this group? It licenses its music to a store known for offering downloads at relatively low costs to high-volume buyers. . . . Per-unit revenue may be lower but total revenue and profits should increase.

If Sony can profitably sell through eMusic (and presumably the new $0.40 per track floor price is designed to allow them to do that), and if selling through eMusic doesn’t cannibalize sales through higher-priced outlets (which the 2-year delay in releasing to eMusic is designed to address) then any incremental sales through eMusic are pure gravy as far as Sony is concerned. Those sales are money that Sony would not otherwise have seen—either the buyers would have downloaded unauthorized copies via P2P or they wouldn’t have bothered to get the releases at all.

(I’ll once again plug the book Information Rules, which addresses the problem of pricing “information goods” like digital music in a quite readable and accessible manner. You can get a flavor of the book by reading the paper “Pricing Information Goods” by Hal Varian, one of its co-authors—who not so coincidentally is now Google’s chief economist.)

The second example is from David Harrell of The Layaways and Digital Audio Insider, who contends that even with higher prices eMusic’s per-track payout may not change:

It seems likely that the presence of more “name brand” artists and albums in eMusic will result in less digital breakage by subscribers. So while subscribers will have fewer downloads available, they’ll be more likely to use all of them, which may be enough to offset the effect of the price increase on the final per-track payout to labels.

Without significant digital breakage, the per-download payout is bound to be less than 30 cents a track, even under the new pricing model. No doubt some breakage will continue to occur, but it seems likely that the current breakage rate will decrease significantly. Hence, it seems likely that the new subscription plans are more likely to preserve the recent payout amounts I’ve seen, as opposed to substantially increasing them.

(“Digital breakage” is the term—apparently coined by Harrell himself—for the money eMusic and labels realize from eMusic subscribers not using all the downloads that they paid for, analogous to the similar phenomenon with gift cards. The music industry term “breakage” dates back to the days of fragile 78 RPM records, when labels would pay royalties on only, e.g., 90% of records manufactured and shipped, on the assumption that the other 10% were broken in transit and thus never reached consumers. The practice evolved into a standard up-front cut of sales that labels took for themselves on all music sold, no matter the format, and used to reduce royalties paid to artists.)

The final outcome of all this is going to depend on the following factors, among others:

• the growth in the number of eMusic subscribers due to adding major label content;
• the changes in per-track payouts due to changes in subscriber behavior (both by new subscribers and existing subscribers); and
• the changes in the relative fractions of downloads going to indie labels due to competition with major label releases.

If the per-track payout changes are a wash then from an indie label perspective this deal is a net plus only if eMusic significantly increases its subscriber base and indie labels are able to capture a reasonable portion of downloads from the new subscribers. This is obviously a “bet the company” strategy for eMusic, and it will be interesting to see how it plays out. Digital Audio Insider has the most in-depth analysis of eMusic payouts around, and will be a key place to find clues as to whether eMusic’s bet is paying off for indie labels and musicians.

Amanda (NankerPhledge on eMu) - 2009-06-06 01:59

Is there any commentary anywhere on the ins and outs of geographical distribution of music? eMusic has decided to exclude anyone from outside US, Europe, Canada entirely which is what most other digital stores already do. The fact they haven’t for so long, they are going to grandfather existing users in and only say they will start this new policy “in the near future” leads me to believe it is not a legal issue per se. It is a policy decision, presumably driven by the Sony deal, and other such deals they wish to make in the future. Just wondering if there was an analysis anywhere of how that system works. I need to know where to vent my venom!

hecker - 2009-06-06 02:12

Actually, I don’t think this is eMusic’s fault. In the past eMusic has done stuff for non-US subscribers that is in a legal gray area. For example, if I recall correctly, once upon a time eMusic let people subscribe from Europe but didn’t charge the European Value Added Tax (VAT) or pay royalties to the European rights agencies (instead of the US agencies). They cleaned all that up when eMusic UK and eMusic Europe were created. However similar situations occur in other countries (for example, many countries have their own specific rules and agencies for collecting music royalties, and label contracts are often very country specific), and so I suspect eMusic is just trying not to skirt the boundaries of what is legal according to all the existing agreements.

Amanda (Flopearedmule@gmail.com) - 2009-06-06 03:16

If it is legally grey why would I be allowed to be grandfathered and why wouldn’t they stop it straight away instead of “in the near future”? If you’re a company doing some potentially illegal and you are made aware of that, you don’t say oh well we’ll knowingly act illegally for a little longer and let those who’ve been acting iilegally so far to continue to do so. So I think it’s a policy decision in deference to major labels, not a legal matter. I can go to Amazon.com and perfectly legally buy any CD I want and have if shipped here. But I can’t buy the same record in MP3 form. How does that make sense? Sorry to be a bit OT Frank but seems to me this is part of the industry dysfunction eMu was something of a corrective to.

hecker - 2009-06-06 03:22

We could both be right here: it’s a legal gray area *and* eMusic is acting in deference to the major labels, because the major labels likely care more about the issue than indies do. (Or to be more precise, a major label cares more about it than any particular indie label does, because it has much more revenue at stake.) A good question on the CD vs. MP3 issue. Can you buy MP3s from Amazon in the same way you buy CDs? I have no idea if geographical distribution arrangements differ for digital downloads vs. physical formats.

Amanda (Flopearedmule@gmail.com) - 2009-06-06 04:01

No, the Amazon MP3 store is unavailable outside the US. Believe me I’ve tried :-) most digital stores and streaming services are not available here. I know these are complex issues and I don’t want to rant without the facts. But emu customer service sure ain’t gonna give me a straight answer so I have get it elsewhere.

My goal was to write something that treated eMusic subscribers as the mature intelligent adults they (mostly) are, while still announcing all the service changes that eMusic made, including the more unpopular ones. Remember, this is a work of fiction. I don’t work for eMusic, do not in any way speak for eMusic, and have no formal relationship with eMusic other than as a usually-satisfied customer.

Without further ado, my imaginary missive (with footnotes from me as indicated):

Dear eMusic subscriber,

I’ve been actively involved with eMusic for several years as CEO of Dimensional Associates, the company that acquired eMusic in 2003, and as executive chairman and now CEO of eMusic itself.¹ The eMusic staff and I are proud of eMusic’s position as “the internet’s corner music store,” offering a deeper, more personal alternative to mass market digital music retailers, at prices that provide good value compared to other retailers’ standard pricing. Over the years we’ve worked to make eMusic better by increasing the depth and breadth of music we offer and the help we provide to make music discovery easier. Today I’m writing to tell you about the latest evolution of eMusic and how it will affect you.

Our focus from the beginning has been on music from independent labels. We are proud to offer more than five million tracks from over 60,000 record labels that span every conceivable music genre. We also strongly believe in providing music listeners digital music in industry-standard formats free of DRM and related restrictions, and our independent label partners were early leaders in selling music as high-quality MP3 files. However at the same time we believe that great music is great music wherever it comes from, and the major labels of today offer extensive catalogues of quality music from many of the most innovative labels and artists in history. We’ve therefore talked with various of the major labels over the years to try to find ways to offer that music to our subscribers in DRM-free form at a price that provides good value to our subscribers and in a manner that’s consistent with our focus on helping our customers expand their listening horizons.²

Today I’m pleased to announce that we’ve reached an agreement with Sony Music Entertainment to offer our US subscribers access to music from the catalogues of labels like Arista, Columbia, Epic and RCA, beginning later this year. This agreement (which we’re working to extend to non-US subscribers as well) will include all Sony releases more than two years old,³ and will bring to eMusic works by artists including the Strokes, Bruce Springsteen, Leonard Cohen, The Clash, and many more. We’ll continue our tradition of helping you discover great albums and tracks among this wealth of music, through recommendations, reviews, and in-depth articles from our knowledgeable staff. Our editorial director Yancey Strickler has more information on how we plan to integrate these new releases into eMusic while continuing to highlight the independent offerings that have always been the heart and soul of the eMusic experience.

Our goal in offering music from Sony (and perhaps other major labels in the future) is to make eMusic a more attractive and comprehensive service to current subscribers and new subscribers alike. We also want to attract even more independent labels, and more releases from the independent labels already on eMusic. That means finding price points for music that provide good value to our subscribers while still enabling all our label partners (both independent and major) to profitably offer their releases through eMusic under our traditional subscription-based model.⁴ Based on our discussions with Sony as well as with our independent label partners, we’ve concluded that a per-track price of at least $0.40⁵ will enable our label partners to make eMusic a sustainable business proposition and us to continue to invest in improving the service we offer to you, while still providing a significant value compared to the typical prices offered by other digital music services.

We’ve therefore changed our eMusic US plans to reflect this new approach, with an eMusic Basic plan now offering 24 downloads for $11.99 per month ($0.50 per song) and other standard plans offering better prices (as low as $0.41 per song) in exchange for higher monthly commitments. We’ve also changed the pricing for our non-US plans to be more consistent with US pricing, and in anticipation of our being able to offer more labels’ music to our subscribers outside the US.

When making past price changes we’ve offered at least some existing subscribers the option to continue their plans at the previous price levels. Unfortunately we can no longer continue that practice; it is not financially sustainable in the long run, and arguably is also unfair to more recent subscribers who cannot take advantage of older plans.⁶ We’re therefore requiring all subscribers under such “grandfathered” plans to select from one of the current plans when their existing plan refreshes. We will offer you the default choice of a current plan most similar to your existing plan.

We recognize that these new plans represent a significant price increase over previous plans, especially for long-time subscribers and subscribers with Plus, Premium, and Connoisseur plans, and could make eMusic less attractive to many current subscribers. We appreciate having your business over the years, and we hope you’ll stick around to check out our new expanded offerings and the many other improvements we’ll be making in the coming months and years. For those subscribers active as of August 1 we’ll provide a free 15-track booster pack as a small token of our appreciation for continuing your subscription.

We’re also working to make eMusic a better value by addressing a long-standing issue with our track-based subscription model. We know that many of our customers are avid listeners who tend to purchase entire albums, not just individual tracks. Unfortunately purchasing an album with a very large numbers of tracks through eMusic is often more expensive than purchasing the same album from other digital music retailers. We’re moving to correct this problem by offering album pricing that will allow you to download selected albums of 12 or more tracks for the price of 12 downloads.⁷ In cooperation with our label partners we will work to extend this album pricing to more and more releases over time, so that eMusic subscribers don’t have to hesitate before deciding to download a complete album.

This is a major event in the history of eMusic, and we understand that many of you are concerned that the eMusic you know and love will be no more. The eMusic staff and I are committed to ensuring that eMusic remains the best place on the Internet for discerning listeners to discover and purchase new music at value prices. We appreciate your past business, and hope you’ll continue to be part of the eMusic community.

Yours truly,

Danny Stein⁸

Amanda (NankerPhledge on eMu) - 2009-06-03 04:48

That would work a lot better for me. You can only sweeten such bad news so much, the difference between a concerned perhaps even unhappy but placated customer and a furious customer ready to tear up the contract is honesty in how the news is delivered.

Johan Anglemark (johan@anglemark.se) - 2009-06-03 09:10

Yep, this is the letter he should have written. Perhaps also including something about how eMusic has been facing complaints by some labels already onboard for not paying them enough.

Brendan (brendansullivan07@gmail.com) - 2009-06-03 14:46

I’d like to think that if this letter had appeared a few days ago instead of the original one then there would be slightly less of an uproar. Of course, the unanswered questions are still there (album pricing, grandfathered accounts, etc.) but at least the presentation could have been more cogent, forthright and sympathetic towards the customers.

Tony (yourhumblepuppy@aol.com) - 2009-06-03 15:01

In my own greed, I’ll be sad to see my .25/track deal go away, but as anyone paying emusic less than 30-some cents a track has to realize, someone’s losing money on me, as I use all my downloads every period. I’ve woken up, and I’ve smelled the coffee. But OTOH, I have been very casual with music purchases when the price is that low, including springing for a whole album based on only a track or two. Will I spend 5 Bucks for MP3s of an unheard album? Probably not. Will I spend 5 bucks for MP3s of a Sony “Nice Price” CD special? Probably not. Will I get a plan that costs me 50 cents for an MP3? No. Absolutely not. But I’ll hold on. Sony is about a lot more than old Dylan and Springsteen and Janis Joplin and Billy Joel. They have lots of Masterworks catalogue I’d love to see and select tracks from. Sometimes you just want to buy some Lotte Lenya at 3 in the morning, y’know? While the inventory at my local used-CD store has arbitrary restrictions (not every title is in all the time), I’ll be going back there more, I think. After all, I endure the arbitrary restrictions of eMusic’s selection, too.

Nergal (tergon@earthlink.net) - 2009-06-03 20:45

Frank, again again wonderfully thought out. That’s why I’m so happy to have you in my RSS’s One note (for future readers) could you use an anchor tag on the Endnotes i.e. click [4]in the text jump to note 4 click [4] in the note jump back to text 4 Again frank always great to read your items :) (I still say I’m glad for the chance at the columbia jazz and classicals)

qwynwyn (qwynwyn@yahoo.com) - 2009-06-03 23:15

This is a great letter that Danny Stein should have written! Seriously! Oh well. I wonder who gave him feedback about his letter….

david (dgavril@hotmail.com) - 2009-06-04 16:52

yes, this would have been much less upsetting than what he posted. You have to wonder about a company when the leadership is clearly incompetent!

EV Debs (balpers@intergate.com) - 2009-06-05 02:46

I do think this letter puts the best possible spin on things. No offense, but it’s really not so hard to write a letter like this. So why didn’t they? The Sony/price increase roll-out has really been a case study in bad marketing. It’s just incredible to me that they’d do it so poorly. And as far as I can tell, they still haven’t figured out the damage they’ve done. At least judging from the traffic on the eMu message boards, the two official responses–which essentially try to continue the happy talk–have been understandably met with more rage. At the very least, whoever came up with this strategy needs to get sacked.

EV Debs (balpers@intergate.com) - 2009-06-05 02:51

Incidentally, have you noticed that they’ve also quietly gotten rid of unlimited re-downloading? After four downloads they’re now going to start to charge you.

Andrew Careaga - 2009-06-05 16:40

Nice ghost-writing. Too bad eMusic couldn’t have leveled with us in such a fashion. If anyone’s interested, I’ve written my own open letter to eMusic expressing my own conflicted views of the situation.

Andrew (ndrw@juno.com) - 2009-06-06 03:23

I’m all for the price increase, as long as the artists benefit! My favorite music has mostly been on indie labels. Ironically, since subscribing to eMusic, most of my physical CD/LP purchases have been major label releases unavailable from eMusic. I actually prefer the MP3 format, as I’m running out of physical space for my record collection. Several of my favorite indie artists have spoken out against illegal MP3 downloads. I subscribed to eMusic to support the artists.

Manny (mookiemail21-shop@yahoo.com) - 2009-06-08 05:27

Nice job on easing the subscribers’ pain. You obviously could never be a corporate titan. (that’s a compliment.)

UsedToLikeEMusic (utlem@mercurysolutionsllc.com) - 2009-07-04 19:18

eMusic also neglected to mention an innovation that is unique in the market place: that some album purchases will not work in the subscribers favor - i.e., fewer than 12 tracks are there, with at least 1 requiring album purchase, and eMusic charges 12 credits. I provided the following example when I asked eMusic about this because I thought it was a mistake: http://www.emusic.com/album/Herbie-Hancock-Head-Hunters-MP3-Download/11478633.html, but there are many others, including some full-length album tracks that require 12 credits: http://www.emusic.com/album/Harry-Henshaw-Insomnia-The-Ocean-Soothing-Relaxation-Music-Wi-MP3-Download/11258699.html. In this case, this isn’t even a Sony track - it used to require just one download under the old pricing. Here is what they wrote to me: " Thank you for contacting eMusic Customer Support. Perhaps the easiest way to understand album pricing is to think of it like buying a CD. The cost (credits required) of an album is independent of the track count (just like a CD). Some albums don’t offer album pricing at all: the credits required to download the entire album equals the number of tracks. More often, you’ll see albums with 12+ tracks offered at 12 credits. Sometimes you’ll see an album priced at 12 credits when it has fewer than 12 tracks, as in the example you’ve given. Usually this happens when an album is comprised of very long tracks, but it may also be stipulated by record company licensing agreements. Regards, Kenneth - eMusic Customer Support " Yay - way to look after your customer base, eMusic. iTunes doesn’t even do it that way.

More specifically, the plan changes are as follows:

• The eMusic Basic plan is still $11.99 per month, but has been reduced to 24 downloads ($0.50 per song) from the previous 30 downloads ($0.40 per song), or a 25% per-track price increase.
• The eMusic Plus plan is now 35 downloads for $15.89 per month ($0.45 per song) vs. $14.99 per month for 50 downloads ($0.30 per song) under the previous plan, or a 50% per-track price increase.
• The eMusic Premium plan is now 50 downloads for $20.79 per month ($0.42 per song) vs. $19.99 per month for 75 downloads ($0.27 per song) under the previous plan, or a 56% per-track price increase.
• The eMusic Connoisseur plan is now 75 downloads for $30.99 per month ($0.41 per song) or 100 downloads for $40.99 per month (also $0.41 per song) vs. 100 downloads for $24.99 per month ($0.25 per song) under the previous plan, or a 65% per-track price increase. Also, the new Connoisseur plans are available only as upgrades from another plan, and require a minimum 3-month commitment; previously the Connoisseur 100 plan was offered as an option at sign-up time, with no minimum commitment required.
• People with annual and 2-year plans will be moved to higher-priced plans when their old plans refresh. In my case the default choice offered is to move from my (grandfathered) Basic 2-year plan offering 40 downloads a month for $89.91 per year ($0.19 per song) to a standard Premium Annual plan offering 35 downloads a month for $171.99 per year ($0.41 per song), or a 119% per-track price increase.
• When downloading at least some complete albums with more than 12 tracks, only the first 12 downloads will be counted against the subscriber’s monthly quota.
• Booster pack downloads now range from $0.60 per track (when bought in packs of 5 or 10) to $0.50 per track for a pack of 50. I don’t have a complete record of the old pricing, but as far as I’m aware this is not a major change from previously.
• eMusic is offering a free one-time 15-track booster pack to subscribers who stay with eMusic past July.

I’ll have more to say about the overall changes at eMusic in future posts, but for now I wanted to note a few additional points regarding the new pricing:

• Presuming it came from eMusic directly and was not a misquote, the comment in the New York Times article that “eMusic says it will slightly raise prices and reduce the number of downloads for some of its monthly plans” was extremely disingenuous, to say the least. As far as I can tell all US plans have had the number of downloads reduced, and per-track price increases of 50% (for eMusic Plus), 56% (for eMusic Premium), and 65% (for eMusic Connoisseur) are hardly “slight.”
• As noted above, it appears that $0.40 per track is the new floor for eMusic US prices. I cannot find any published option offering a per-track price less than $0.4095 (available through the eMusic Plus Annual plan). There does not appear to be an annual option for the Premium or Connoisseur plans, and 2-year plans appeared to have been eliminated altogether.
• Subscribers get just less than a 10% discount for choosing an annual plan vs. 12 months of a monthly plan. (The eMusic Basic Annual plan is $129.99 or $10.83 per month vs. $11.99 for the corresponding monthly plan, while the eMusic Plus Annual plan is $171.99 or $14.33 per month vs. $15.89 for the corresponding monthly plan.)
• By eliminating the Connoisseur plan as an option at sign-up and offering only three options (Basic, Plus, and Premium), eMusic has reverted to a more straightforward “Goldilocks pricing” strategy, with the eMusic Plus plan presumably the one eMusic would like most subscribers to choose.
• eMusic has mitigated the price increases slightly by offering subscribers the ability to download “selected” albums with more than 12 tracks and be charged only 12 downloads. However it remains to be seen how many albums will actually be priced in this manner. (I suspect that this may depend on individual labels and whether they choose to do this for all or some of their releases through eMusic.)

All in all this is the biggest change in eMusic pricing for quite some time, and judging by the reaction of the subscribers who frequent the eMusic message board, probably the most controversial change since eMusic was originally acquired by Dimensional Associates and discontinued its “all you can eat” unlimited download model.

Amanda (NankerPhledge on eMu) - 2009-06-02 05:00

Thanks for doing all this work. On my “grandfathered” 90 plan I am going to 50 for $19.95 – same price as now, 40 fewer downloads – plus a 25 pack booster. So its a bit different for these older plans. Is that 39.9c? Maths is not my strong suit. Also, I should flag the predicament of subscribers who use the US store but are not in the US (ie outside of UK, EU and Canada which have their own stores) – we are getting the same changes with no guarantee of getting the major label content. I would like eMusic to clarify this, but my experience of geographical distribution makes me pessimistic that I will see the “not available in your country (Australia)” message when I click on come July 1st.

Amanda (NankerPhledge on eMu) - 2009-06-02 05:01

Correction: $19.99, not $19.95.

Michelle (artemis@bluetrail.com) - 2009-06-02 05:18

Note that those wishing a last splurge on $.30/track songs can still get 100 song download cards at places like Target for $29.99. You have a year from purchase to add them to an emusic account and then 60 days after that to use them up.

captwhiffle - 2009-06-02 06:14

Thanks for doing all that math! I’m no good at math, but you’ve confirmed what I’ve been suspecting all day: we’re getting screwed.

polydaidaloi.com » Blog Archive » Farewell eMusic but thanks for the tunes. - 2009-06-02 11:11

[…] Amanda, I learned that online music provider eMusic is not only changing its pricing structure but has also signed a deal with Sony to distribute its back catalogue via the site. This has caused […]

Hassan (hassanchop@gmail.com) - 2009-06-02 14:10

I have used Emusic since it was all you can eat and I do not like the changes. I was on a 1 year plan for 191. a year. I figure for the same plan it will be a 93.78% increase which sucks. I am not sure how much of the Sony catalog interests me because I have most of it. There has to be a better way that this to treat a portion of your customer base.

eMusic’s New Pricing | Avant Music News - 2009-06-02 14:49

[…] uproar is deafening. I’ve blogged about how I feel, as has Brandon Wu, and others. Check out eMusic’s official blog and the hundreds of negative comments that they have […]

Frank Lynch - 2009-06-02 17:12

Bono once said the first sign of old age was in your record collection, and I’ve been using eMusic to keep mine young, at small economic risk (I am [was?] on the 75dl/$20 plan). Older Sony/Columbia recordings don’t interest me a whit- - I pretty much have all I want from them from 2+ years ago. But I enjoyed finding new bands like Califone and Fluttr Effect and the Slip and Calexico, and I would NOT have tried them otherwise. This significant price increase, while still below iTunes and Amazon, hurts. About all I can see it being valuable for are track packed recordings like the old Jimmie Rodgers or Pete Seeger sets, where it’s over 20 tracks/CD. As Samuel Johnson once said about an inn in Scotland with far too little to offer, “we did not express much satisfaction.”

Bigbigpop - 2009-06-02 18:21

My grandfathered in plan of 50/11.99 has been axed to 30/11.99. That’s in at just under $0.40/track according to my math.

Sony & eMusic: era uma vez um clube de música indie | Remixtures - 2009-06-02 18:41

[…] há bela sem senão, para aceitar este acordo a SMEI deve ter certamente exigido como contrapartida preços mais elevados por cada música descarregada. Quem paga são os subscritores da eMusic. Assim, a partir de agora, […]

Nergal (tergon@earthlink.net) - 2009-06-02 23:21

Hecker, As always I want to thank you for your metered and edcuated post on the state of eMusic. I must say that after reading sooooo many of the comments of Dots (i’m sure yancey’s defienitly got a headache, that was many more than the 15 it takes ;) ) I eneded up just deleteing the rest. I’m not pleased with the increase,but not so much to leave my beloved emusers and what not. I’ll be glad to see some of the classic stuff. But, like you i’ve been around a while and seen many changes. i’m sure the editorial staff and us longtimers will make the best of it. thanks for passing my tweet to all and following up with wonderful blog posts. cheers, Nergal

Village Green Studios - 2009-06-04 00:17

On eMusic I could afford to be adventurous and sample all kinds of things. Now, not so much. And why? So I can access to downloading loads of music I already know about? Meaning I already own it or don’t care to. I wouldn’t download Thriller for a ¢01 let alone ¢41/track. Feels like eMusic was completely unaware of their core customer. We’re talking about this on the rock blog, http://www.rocktownhall.com/blogs/index.php/2009/06/02/i-m-so-mad-at-my-emusic

Suncat (djones1415@aol.com) - 2009-06-04 03:22

Was on the old $19.99 for 90 downloads per month. Going to 50—180% increase—almost DOUBLED the price for a subscriber who has been with them for four years. CYA, eMusic. Companies with this idea of customer service should go out of business. They set the price for me four years ago. I agreed. If they mispriced it, their bad. If their cost structure changed, their bad–they shouldn’t have offered at that price for those downloads. Fact is, they NEEDED subscribers like me at the time. And they got them. Now, they raise the price. First cousin to bait and switch.

Frank Lynch - 2009-06-04 13:00

I realized this morning that the doubling of my per download price isn’t a linear issue - - not in the sense that it makes me half as willing to experiment or download tracks. It’s a TRANSFORMATIONAL issue, in that the price point goes past the marginal value for experimenting with a new artist or adding to my collection of some artists. (For those who didn’t take econ, or whose learning rusty, marginal value ties into diminishing returns: with each successive unit, the value of an additional unit declines.) Thus, while I have 15 CD’s worth of Sun Ra on my player and 15 more CD’s worth of Sun Ra in my emusic “saved” list, 40 cts a track on additional Sun Ra is higher than my marginal valuation. So I would download NO more Sun Ra, not half as much. Regarding incentives to experimentation, I think eMusic and any labels who asked for the price increase may be hurting themselves. I would imagine the following compromise could be easily implemented, yet still allow for the revenue requirements and allow for experimentation. Simply this: charge the “old” price for the tracks you download from the first CD’s set, and the “new” price for those thereafter. In this way, experimentation could still be promoted, but additional revenue would there for subsequent efforts. I downloaded a LOT of Calexico and Califone; after the first downloads, I wasn’t experimenting, I was making educated selections.

Urfwin (geda740@hotmail.com) - 2009-06-04 15:22

Why didn’t eMusic just stick to their ‘old’ subscription plan, implement the major labels, and charge you $.10 extra for downloading a major label track? Would be fair to anyone who only joined eMusic for the indie-labels.

Frank Lynch - 2009-06-04 16:38

Urfwin, one article I read suggest that some of the independent labels also wanted a price increase; adding Sony was an “opportunity.”

scruss - 2009-06-05 14:18

Looks like eMusic Canada subscribers are getting all the price increases, but none of the major label content or the capping out albums at 12 tracks. Weak. (oh wait, I think I’m supposed to say “Swindleeeee!” here …)

SunCat (djones1415@aol.com) - 2009-06-05 19:08

I hope customers leave them by the droves. I am. Music is a discretionary purchase. I’ll spend my $20 per month elsewhere. They won’t miss me. But if 2000 more join me, they will. They have made the business judgment that after all of our complaining, they are still lower than Amazon and iTunes, so we will complain but we have nowhere to go. They could have increased prices for new members and rewarded loyal old customers. Don’t let this price increase work for them. Just say NO. Cancel!

Serra (serhan_ozmen@hotmail.com) - 2009-06-06 13:11

Yes I agree with both messages on top. I will also quit experimenting as I did with these higher prices. They should just charge more for the major label content. I am no in emusic for that content. They could even create a new plan to include major label content but leave the old ones as they were. There were well positioned, now they are trying to be like the others and they have the risk of dying abandoning their initial value proposition.

Zach (crunchyave@yahoo.com) - 2009-07-03 19:21

I have canceled my account as of july 1st. Emusic always attracted me because it offered an opportunity to discover new music at a price that allows the user to extend their musical tastes at little risk, far below what you would pay for downloads elsewhere. I personally don’t care one bit about adding any major label tripe to the site, so paying for this “upgrade” is out of the question for me. I don’t listen to that, instead opting for avant garde, electronic music, metal, and other generally obscure musics. So paying more for less downloads to get something I didn’t want was the last straw. I think this may be the case for many users, and it’s sad to see that eMusic is choosing to take away from the qualities that made it unique. BTW, a quick comment on the new “12 downloads for an album” plan: This may work out okay if every album you want has more than 12 tracks on it, and I have in the past passed albums over because of how many downloads one album would cost. HOWEVER, eMusic has also decided that any track longer than 15 minutes (of which there are many in my chosen genres) can only be purchased by downloading the entire album at a cost of 12 credits. So, many albums that previously cost 1-5 downloads now must be purchased for 12.

emusic eats itself | Porch Dog - 2009-07-07 21:01

[…] right now, having just recently made a deal with Sony and (not coincidentally) dramatically hiked their prices.  For some this represents a dramatic improvement for emusic: even though the price-per-download […]

Bob (spam@spam.com) - 2009-07-09 10:33

Longtime customer, cancelled last night. Emusic has to keep two out of three existing customers to make this price increase work. I suspect some will cancel, some will lower their plans limits. Terrible marketing though. People went to them because they were different. Hated to cancel but some new service will pop up.

Abdur-Ra’uf (transphericity@yahoo.com) - 2009-07-12 09:45

Not only that, but many Indian Classical albums are only one track of about 20 to 25 minutes and cost 12 downloads.

Jan (all.my.email@gmail.com) - 2009-07-18 11:54

I am with Bob on this one. I was on the $19.99/90 a month for over 3 years. Gonna grab my expensive 50 downloads and call it quits with eMusic. It’s too bad. I really loved taking risks on obscure world music. But now, it’s just not worth it.

TH (tanahargest@earthlink.net) - 2009-07-21 00:44

I just canceled. I had been a member since 2004, on the $24.99 for 100 downloads plan. I was to be cut to 50 downloads for $19.99. It just wasn’t worth it for me to continue. I primarily sought out jazz and classical, made a few new discoveries in other genres. Although I was unhappy with the change to my plan, it was really the new “12 downloads for an album” and download restrictions for longer tracks that convinced me to cancel. I was running across too many 5-track albums that now cost 12 downloads and too many download restrictions on longer classical and jazz tracks. As far as I’ve seen, the “12 downloads for an album” isn’t really being applied to multi-track classical or opera albums in a way that would benefit customers. Plus, truly helpful members like Nereffid have closed up shop and deleted their lists, so there really isn’t any incentive to stay.

jaredean (shop@prolook.com) - 2009-09-02 15:15

I agree completely and cancelled with several e-mails to whoever would listen that it is a terrible way to treat the customers that made them great…i’ve been a customer since 2002 and when they grandfathered me in their last increase i knew i was locked in and thought i’d never leave since i was getting 90dl/20bucks – why would i ever go anywhere…sure, it was a price increase - but they showed me they appreciated my loyalty…with the latest increase and dropping of my grandfather status i’ve cancelled my account - they obviously don’t care about me anymore, so i hope more people are like you and I - if enough of us cancel they will get the message…

The major trade-off (no pun intended) seems to be that eMusic has agreed to “slightly raise prices and reduce the number of downloads for some of its monthly plans,” in effect imposing a per-track price that is higher than its current prices, which range from $0.40 per track for the eMusic Basic plan (30 downloads for $11.99 per month) to $0.25 per month for the eMusic Connoisseur plan (100 downloads for $24.99 per month). What we don’t know yet is exactly which plans will be affected, and what the price increases will be. My personal guess is that the eMusic Basic plan will remain the same, but that the other plans will be revised to bring the lowest per-track price up to $0.30 or even higher.

So much for the bad news. On the positive side, this deal will give eMusic subscribers better access to the important works of past musical eras, will make eMusic more attractive to potential subscribers, and if successful may persuade other major labels to do likewise. This in turn makes it more likely that eMusic will survive and even thrive as a (relatively) low-price outlet for customers looking beyond the latest hits.

In his blog post Danny Stein raised a point about how this might change how customers might perceive and experience eMusic:

We’ve been requested to carry major label titles for years, but we always have gone back and forth on whether it would change the fabric of eMusic. We don’t think it makes sense to exclude great artists simply because their label partner is one of four specific companies. We look to some of our favorite music—The Sex Pistols, The Clash—and we certainly never think to ourselves “Major Label.” What do you think? Do “major” and “indie” mean anything to you or is this just industry jargon?

In the past the record labels now aggregated under the term “major” were in fact where the most important innovations in popular music were happening (as Bob Lefsetz never tires of reminding us). I think that including older releases from some of those labels in the overall eMusic offering is perfectly consistent with eMusic’s current positioning of itself as “the internet’s corner music store,” especially if eMusic is going to pull out all the stops on providing context and recommendation. (Which I expect will happen—to the extent that this is an experiment, eMusic has every motivation to make it successful.)

I think the major downside other than the price increases is that people will be very mistrustful of having a repeat of the Rolling Stones fiasco. That apparently wasn’t eMusic’s fault, but if Bruce Stringsteen or whoever decides that they don’t like their music being “cheapened” by being sold at eMusic prices and is successful in getting it pulled, or if Sony upper management gets cold feet and decides to kill the entire deal, that’s going to leave a pretty sour taste in the mouths of eMusic subscribers, especially given that the new higher prices will likely remain in effect.

Jumpturn (jumpturn@hotmail.com) - 2009-06-01 17:38

>>The major trade-off (no pun intended) seems to be that eMusic has agreed to slightly raise prices and reduce the number of downloads for some of its monthly plans« SLIGHTLY? Slicing the # of downloads by 40/month? So I can access Wal-Mart artists? WHATEVER

hecker - 2009-06-01 18:37

Note that I was quoting from the New York Times story and didn’t have actual data on pricing when I wrote this. As you note, the actual increases are substantial, by my estimation a 25-100% increase in per-track prices depending on a person’s current plan.

Ground and Sky » Blog Archive » eMusic about to get a lot less awesome - 2009-06-01 19:51

[…] business model becomes more sustainable, I guess I can’t really complain too much. But Swindleeeee!!!!! thought of another interesting potential negative scenario: I think the major downside other than […]

Robb (robecker@u.washington.edu) - 2009-06-01 21:51

Well, now we know - this deal means less music for more money: They have doubled their prices to give us access to a used record bin. Independence of the record labels involved was less of a concern to me than the independence of the service itself. E-music has just become an out of date, watered-down iTunes.

Lloyd (2K Club) (whpcream@teleport.com) - 2009-06-02 01:18

Well, crap! This just sucks. Pardon my French. I am on the 780 annual downloads (65 a month) for $143.90. After November, when my year expires, I would go to 288 downloads (24 a month) for $129.99. Great! I save $13.91 but loose 492 downloads! Well, I will give this place a chance until it is time to renew. But unless I am wowed by the new catalog, it is Amazon for me. Keep in mind that the vast majority of time I download compete albums and both iT and A already offer discounts for album download. Advantages? Better bit rate and I don’t have to worry about downloads expiring. Re: Springsteen and B. Joel Don’t get me wrong, I love them. I’ve loved them since I was in my teens. So I have had plenty of time to buy the CDs. And rip them. Why on earth would I want to download stuff I already have? Or I can get cheap as a used CD.

Mik1 (mik1surf1@comcast.net) - 2009-06-02 20:06

I am bummed by the new e-music plan. I can pick up all the major label CDs cheap at flea markets and the like. So why do I want to pay 50 cents per download when I can get a CD from which I can rip the music from for less. I alos loved being able to try new artists on emusic but now that will be severely curtailed with the price increase.

Stephen (Judah82@aol.com) - 2009-06-02 21:48

I, too, am bummed. I’m outta here when the new pricing plans begin. I wouldn’t spend what I spend on DLs anyway, so I’ll be saving bucks while eMusic will be losing them (at least from me). Bad news for eMusic customers needs to translate into bad news for eMusic.

rarobles (rarobles@gmail.com) - 2009-06-03 05:59

I’ve been an eMusic member from the early days. I’ve referred dozens of people to eMusic. I’ve remained loyal even as I’ve had my plan “converted” twice into more expensive plans with fewer downloads. But this latest announcement is too much — I’ll get 35 downloads instead of 75, for $30/month instead of $15? And for what, just so I have access to the back catalogs of major labels, filled with music that I already own and/or can download from Amazon, iTunes, Rhapsody or a half-dozen other sources? Thanks for killing a great thing, eMusic. I promise you I will not renew my subscription when this one expires.

eric (erfmd@aol.com) - 2009-06-03 07:52

buh-bye.

smooth (jinglebell@rock.com) - 2009-06-04 00:49

The major labels are an evil to the music world and I came here specifically to support independent artists, not them. The competitive edge that got people here to try the indies (low price) is gone with this corporate sell out, and I’m gone too. (Off to check out mag na tune + am ie street + aud io lunch box . com)

social cache: we deal in uncommon cents. » Blog Archive » Ten Years Later eMusic.com Crushes It Brand Values in One Day - The Perils of Not Having a Community Manager - 2009-06-04 19:00

[…] eMusic’s web site with message and 800+ comments. The Phoenix New Times newspaper - headline Sony Ruins eMusic’s Indie Credibility, Raises Rates HypeBot - eMusic Readers React to Sony Addition Swindleeeee leaves a post […]

Sal (salfarina@gmail.com) - 2009-06-06 05:06

since i was on a non standard plan grandfathered in from 3 years ago, i went from 65 tracks/month to 24, at about the same price. i.e. nearly a 150% rate hike, so i can download eminem or whatever. i am pissed.

Bill (buseburke@sbcglobal.net) - 2009-06-06 22:19

Central to eMusic was the concept that with low prices I could try out a lot of new music. And it did have that effect. And, in some cases I went out and bought CDs by artists I never would have heard of otherwise. Doubling prices kills that concept. I know the artists in the Sony back catalogue and, as others have pointed out, don’t need to figure out whether I like them. So this is a bad move in that it I can get now get one of Dave Brubeck’s old Columbia albums on eMusic, but I’ll have half as many downloads and am much less likely to discover young jazz musicians. Seems to me if eMusic really wants to go down this path, they should explore multiple pricing schemes where some tracks cost more than others.

Jay (nosecow@hotmail.com) - 2009-06-08 06:13

He wonders if it will change emusic? Sure it will; it will become more of a mall record store and less of a fun place to explore.

Jessica (jweissmn@his.com) - 2009-06-15 13:32

The only good news is that multiple track albums will be charged at 12 downloads max. For classical music fans and fans of big compilations, this is a win. But a feeble one. I’ll spend a few months grabbing all those many-track albums, then skip the subscription. Alas.

secretary (secretarykissinger@yahoo.com) - 2009-06-18 04:52

this is insulting. i was proud to be a long-time emusic subscriber; now i’m sad to be a former long-time emusic subscriber.

Bob (chicagobob@hotmail.com) - 2009-06-18 19:19

Now that e-music is in bed with Sony we’re all (loyal customers) getting squeezed out. E-Music owes it’s success to tapping into the niche market music scenes, offering music that isn’t necessarily mass market. Not having to cater to this mass market they were able to grow outside of the costs of having to license the likes of Jonas Brothers, Ashley Tisdale, Taylor Swift ect. It seems like E-Music is tossing out it’s loyal consumers just so they can get into the game with other downloadable content like i-Tunes and Amazon. Unfortunately they are straying from the path that made them successful in the first place. Enough so to even think they need to compete against i-Tunes and Amazon instead of realizing eMusic can offer what they can’t. People will always be bummed about any subscription change. At least grandfather those of us who helped eMusic get to where it is by honoring the subscriptions we’ve purchased for over 5 years!

DJ Jackdaw (DJjackdaw@gmail.com) - 2009-06-21 19:40

I gotta say that an increase from 22.2¢ per download to damn close to 40¢ per download is a very steep price increase. I understand eMusic has to be a viable business etc. but I’ll bet that at most I’ll want about 3 tracks a year from the newly available labels. Truth is, for years those labels have ignored my musical interests. Why should I now be expected to pay a whole lot more so that their releases can be available on eMusic? It’s not like you can’t find their releases in many other places, real world and online. Why should I support their desires to fatten their bottom line on recordings that they’ve mostly made their investment back on many times over. I valued eMusic for the opportunity to check out, at very low cost, a lot of new recordings that generally are hard to find in the physical world. I really don’t give a fuck about being able to download The Clash or Sex Pistols via eMusic. They’re hardly what I’d call cutting edge music any longer. No one who’s opinion I respect would think that they were significant today in any way other than historical. Much as I like the music, they’ve become basically little more than consumerist fodder for those who haven’t kept up with the times. I think that this new strategy is kissing the asses of the fat shits that are only concerned about money, not music; the same fat shits who damn near wrecked their business through their unfettered greed. It’s a serious stumble for eMusic in my opinion. Obviously, the value I derived from the low-cost ability to audition a lot of music has now been chucked out the window. I can only hope that sufficient attention continues to be paid to the wide range of music that does interest me; the music made by musicians for those involved with music, not just product. If the availability or profile of worthwhile music is diminished with this change it will truly be a sad day for eMusic.

Dusty (dusty@vic.com) - 2009-07-15 19:31

I think the move to album-pricing was inevitable: the previous “a track is a track” approach was unfair to musicians who record long tracks and listeners who like albums with many short ones. But this means that most estimates of the price increase are far too low: Many albums with 5-10 track are now listed as 12 tracks, with key tracks that used to be available independently now only available as part of the package. The price increase per track for my own plan was 67%, but adjusting for the new track accounting means my effective increase is well over 100%. I am not cancelling yet, but it may be coming soon.

How long until there’s enough unfettered new music, tunes the creators control as opposed to the fat cats, that someone from the outside can roll up these rights and create a viable alternative to the established game?

This I think is the key question, since I agree with Lefsetz that industry incumbents are extremely unlikely to innovate, and long copyright terms, existing contracts and statutory licensing arrangements, and political battles over compensation (e.g., regarding performance royalties for terrestrial radio) will slow down if not halt altogether any major revamp of business arrangements for existing works. In particular I doubt we’ll soon see Lefsetz’s preferred “all you can eat for one monthly price” scheme for legalizing P2P downloads of major label content—a skepticism shared by others.

Thus the only remaining possibility is as Lefsetz outlines: Wait until there is a critical mass of commercially viable new works controlled by artists and corporations willing to play by new business rules. My guess is that we’re talking about a 5-15 year timeframe for this to happen, because this will likely require a combination of the following:

• The emergence of lots of popular new artists who have grown up in the new world of digital distribution, social networking, etc., and are prepared to exploit it to the hilt. If you believe in the “10,000 hour rule” popularized by Malcom Gladwell and its application to popular musical artists, this could well take 5-10 years (assuming that we’re starting basically from zero). However note that the rule does not necessarily apply to talented people helping to create new genres, which leads to our next factor.

• Generational, demographic, and geographic shifts that help foster new commercially successful musical genres, with an accompanying new group of key managers, promoters, and (to the extent they still exist) labels associated with those genres. Again, if we’re starting from scratch (i.e., these new genres don’t yet exist, except perhaps in embryonic form) this could take a fair amount of time. Compare the 10-15 years from the emergence of rock and roll in the early 50s to the mass success of the Beatles and other “British invasion” bands in the mid-60s, or the 10-15 years between the early days of hip-hop in the late 70s and the mass commercial success of rap in the 90s.

• Maturation of the business and technological environment around digital music distribution. The Internet took 25 years from its invention to when it became a major phenomenon (early 70s to late 90s). At this point we are only 10 years past Napster, and are still some ways away from a fully-changed music industry. After a couple more generations of iPhones and similar devices, plus accompanying advances in wireless networks, the “music player of choice” will be a smartphone with sufficient storage to hold all but the most fanatic listener’s music library and always-on high-speed network connectivity suitable for paid downloads, “jukebox in the sky”-style streaming, and/or P2P networking. The current generation of rights holders will of course try to restrict how users access music, as will wireless operators (trying to assume the role of radio as a chokepoint), so as in the past changes in technology will outpace changes in the business environment. Music and wireless industry incumbents will ultimately be foiled by the emergence of a new generation of music industry players and increased competition in the wireless market respectively, but again this might take as long as 10 years or more.

So, my prediction: Lefsetz will possibly see his hoped-for revolution within the next ten years, but definitely not within the next five. We’ll see if I’m right.

How do acts establish a direct connection with their fanbase? How do they entice listeners to join their e-mail list, with authentic e-mail addresses? That’s the number one lesson of Radiohead’s “In Rainbows.” Give away something desirable and you get the right to make contact with your fans thereafter. At MIDEM the co-manager of Radiohead said the “In Rainbows” release allowed the band to collect 3 million e-mail addresses, and ultimately play to 60,000 in San Francisco as opposed to 25,000 the previous time through. And isn’t live where it’s at?

Well, folks, I feel vindicated. As I previously wrote,

I think people are missing a crucial point about Radiohead’s “name your own price” strategy. It is not all about giving listeners what they want, namely DRM-free music that’s free (or nearly so); it is also about giving Radiohead something it apparently wants (and that it could not get working through a major label): deep information about its listener population beyond the hard-core fans (i.e., those who’ve already joined the Radiohead fan club), including in particular information about which listeners are good candidates for up-selling strategies aimed to move more Radiohead merchandise, tickets, and other Radiohead-related products and services.

This was at a time when Lefsetz (among others) was deriding Radiohead’s actions as “playing for tips,” a notion I thought was particularly wrong-headed. I don’t claim to be any great expert on the music business, but I think I called this one exactly right.

soroush yousefi (soroush_inblack@yahoo.com) - 2009-03-21 19:00

i am on of your biggest fans in iran. i love your group i’v listen tracks from pablo honey to rainbows. i was jus giving your group a segestion .i’m saying that maybe you want to replace your group with young and talented rockers to do sth make the group live for ever. i’v been working in a rock band in iran. i’m the singer and ‘im 18. i’m waiting to know what you think about my idea.

beachdog67[club2000] (beachdog67@gmail.com) - 2009-05-07 14:15

Mighty quiet around the halls of Swindleeeee!!!!! these days. Woof!

hecker - 2009-05-07 18:06

beachdog67: Yeah, unfortunately work has gotten in the way of Swindleeeee!!!!! goodness :-(

• “Crystal Tears”: songs of Dowland, Robert Johnson, Byrd, and others; Andreas Scholl, countertenor, Julian Behr, lute and Concerto di viole (Harmonia Mundi). This is 21 tracks (about half of my monthly allotment), but I like early music and the samples sound good, so this is a likely download for me.

• “Heavenly Harmonies”: music of Tallis and Byrd; Stile Antico (Harmonia Mundi). Same story as for “Crystal Tears.”

• Chopin, Preludes, and pieces by Mompou; Alexandre Tharaud, piano (Harmonia Mundi). This is not on CaptWhiffle’s list, probably because it was released late in the year.

• Brahms and Schumann Lieder; Lorraine Hunt Lieberson, mezzo-soprano, and Julius Drake, piano (Wigmore Hall Live).

Several releases on eMusic were also on Ross’s “honorable mention” list; some of these are missing from CaptWhiffle’s list:

• Beethoven’s Symphonies Nos. 2 and 7, with Osmo Vänskä conducting the Minnesota Orchestra (BIS).

• Piano works by Salonen, Stucky, and Lutosławski, with Gloria Cheng (Telarc).

• Elliott Carter’s Quartets Nos. 1 and 5, with the Pacifica Quartet (Naxos). Elliott Carter’s 100th birthday was yesterday, so you can download this as a belated birthday gesture if you forgot to send a card.

• Volume 4 of Beethoven’s Piano Sonatas, with Paul Lewis (Harmonia Mundi). 29 tracks, but even the MP3 release on Amazon is $27.49.

• “Now,” The NOW Ensemble (New Amsterdam). I really like this album, and wrote about it previously in the context of the indie classical scene and the role of New Amsterdam Records within it. New Amsterdam is attracting a lot of interesting artists to its roster (e.g., Corey Dargel, Victrola, Build); some of them I find somewhat meh, but others I really like. Being able to cheaply explore releases from labels like New Amsterdam is one of the great things about eMusic;

• “Mothertongue,” Nico Muhly (Bedroom Community/Brassland). I really liked Muhly’s “Speaks Volumes” (not on eMusic), but after listening to this one a few times I’m still having problems getting into it. The Sequenza21 review captures some of my concerns.

• “Scattered Rhymes” (works of O’Regan, Machaut, Bryars, and Dufay), with the Orlando Consort and Paul Hillier conducting the Estonian Philharmonic Chamber Choir (Harmonia Mundi).

Ross also posted a list of what he considers to be the ten best performances of 2008. This is also interesting, and provided me at least one suggestion for future eMusic exploration.

It’s interesting though: I looked through these 50 albums and didn’t see anything that was attractive to me at a $5 price point. This seems to be my general experience with Amazon’s discounted albums. (I subscribe to the @AmazonMP3 Twitter feed, so I see pretty much everything that appears.) When offered an essentially random collection of discounted albums, a $5, $3, or even $2 price is typically not sufficient to motivate me to purchase something I’m not already seeking out; only at the $0.99 per album level do I tend to make an impulse purchase from Amazon.

This is somewhat at variance with my eMusic experience, where I download lots of complete albums that fall into the $2-4 range. I think this is due to a number of factors: First, and probably most important, eMusic’s download-based system hides the true prices to some extent; I just know that I have X downloads and I need to use them for something. This is also related to the issue of mental accounting costs (aka mental transaction costs): I’ve already paid my money for eMusic, so (unlike Amazon) decisions about what to download don’t invoke the “paralysis by analysis” of deciding whether a particular album is worth spending money on.

Second, I know that everything on eMusic is already discounted, so I can just explore the catalog on my own and not have to wait for discount offers to come to me. Finally, I think with 17 dots, the message boards, etc., eMusic is doing a better job of explaining exactly why I should download something; as I noted, Amazon is just spraying discount offers at me at random with no context or justification. This ties in with my previous argument that a good strategy for eMusic would be to pursue a role as a thought leader and trusted advisor for its customers.

listener (ritamike5310@hotmail.com) - 2008-11-30 21:47

But what if you’re unable to get the downloads that your eMusic membership fee covers? I say do not waste your money on eMusic! First of all, my billing date was changed by a day, so I am being charged $11.95 for a month *after* I canceled my membership on my previous billing days. Secondly, I was unable to download all of the tracks I had coming to me. When I tried to download, it appeared that the track was downloaded, but I kept receiving an error message. I have repeatedly asked Customer Service what happened to my downloads and, although I have received e-mails in response, they did not answer my question. This has been a very frustrating experience.

Amanda - 2008-12-05 06:00

Was it “essentially random”? I thought the 50 for $5 were (I believe) the top 50 albums downloaded on Amazon its not surprising eMu hardcorers would not find much tempting. If they’re that popular, you already know about them and if you want them, you’ve bought them already. I can’t access it anyway since I’m out of the USA but it would make a good supplement for the more mainstream stuff I want. Even with our currency at appalling levels against the USD (causing me to pause a couple of my eMu accounts), even $9 USD is cheaper than iTunes here.

eMusic folks are now twittering as @17dots (but folks, register @emusic too before it’s taken)

@17dots following more (94) than follow it (61), should promote on the message boards

Suggest @17dots do 1-3 posts per day, highlight new arrivals, always include links

@17dots “competition”: @amazonmp3 daily deals, 6,849 followers (OK but drop in bucket, Twitter over-hyped?)

But before clicking away I noticed the pricing: $7.49 per month for five tracks. Yowza, that’s almost $1.50 per track! That’s a pretty high price from a company that’s perhaps best known as a discount outlet for music. I can only conclude that this is just standard practice in the so-called “mobile music” market (or, as it’s often called by cognoscenti, the OTA or “over-the-air” download market). Sure enough, looking at Verizon’s V CAST Music with Rhapsody offering we see that it costs $1.99 to buy a song and have it downloaded directly to your phone, vs. $0.99 to buy it on your PC and then sync it to your phone.

I guess the underlying rationale is that users are willing to pay extra for the convenience of downloading directly to their phones, just as they’re willing to pay extra for the convenience of buying a song already ready for use as a ringtone, as opposed to making their own ringtones from an MP3. I can understand this model for ringtones (where I think convenience is worth paying for), but frankly the traditional OTA business model is a business model that is rapidly becoming obsolete.

When I use my iPhone, there’s no real difference in what I can do over the AT&T 3G network vs. a WiFi network; I’m just using the Internet and the web. Well, there is at least one difference: When I’m on WiFi I can buy music through the iTunes Wi-Fi Music Store, but there is no corresponding “iTunes 3G Music Store” I can use when I’m using the AT&T cellular network. This, of course, is a crock—there’s no technical reason why Apple can’t offer the iTunes Store over the AT&T network, it’s just a restriction imposed on Apple by AT&T, either due to existing OTA-related contracts or to protect the OTA business model generally.

The only reason an absurdity like this can continue is because the iPhone is a proprietary device, and Apple and AT&T can use that proprietary nature to enforce arbitrary restrictions on customers’ use of the iPhone. However over time as more open devices like Android become more popular, and Internet access from mobile phones becomes more like Internet access from PCs, that situation will likely change, if not for Apple then for others. For example, one can imagine a Songbird-like (or perhaps even Songbird-derived) open media player and library manager on a mobile phone, through which one could download and play MP3 tracks purchased through the standard eMusic web site.

To paraphrase a blog post by Jay Sullivan of Mozilla, users don’t want the “mobile Web,” they want the real Web on mobile devices. Similarly users of mobile phones and related devices can look forward to someday moving from “mobile music” to just plain music, and from eMusic Mobile to the same old eMusic we know and love.

Among the copycat stories and regurgitations of the press release I found a couple of interesting tidbits regarding Pakman’s departure. The Forbes story has Pakman expressing continued skepticism on major label strategies (“grasping at straws,” as he puts it), a skepticism I share. The LA Times story makes the (I think important) point that all the other major services other than eMusic are focusing on major label music, so that there’s still good opportunity in the indie space. Over at Hypebot Bruce Houghton continues to obsess about eMusic payouts and worry about possible stagnation in eMusic’s business.

(To digress for a moment, I think Houghton is still out to lunch on the payout issue. Clearly if a) customers want to pay less for music in digital form and b) businesses like eMusic fill that demand, then c) per-track payouts—but not necessarily total profits—will be smaller. Complaining about this is like Wal-Mart suppliers complaining that they don’t have 50% gross margins. The alternative is keeping music expensive, which drives price-sensitive buyers to P2P. If eMusic’s business is indeed stagnating, that’s quite possibly the major reason: that more and more customers don’t want to pay anything at all for music.)

Finally, on his blog (Pakman has a blog? I had no idea!) Pakman talks about his looking for new opportunities to “[use] the disruptive forces of technology to create new players in the value chain of media and technology industries.” As a customer of those industries that’s a goal near and dear to me; I wish Pakman the best of luck in his future ventures, and look forward to (in Clayton Christensen’s phrase) “seeing what’s next” for him, eMusic, and the music industry in general.

Nergal (tergon@earthlink.net) - 2008-10-01 21:03

Frank as Always great to hear your voice (though you rarely post one that RSS’s to me) I was interested in Pakman’s departure as well and I read over some of the same stories you mentioned. See you on the Dots Nergal (formerly MiDoJo)

As previously noted by Yancey Strickler, eMusic did a fair amount of due diligence with both ABKCO (the company holding rights to the Stones’ older releases in the US, the only region in which the eMusic Stones releases were made available) and Universal (the major label through which ABKCO distributed those releases) in order to make sure there were no impediments to the proposed deal. However something happened between the time of the contract signing and the time the releases were pulled, something that caused either ABKCO or Universal to get cold feet and kill the deal.

I’m guessing that sometime during that period Universal senior managers started discussions with the Stones about switching from EMI to Universal. The discussions may have started right after the eMusic announcement, or they may have started after eMusic and ABKCO/Universal signed a contract and before the actual release.

It’s possible that the Universal and/or ABKCO managers negotiating with eMusic may not have known about the Universal/Stones talks, having been kept in the dark by more senior managers. A more cynical reading is that the Universal managers working with eMusic were in fact aware of the discussions (and perhaps even involved in them) and let the eMusic deal go forward anyway, for whatever reason. For example, they may not have wanted to tip their hand about possible complicating issues, or they may even have let the deal go forward just to test the waters and see how well the eMusic model worked in terms of stimulating demand through lower prices.

Now, since relatively few people want to buy new Rolling Stones releases, the Stones/Universal deal is primarily about the money to be had from milking the Stones back catalog. (As Bob Lefsetz put it, “This is a banking deal, pure and simple. Universal calculated how many they could sell and made an offer. End of story.”) Universal already distributed the early Stones catalog, as a distributor for ABKCO in the US and through its own label Decca in the UK (and perhaps elsewhere, though I can’t find confirmation of this on the net). A deal with the Stones for the post-ABKCO material would allow Universal to offer the entire Stones catalog in the US, UK, and perhaps worldwide.

However the deal with eMusic was a complicating factor in the proposed Stones/Universal deal. The presence of an alternate channel offering lower-priced Stones tracks would at a minimum introduce unwanted uncertainty into the financial model for determining the likely revenue and profits from overall back catalog sales, and it’s possible that Universal senior management wanted to eliminate that uncertainty. It’s also possible that the Stones themselves made ending the eMusic arrangement a condition of their signing the overall Universal deal. As noted in the Variety article on the Stones move to Universal, part of the motivation for the deal was “launching a long-term campaign to reposition the band’s catalog in the digital marketplace”; from the Stones’ point of view the vision for that campaign probably didn’t include selling their releases in what they might have perceived as the Internet equivalent of the record store bargain bin.

I find it an interesting coincidence that the availability of Stones releases on eMusic was ended exactly 30 days after it began (May 3 vs. April 3). This suggests that eMusic was allowed to sell the Stone releases only long enough to satisfy some minimum contractual commitment, and that ABKCO and/or Universal exercised their termination rights as soon as they could. Given the typical contractual requirement for some sort of advance notice of termination, I suspect eMusic itself found out about the problem very soon after the catalog went live on the site.

So, in the end, what did everybody get of it of this? Universal probably came out the best; it eliminated a potential impediment to the Stones deal, but not before getting the benefit of a real-world experiment in the effects on demand of lower pricing. The Stones got to preserve the illusion that all their back catalog releases are actually worth $9.99. eMusic subscribers got a few weeks in which to appreciate the work of one of the world’s once-great bands at a reasonable price point. And the folks at eMusic got to bust their butts to make the Stones launch on eMusic a success, only to have the rug pulled out from under them through no fault of their own. Just another day in the life of today’s music industry.

It will be interesting to see how well the new eMusic web site features match up with my and others’ visions of what eMusic could do in this regard. In my original post I wrote that

A concerted approach to provide comprehensive context would combine information from lots of sources: eMusic-exclusive reviews, articles, and interviews, subscriber reviews, relevant message board posts (e.g., linked to from album and artist pages), Wikipedia articles, music blog posts, reviews from multiple sources, news stories, artist and label web sites and other pages (e.g., on MySpace), unofficial fan sites and forums, and so on.

Compare that with the Fortune article:

Let’s say you are a fan of Arcade Fire. You can already read quite a bit about the critically-acclaimed Canadian cult band on its eMusic album pages. Now eMusic will add a wealth of content from the Web 2.0 universe: the band’s Wikipedia entry, pictures from Flickr, and videos of Arcade Fire concerts from YouTube.

When providing context the more the better from my point of view. If eMusic adds context only from Wikipedia, Flickr, YouTube, and other major sites then it will be nice, but I think also a missed opportunity. Here are some key questions:

• How (if at all) will the new site leverage the wealth of user-generated content on the existing eMusic message boards?
• To what extent will the new site provide access to “long tail” content beyond the major web 2.0 sites, for example, posts in music blogs that discuss artists and releases available through eMusic?
• Speaking of blogs, will eMusic’s own 17 Dots blog be better integrated into the main eMusic site?
• Will the new site provide official mechanisms for labels and artists to make their own web content available (e.g, through links to band web sites)?
• Will the new site allow eMusic subscribers themselves to contribute content, either through direct wiki-style editing of pages or through some other mechanism?

I began my last post with a quote from Ian Rogers (now of Topspin), and I’ll repeat the most salient part of it: “iTunes is a (mostly) context-free content experience and the Web is a (mostly) content-free context experience. Whoever puts the two together wins.” Could this be a winning strategy for eMusic? I’m certainly looking forward to what next Tuesday brings.

MiDoJo (tergon@earthlink.net) - 2008-07-17 21:36

Frank, Insightful article as always. And you beat CNet to the punch, as well as 17dots themselves (AFAICT) “Will the new site allow eMusic subscribers themselves to contribute content, either through direct wiki-style editing of pages or through some other mechanism? " This is most important to me, I’d also like Wikistyle Editing of our downloaded lists; as you well know often a Download is removed and we’re given the downloads from the next item is the DataBase. Also I’d like an ability to say no to certain “recommened for you” items (a la Amazon, but handled better) as they are often reflective of silly or free downloads (I’m getting a lot of pop in my suggested just cause I on a lark Downloaded some Ace of Bass :VOMIT: ) Finally, as you and I have discussed before, I’d like the ability to flag other’s album comments and offensive or inappropriate (I’m sick of idiots and there this isn’t available or their the is broken, or their eMusic Sucks comments) Your Fellow 17dotter and emuser, MiDoJo

hecker - 2008-07-17 21:59

Thanks for the comment. Note that I found out about this from my automated Google query for eMusic-related items, and then found out that it was already under discussion in the eMusic message boards. So I don’t get any credit for being first!

As every eMusic subscriber knows, not too long ago eMusic did a deal with ABKCO to sell the early Rolling Stones back catalog under standard eMusic terms (DRM-free MP3s sold at 33 cents per track or even less depending on your subscription plan). eMusic pulled out all the stops to promote the releases, eMusic subscribers were ecstatic, and by eMusic’s account the folks at ABKCO and Universal Music Group (ABKCO’s distributor) were “incredibly impressed” by the amount of business generated—business that was likely almost pure profit from the point of view of ABKCO, UMG, and everyone else involved, and that almost certainly wouldn’t have been generated under the standard iTunes 99 cents per track model. (As I and others have noted many times, eMusic caters to dedicated music listeners who spend a lot of money on music and prefer paid downloads over P2P, but are very price-sensitive.) I’m by no means a Stones fan, but even I took advantage of the opportunity and purchased Let It Bleed and Beggars Banquet (the full albums, not just the singles).

Of course, this being the music industry someone had to spoil the party, and now the Rolling Stones have been pulled from eMusic, along with other ABKCO releases. It’s not clear exactly why this happened. Perhaps there was a unresolved rights issue left over from past legal battles between the Stones and Allen Klein, a senior executive at ABKCO or UMG who got cold feet, or just the old excuse about low-priced downloads “devaluing the art.” In any case somebody somewhere had both the power and the inclination to torpedo the deal, and did. Presumably Rolling Stones fans (or potential fans) who don’t want to pay iTunes prices will now either stop buying the Stone’s music or will download it via P2P.

Bob Lefsetz and many others have proposed licensing P2P on a flat-fee “all you can eat” basis; sometimes Lefsetz has instead talked about a eMusic-like model combining a monthly subscription plan and drastically lower per-track prices. I’m not confident that either of those things will ever come to pass. The music industry appears to suffer from a classic prisoners dilemma problem: It’s more rational for everyone to try to maximize their own piece of the pie and screw everyone else, with the result that the industry as a whole ends up worse off than it would be if everyone cooperated. Thus the labels and artists want radio stations to pay performance royalties, the radio stations want to get paid in turn by the labels for promoting music, and the songwriters and publishers don’t want to change their traditional royalty arrangements to move to a percentage-based model.

Sometimes I think the only thing that would save the music industry from itself would be the government voiding every music contract ever signed and every statutory royalty and compulsory licensing arrangement ever established, and forcing the industry to start from a clean slate. Of course the government would never do this; it’s bought into the industry’s line that maximum control of music and other copyrighted material equals maximum benefit to society, even to the point of considering appointment of an “intellectual property czar” to lead the “war on piracy.” (I’m sure such an IP czar would be just as successful as our “drug czars” have been waging the “war on drugs.”) However where the government does not act the people will act for themselves, and if P2P use continues to grow then for all practical purposes it won’t matter at all what the contracts say and what the royalty arrangements are supposed to be.

MiDoJo - 2008-05-06 00:49

Frank, Once Again it seems that the Record Industry (don’t get it confused with the Music Industry :) ) does not understand the full power of eMusic. Yes it’s true the Stones probably don’t need much help when it comes to product/entertainment (movies and TV) placement. But the release of their music to eMusic was a call to all other “main stream” musicians that perhaps DRM was not all that it is cut out to be. I know for a fact that the amount of downloading done by eMusic patrons of the Stones’ catalog introduced many people (yourself and me as examples) to getting their music when they wouldn’t already have. “I’m by no means a Stones fan, but even I took advantage of the opportunity. . .” I could not have stated it better and it gave me a chance to get the only stones song I always liked “Mother’s little Helper” as well as two things I never knew existed (A great Yer Blues, and a Who song.) ABKCO and UMG have (once again) been stupid not to keep going with this unprecedented main-stream addition to eMusic. I cannot believe they have done this and hope to high heavens they will change their collective minds.

There are at least two interesting aspects here. The first is that this is a sign of where eMusic finds itself now that the rumored Amazon deal has fallen through (if it ever existed in the first place) and no new buyers appear to be showing up (at least if published rumors are any indication). As I’ve written multiple times, eMusic is not a Web 2.0 darling that can sell itself at an inflated valuation based on hype and promise; it’s a pretty conventional online service with a straightforward business model and a valuation that can be reasonably well estimated based on its financial results. (In fact, if I ever have the time I might take a shot at doing this myself; the result would likely be off by almost an order of magnitude, but the process itself might be interesting and educational, for myself if no one else.)

Dimensional Associates’ best hope for a future eMusic sale (or IPO, though I think that unlikely) is therefore to try to drive growth in the two numbers that ultimately determine eMusic’s value: total subscribers and profit per subscriber. Increasing total subscribers is a function of getting more subscribers on the front end (hence the mention in the press release of customer acquisition through direct marketing) and retaining subscribers on the back end (hence the mention of customer retention, loyalty programs and the like). Leaving aside the cost side of the equation, increasing profit per subscriber could be done by cross-selling and up-selling subscribers (e.g., convincing them to buy audiobooks and/or other future products in addition to music), as well as by attracting and retaining subscribers who are more casual users and hence more profitable to service.

(This last point has of course been key to eMusic since its beginnings: all other things being equal, the less a subscriber downloads the more money eMusic makes. In the limit a subscriber might download nothing at all, and their monthly fee would then be pure profit for eMusic—and for the labels, under eMusic’s revenue sharing scheme. Of course subscribers making no use of the service would presumably cancel their subscriptions eventually, but “eventually” might be a long time, and in the meantime they would have inflated eMusic’s average profit per subscriber—and helped subsidize the downloading habits of subscribers who do download their entire quotas every month).

As it happens, eMusic shares this basic financial model (relatively stable recurring revenue from subscription fees, significant fixed costs for infrastructure and labor, and variable costs per customer based on usage) with other subscription-based businesses, including in particular ISPs. It’s perhaps not a coincidence that in hiring a CMO and VP CRM eMusic didn’t bring in music industry veterans but instead looked to one such ISP, namely EarthLink.

Whether this will be a successful strategy or not remains to be seen. The second aspect of this announcement, and a somewhat ironic one, is that eMusic was apparently able to hire Morgan and Punsal in large part because of downsizing prompted by EarthLink’s deteriorating business. Regardless of how successful EarthLink was at extracting financial value from its existing customer base, in the end it fell prey to larger industry trends, most notably the decline of the original dial-up business and the rise of a telco/cable broadband duopoly—a duopoly in which the ISP business produces only a portion of telco and cable revenue (albeit an increasing one), and can be cross-subsidized from the “cash cows” of the legacy telco and cable businesses.

Could eMusic face a similar fate? I think that ultimately depends on whether eMusic can offer real value to its customers, value that is not totally dependent on the current state and structure of the music industry. Better customer acquisition and retention in the narrow sense may give eMusic the financial strength to weather the industry transition, but I think customer satisfaction in the broader sense will be key to eMusic prospering in whatever the next phase of the music industry turns out to be. (I hope to post more on this topic in the future.)

Unfortunately NOW is not available on eMusic, though other releases from New Amsterdam are. I don’t know if this is deliberate or not, and if deliberate whether the album will never show up on eMusic or whether it’s being held back for until some later time. (If the latter then this would be an example of the “release window” strategy I mentioned in a previous post.) In any case I ended up buying the digital version directly from New Amsterdam Records; it’s also available at the Amazon MP3 Store for slightly less, but by buying direct from New Amsterdam you can get it in lossless format.

While we’re on the subject of indie classical, I found two more blog posts that highlight different aspects of the phenomenon. “Shake Up, and Shakin’ It” discusses changes in performance practices designed to dispel the stuffy atmosphere of many traditional classical concerts. (I saw a good example of this at a concert by Alarm Will Sound that I attended last year.) Meanwhile over at the New Amsterdam web site Judd Greenstein (composer of two pieces on NOW and one of the founders of New Amsterdam) urges indie classical artists to treat recordings as “things unto themselves, to be enjoyed on their own terms,” as opposed to just documents of live performances. This has been the case in the rock/pop world since the 1960s, of course, but the classical music world moves at a slower pace.

MiDoJo - 2008-03-28 22:19

Alarm will Sound has an awesome work on eMusic wherein they do the songs of “Inteligent Dance Music” founder Aphex Twin.

JKS (caterpillarheart@gmail.com) - 2009-11-19 20:30

Please, please, please don’t call it _jndie classical_. What a terrible move toward killing a good thing.

hecker - 2009-11-19 20:53

@JKS: I didn’t originate the term “indie classical”. You should talk to the folks at New Amsterdam Records and elsewhere who are popularizing the term. (But I guess I am guilty of propagating it…)

So, why not have one or two Selections this year to highlight some of the upcoming composers and performers who are bringing a true indie sensibility to the classical music scene? Yancey and friends won’t have to go far to get some advice: Justin Davidson recently wrote a New York magazine article on the “next wave of classical” scene in New York (highlighting, among others, the good folk at New Amsterdam Records), and Alex Ross did a similar article for the New Yorker last year. eMusic could probably find some worthy Selects without even having to leave the five boroughs.

So, come on eMusic: please make us indie classical fans happy in 2008!

yancey (ystrickler@emusic.com) - 2008-02-19 19:33

hey frank – always love reading yr analysis. by all means we would love to feature some great classical artists. but this process is truly democratic – it’s what we come across, it’s what we like. if you – or anyone else – ever wants to suggest an unsigned classical artist, please do so! we would love to check them out. there is no goal here outside of helping to uncover and support great music, whatever form it may take.

hecker - 2008-02-19 20:42

Thanks for stopping by, Yancey! In terms of suggestions, there aren’t actually many “indie classical” composers or performers I’ve come across that don’t have a label contract or their own label (e.g., New Amsterdam), so I don’t know if any real unsigned finds are out there. Having said that, a few of the new composers/ensembles I’ve been listening to recently include (in no particular order or categorization) Alarm Will Sound, Ellen, Slow Six, NOW Ensemble, Nico Muhly, Judd Greenstein, Galen Brown, Eluvium, So Percussion, and itsnotyouitsme. (Some of these are actually more classical takes on post-rock, e.g., Slow Six, Eluvium, itsnotyouitsme, but they generally appear to be part of the same scene in NYC and beyond.) Note that many of the above already have releases on eMusic. Composer Nico Muhly is a major exception, which is a real shame. He has a nice album “Speaks Volumes” out on the Bedroom Community label (with a guest appearance by Antony of Antony and the Johnsons), and a piece on a NOW Ensemble album on New Amsterdam. Also, violist Nadia Sirota will be doing a release on New Amsterdam Records of works by Muhly, Judd Greenstein (who also has two pieces on the NOW Ensemble release), and Marcos Balter (whose work I haven’t heard yet). I’d definitely recommend checking all these out.

Let’s start with the press release, and focus on two key phrases in the release’s title. The first is “A&R program,” which refers the work of discovering and developing new acts. This press release is in effect a message to the music industry in general, and to independent labels in particular, that eMusic is now prepared to take on a key label function, at least in a limited way. (eMusic is asking artists only for a 60-day exclusive period for digital release, after which they are free to seek other digital distribution channels.)

From the perspective of indie labels this could be viewed in one of two ways. On the one hand, this may be a way to demonstrate to labels the ability of eMusic to drive new artist sales, and thus the desirability of working with eMusic. It also offers labels an opportunity: with unsigned artists eMusic will do the upfront work of marketing artists and attempting to jump start sales of their digital downloads. Labels will then have the chance to pick up artists who have a proven record of digital sales success and can market those artists through other digital music services, including the iTunes Store and Amazon, where per-track payouts are higher. To the extent that this actually occurs, it’s an example of eMusic providing an extra benefit to labels to offset the lower prices they’re asked to sell at.

At the same time eMusic is perhaps making the same implied threat to indie labels that Apple has been accused of making to major labels: “Don’t assume we’ll always need you.” That threat (if indeed it is one) will play out over the long term; for now and years to come eMusic is and will remain dependent on indie labels for products to sell.

The second key phrase in the press release title is “highly-curated boutique music space,” a phrase that strictly speaking refers to eMusic Selects but which can also be seen as an attempt by eMusic to influence the perception of the service as a whole via the “halo effect.” The message here is directed to music industry analysts and potential eMusic buyers: “don’t compare us to Amazon,” especially as Amazon moves past eMusic to become the acknowledged number two digital music download service behind the iTunes Store; eMusic wants to be positioned as a “boutique” service, not as a general-purpose music retailer.

Based on the “highly-curated” reference, another implied message could be “don’t compare us to Last.fm” and other “music 2.0 companies.” Unlike services like Last.fm that are built primarily upon user-generated content (e.g., listening data, track ratings, artist pages, etc.), eMusic wants to emphasize its reliance on knowledgeable music experts. Finally, the word “space” points to eMusic’s desire to be seen as more than an e-commerce site. (This desire is also apparent in the mention in recent press releases of the message boards—excuse me, “vibrant online community”—and other non-store aspects of the eMusic web site.)

As I’ve previously pointed out, eMusic really isn’t a “Web 2.0” company as that term is normally used; rather it’s just a specialty retailer, the online equivalent of a well-stocked independent record store with a knowledgeable sales staff. So with this “highly-curated boutique music space” theme eMusic is basically making a virtue of necessity: it can’t compete directly with the likes of Last.fm or Pandora, so it’s trying to do a better job of what it’s already doing. As I’ve also pointed out, the nature of eMusic’s business is such that it’s relatively easy to value (simply look at the current subscriber base, average profit per subscriber, and likely growth in those figures). This means that eMusic is not likely to command an outsized YouTube-style valuation when it is sold; however at the same time managed properly it could be a solid and lucrative business for the right buyer.

Perhaps eMusic is best compared not to the latest trendy “music 2.0” companies, but rather to a company like O’Reilly Media. O’Reilly started out in the traditional (and rather boring) business of publishing technical books (as O’Reilly & Associates), caught the Internet wave, moved into digital publishing ventures (most notably the Safari subscription service), acquired a reputation (via Tim O’Reilly’s writings and those of others he brought onboard) as a thought leader in the Internet and web space, and eventually parlayed that reputation into related lines of business, most notably hosting conferences.

O’Reilly consciously tailors and markets its offerings to “alpha geeks,” looks to them to see what was hot and upcoming, and then uses that knowledge in creating new product offerings. eMusic’s strategy with eMusic Selects seems very similar: begin by serving that subset of music listeners who are dedicated fans of non-mainstream genres, determine what the most knowledgeable and au courant fans (both on eMusic’s staff and otherwise) think might be the next new things in those genres, and then use that knowledge to put together products of interest to the general eMusic subscriber base. It may not be as sexy a strategy as some, but I think it’s one that leverages eMusic’s strengths and minimizes its weaknesses.

Today users are creating tremendous value and for the most part we’re ignoring it. They’re writing blogs about your artists, putting bios on Wikipedia, documenting last night’s concert on Flickr and video sharing sites, showing what songs are most popular by their behavior on Last.fm, building “box sets” on community sites, etc. How has the music industry leveraged this? What tools have you created to enable or encourage it?

Nothing and none, and what we’ve done is forced a disconnect between content and context. As I mentioned in my October presentation, iTunes is a (mostly) context-free content experience and the Web is a (mostly) content-free context experience. Whoever puts the two together wins.

This has always been a major complaint of mine about eMusic: When I discover an interesting new artist on eMusic I go through a period during which I want to seek out and experience everything I can about them. Can I do that through eMusic? Unfortunately not. eMusic is self-consciously “curated”: Except for subscriber reviews, descriptions in subscriber playlists, and message board posts, the eMusic site is a walled garden in which all content is provided by eMusic staff, contractors, or partners.

Unfortunately eMusic doesn’t have enough people to provide deep coverage of all the artists whose work it offers, or enough partners to fill the gaps. Even the eMusic subscriber base isn’t large enough to provide comprehensive coverage all the way down the long tail. Also, a lot of the information I’d like to have, including band bios, lyrics and liner notes, and information on upcoming concerts and releases, is (or at least should be) most easily obtainable directly from the artists and/or their labels, as opposed to getting it second-hand from others.

A concerted approach to provide comprehensive context would combine information from lots of sources: eMusic-exclusive reviews, articles, and interviews, subscriber reviews, relevant message board posts (e.g., linked to from album and artist pages), Wikipedia articles, music blog posts, reviews from multiple sources, news stories, artist and label web sites and other pages (e.g., on MySpace), unofficial fan sites and forums, and so on. One example of what’s possible is FoxyTunes Planet, a new site from the creators of the FoxyTunes Firefox extension.

For example, lately I’ve been listening to Clogs, a relatively obscure band even by eMusic standards. Clogs has a reasonably informative eMusic artist page licensed from the AllMusic Guide, along with AMG-provided reviews for two of its four releases, and eMusic subscriber reviews for one of them. On the other hand the FoxyTunes Planet page for Clogs has links to videos and concert footage, the band’s web site, photos, song lyrics, Clogs-related music blog posts, and other stuff. If you combined the eMusic information with the FoxyTunes Planet information, and also added a feedback mechanism to allow judicious editing (e.g., getting rid of all the videos about shoes and news stories about traffic jams), then I think you’d have a killer way to get deep context on any artists popular enough to generate Internet references.

Could eMusic be the service that truly puts content and context together, at least for the genres it specializes in? Beyond any benefits to subscribers, I think this would benefit artists and labels as well. In particular, if labels are unhappy with eMusic’s payouts, perhaps they’d be happier if eMusic provided them more opportunities to directly touch listeners, including providing label-generated content about artists, links to other artists on the same label, and so on. This could also be extended in theory to provide easy ways to generate follow-on sales of tickets, merchandise, and other products. (For example, since—unlike Amazon—eMusic doesn’t sell CDs or other physical media, why not let eMusic subscribers link through to label stores, with eMusic getting a cut of sales generated through such referrals?)

However in the end I’m skeptical of eMusic moving in this direction. Part of the problem is resources; I get the sense that eMusic is having a hard enough time running the business as it currently exists (witness the apparent issues with customer service), and that (having failed to find a buyer in the past) Dimensional Associates is perhaps unwilling to throw any more money at eMusic than might necessary to dress it up for sale. Another problem is perhaps a lack of imagination on the part of eMusic management. As I previously wrote, I don’t think eMusic is really a “Web 2.0”/“long tail” company; it’s more the Internet equivalent of an independent music store with well-stocked cutout bins (“a good example of a traditional specialty retailing strategy adapted to the realities of today’s music business”). Thus far eMusic has made some forays into the brave new world of blogs, RSS feeds, social networks, and mashups. However all of this hasn’t fundamentally changed the nature of eMusic as an ecommerce site with some extra features grafted on here or there.

It remains to be seen whether eMusic management has the desire or resources to revamp the whole eMusic experience. But as time moves on, eMusic’s original value proposition of low-priced DRM-free music will likely be duplicated by competitors, and eMusic will need to go the extra mile to keep its subscribers happy. I think that making context just as important as content would be one straightforward way to do just that.

UPDATE: I quote Ian Rogers of Yahoo! on the importance of context and offer FoxyTunes as an example of providing it, and just a few hours later Rogers announces that Yahoo! is buying FoxyTunes. I had absolutely nothing to do with this, I swear.

Amanda - 2008-02-06 03:22

A first, simple step in enhancing the experience of subscribers would be revamping the message boards and actually having some monitoring/moderation/official presence there. They are such a resource but only the hard-core seem to know about them,they a bit buggy and of course the constant trolling/complaints push the decent stuff down the page. I noticed mtracks has links to YouTube videos on its’ artists’ pages – not much but a start. I agree with everything you say, including the feeling its not going to happen. Which is a real pity.

MiDoJo - 2008-03-28 21:49

Frank I found your blog via 17dots, I know you posted this entry a while ago but I couldn’t agree more. Emusic has a lot of extras that are either unknown by subscribers (the abiliy to not only tap into the daily freetrack from any rss reader but to get a contstant feed of new releases I broke it up into genre i.e http://www.emusic.com/rss/n/b/-n/a/0-100/65+68+1200000279/0.html) or dead ends (The podcast mentioned in the article you linked, which only has one entry from 2005 which pre-dates the inclusion of RSS as default into mainstream Browsers) Hey is that the same amanda from the Blog Post I found you in? (17dots.com/2008/03/26/whos-really-number-two/#comment-17497)

mrshl - 2008-01-17 16:37

Very nice. I’m still reading.

Paul - 2008-01-17 18:02

Looks nice - I found it right away.

Note that the domain name of the blog will remain swindleeeee.com, and in fact all the existing URLs should remain the same. This means (among other things) that those of you using RSS feed readers should not need to do anything; once the domain is switched to point to the wordpress.com blog you should see future posts automatically.

I’m planning to make the actual change this morning (Thursday January 17) a few hours from now, and then I’ll do another post to mark completion of the migration. If you don’t see that next post by midnight US Eastern time on Thursday then please send me an email message at hecker (at) hecker (dot) org, and I’ll try to debug the problem.

Many people find listening to early minimalist works as unattractive a preposition as a trip to the dentist, but I think I’ve found a way to make them more palatable to those getting their first taste: Minimalist works go down surprisingly well as an accompaniment to long drives at high speeds. The typical pronounced beat encourages you to keep up with traffic, the music unveils new features at about the same rate as the landscape, and the relative simplicity of the musical concept allows you to reserve a large part of your attention for the basic tasks of driving.

So without further ado here’s a list of albums for a minimalist road trip, all available on eMusic and all road-tested by yours truly:

• Music for 18 Musicians (Steve Reich). In honor of the student ensemble at Grand Valley State University that recorded this excellent performance, try this on a long drive past endless corn fields.
• In C (Terry Riley). I found this to be a good accompaniment to a trip through the Appalachian mountains; the strains of a mandolin give it that down-home feeling.
• Music in Fifths (Philip Glass). To my mind the work “Music in Fifths” (the first piece on this album) has a slightly menacing undertone, at least in this Bang on a Can performance; you might try listening to it while driving in fast-moving heavy traffic through the more blighted parts of New Jersey.
• An Hour for Piano (Tom Johnson). Or, if you drive at typical interstate speeds, about 70 miles for piano.

Here are some additional tips for rewarding listening:

• Drive by yourself. You don’t want someone else in the car who wants to have an actual conversation, and you especially don’t want kids continually asking “is it over yet?”
• Drive long distances. You want to get the full experience of minimalism, with pieces at least 20 minutes long.
• Drive on non-congested highways. The virtues of minimalism turn into vices when you’re stuck in stop-and-go traffic breathing exhaust fumes and staring at the car in front of you.

If your trip proves enjoyable, you can try exploring eMusic for similar works. In this respect, note that the “Minimalism” eMusic Dozen contains lots of works that are really not minimalism per se (i.e., belonging to the 1960s movement and its continuation) but rather are music of the past that is sort-of-minimalist in nature (and some at least of which influenced the early minimalists).

A better approach is probably to search eMusic for particular composers identified with the minimalist movement. See the Kyle Gann posts previously linked to for names, as well as another post in which Gann compiled a personal list of the top five minimalist albums in reaction to some rather conventional (i.e., Glass/Reich/Adams-dominated) New York Times lists. (One of those albums, Eliane Radigue’s Trilogie De La Mort, is available on eMusic, along with the Tom Johnson work mentioned above. I didn’t include Trilogie De La Mort on my list because I haven’t yet road-tested it; however at nearly three hours it is definitely of suitable length for long-distance driving.)

One final thought: minimalism is usually conceived of as a reaction to serialism and related trends in 20th-century music. However given the (to me at least) great affinity between minimalist works and the interstate highway system, I find it interesting that the National Interstate and Defense Highways Act was signed in 1956, while La Monte Young’s “Composition 1960 No. 7” (the beginning of the minimalist era, according to Kyle Gann’s definition) appeared only four years later. Coincidence or causality? You be the judge.

UPDATE: I’m currently reading Alex Ross’s book The Rest Is Noise, and just discovered that far better critics than I have already noted these connections:

Eno once summarized minimalism as “a drift away from narrative and towards landscape, from performed event to sonic space.” . . . [Minimalist] vistas are filtered through new ways of seeing and hearing that relate to the technology of speed. They evoke the experience of driving in a car across empty desert, the layered repetitions in the music mirroring the changes that the eye perceives—road signs flashing by, a mountain range shifting on the horizon, a pedal point of asphalt underneath. [p. 475]

Mark Satlof (msatlof@shorefire.com) - 2008-02-04 15:08

Thanks for these recommendations…in terms of bang for download, this makes up for the Apples in Stereo album that got me for some 13 and 14 second “songs.” Not that I’m counting. And I’m glad I found this blog. My biggest “complaint” with eMusic is I can’t figure out how to buy an even bigger subscription than the one i already have!

Ethan Bauley - 2008-02-14 18:18

Another amazing, recent minimalist/new music album is: “Amid The Noise” by So Percussion. Steve Reich is a huge fan of their performance of his “Drumming”, but “Amid The Noise” is all originals. BEAUTIFUL, delicate melodies, + exquisitely subtle/funky beats. SUBLIME!!!!!

hecker - 2008-02-14 19:12

Ethan, thanks for the recommendation, I’ll check that out. Incidentally, besides “Drumming” and “Amid the Noise” So Percussion has a self-titled release on eMusic as well, with works by David Lang and Evan Ziporyn of Bang on a Can.

• Steve Reich, Music for 18 Musicians, Grand Valley State University New Music Ensemble (Innova). This is an excellent version in my opinion. It doesn’t quite measure up to the original recording to my ears, but I think it’s superior to the version that the Bang on a Can All-Stars Steve Reich Ensemble did a while back for Nonesuch. And you can’t beat the human interest story: music students from the midwest take on Reich and wow the big city sophisticates.
• John Luther Adams, Red Arc/Blue Veil (Cold Blue). Amusingly enough, eMusic thinks John Luther Adams is a “new age composer” who writes chamber music (The Mathematics of Resonant Bodies) and avante-garde jazz (this work and The Light That Fills the World).
• Mozart, Don Giovanni, René Jacobs conducting (Harmonia Mundi). Note that this release totals a whopping 61 tracks, so it will wipe out a month or two of downloads; however it’s still a better bargain than paying $39.49 for the CD at Amazon.
• Stockhausen, Stimmung, Theatre of Voices (Harmonia Mundi).
• Common Sense Composers’ Collective, tic, with the New Millenium Ensemble (Troy).
• Beethoven, Piano Sonatas vol. 3, Paul Lewis (Harmonia Mundi). 32 tracks, but still a better deal than paying $39.49 at Amazon.
• Bach, Goldberg Variations, Simone Dinnerstein (Telarc). As DennisinWAState mentions in his review, at 32 tracks for most eMusic subscribers it’s probably more cost-effective to pay $12.97 for the CA at Amazon.
• Brahms, String Sextets, Nash Ensemble (Onyx).
• Lorraine Hunt Lieberson: Live from Wigmore Hall, 1998; with Roger Vignoles, piano (BBC)
• Roussel, Symphony No. 3 and Bacchus et Ariane; Stéphane Denève conducting the Royal Scottish National Orchestra (Naxos).
• As Steals the Morn . . .: Handel Arias and Scenes; Mark Padmore, tenor, with Andrew Manze conducting the English Concert (Harmonia Mundi).
• Gershwin, Piano Concerto in F, Rhapsody in Blue, Cuban Overture; Jon Nakamatsu, piano, with Jeff Tyzik conducting the Rochester Philhamonic (Harmonia Mundi).
• Alexandra Gardner, Luminoso (Innova).

Note that of 18 items on Ross’s list, 13 are on eMusic. This is yet another example of how eMusic is becoming a great site for classical music, especially for people like me who want to explore “contemporary classical” works at relatively low expense.

Prent Rodgers - 2007-11-29 19:16

I did the same on Microsoft’s Zune.net. 7 of 18. Not so good. See http://bumpermusic.blogspot.com/2007/11/alex-ross-picks-on-zune.html

Jennifer Sardam - 2007-12-26 01:17

Thanks for the write-up. I just began a trial membership with eMusic, which gives me 25 free songs to download. I was disappointed when I found out I hardly recognized anyone on there, but I do like classical and will check out some of these pieces you mentioned.

Lisa Moore - 2008-01-18 12:09

Correction: The Bang on a Can All-Stars never recorded Music for 18, I think Alex is referring to the Steve Reich Ensemble Nonesuch recording of the 90’s, which had one member of the All-stars in it. This had nothing to do with the All-Stars as a group of organization.

hecker - 2008-01-18 12:49

Thanks for the correction. Note that the mistake is my own, not Alex Ross’s. I was referring to the recording as included on the box set “Steve Reich: Works 1965-1995’ put out by Nonesuch. There was indeed a Bang on a Can performance in this box set (“Eight Lines”), which must have been the source of my confusion. My apologies.

The Shmoo was a nice animal, a nice fella, but if you were hungry, you just cut off a piece of him and put onions on it. . . . You could do anything to him. That’s what was happening to the music business. Everybody was treating the music business like it was a Shmoo.

This was in turn followed by some hand-wringing about the “the artists.” Puh-lease.

Fortunately David Pakman turns up at the end to inject a note of sanity into the discussion, pointing out that, “Locking things up is actually good for piracy.” I don’t think Pakman is a digital music genius (among other things, I don’t think he’s really clued into Web 2.0, social networks, etc.), but in this context he’s a giant among pygmies.

James - 2007-11-27 18:39

Shmoo? This guy is clearly operating in the last century.

Put simply, Radiohead is making the following offer: We will provide you a digital album at a price that you choose, and in return you will help us to more effectively sell you something else at a price that we choose. Whatever this is, I don’t think it’s asking for tips. So could we kill this analogy please?

James - 2007-10-05 11:58

Hmmm, interesting concept that is being used more of a loss leader than anything. Funny thing is how much bad info they will get in this campaign with throwaway email addresses, disposable telephone numbers and addresses for the local landfill. Then again, like any marketing campaign, the conversion numbers are razor thin. But, yeah, tips? No, not really.

Frank Hecker - 2007-10-05 12:50

Re bad info: First, we don’t know how much bad info people will really submit. It’s possible that people interested in this offer will be less motivated to provide bogus info than one might think. But in any case bad info is not really a problem if it can be easily detected and scrubbed. As I noted in my original post, people using throwaway email addresses will cause bounces at some point in the future and can be purged, while bogus postal addresses can be detected (at least in theory) when doing credit card processing. If you deliberately provide bogus information then you are not a good candidate for up-selling, and Radiohead would want to know that as soon as possible; bogus information can thus be viewed as a signal of prospect interest, just like the chosen price.

Katie (kmw51688@yahoo.com) - 2007-10-06 15:01

I really, really doubt this is the reason Radiohead is doing this. If you don’t want to give any credit card info, you don’t have to. If you just want the album, put in 0.00 and you’re done. This isn’t some kind of massive conspiracy on Radiohead’s part to make some kind of giant marketing list.

Frank Hecker - 2007-10-06 21:13

Katie: Even someone who pays nothing has to provide a working email address, and I doubt everyone who does so is going to use a throwaway address. So at a minimum Radiohead comes out ahead of where they’d be if people picked up the album via P2P: they have at least some opportunity to do follow-up marketing. And note that providing permission for follow-up marketing is *not* optional; you can’t check out until you accept the terms of service. As to the “conspiracy theory”, I’m not claiming that Radiohead’s doing anything nefarious. But if they truly wanted to give the album away with no strings attached then they could have just put the MP3 files on the net for unrestricted download, and then provided a separate option to allow users to pay something if they wished. (This is the real “tip jar” option, as noted by Digital Audio Insider.)

First, I think people are missing a crucial point about Radiohead’s “name your own price” strategy. It is not all about giving listeners what they want, namely DRM-free music that’s free (or nearly so); it is also about giving Radiohead something it apparently wants (and that it could not get working through a major label): deep information about its listener population beyond the hard-core fans (i.e., those who’ve already joined the Radiohead fan club), including in particular information about which listeners are good candidates for up-selling strategies aimed to move more Radiohead merchandise, tickets, and other Radiohead-related products and services.

Consider: The minimum price of the new Radiohead album isn’t really 1p (or 0p), and it really isn’t “up to you.” Part of the price for getting the album is supplying your name, email address, physical address, and other contact information, plus permission to have Radiohead send you newsletters and merchandise and ticket offers. (Read the terms of service, folks.) Note that Radiohead has structured the offer so that this information has a high probability of being valid and not faked or fraudulent:

• People will not supply fake email addresses, since they need to receive the email with the information about how to download the digital album when it becomes available. (Incidentally, this helps explains why this was structured as a pre-release offering: If people could get the downloads immediately then they’d have less motivation to give a valid email address.) Some people of course could be using “throwaway” addresses, but probably only a very small fraction of people would bother to do this; those who do try to deliberately prevent Radiohead from emailing them later are obviously not good candidates for future Radiohead offers, and can be flagged as such later when future emails to them bounce.
• People have to supply a valid credit card, and this enables a cross-check against the postal addresses they provide (which will typically be the billing addresses for the cards). Again, some small fraction of people will try to “beat the system,” most notably by using stolen credit cards. However the low price would likely reduce the number of people doing this: Why commit credit card fraud for something that costs less than $1 (including processing fees)? Of the remaining people who do commit fraud, some may be detected, the associated charges reversed, and the supplied (invalid) contact information flushed from Radiohead’s database. (I presume Radiohead and its credit card processor anticipated a fair amount of potential fraud, and this helped dictate the size of the credit card processing fee.) Of those whose fraud goes undetected, most if not all probably supplied 0p or 1p as the album price, and will be flagged appropriately as noted below.

As a result of this offer Radiohead will thus acquire a massive listener list with verified (or at least potentially verifiable) information about how to reach those listeners via email, postal mail, or phone. But wait, there’s more:

Because listeners can name their own price, Radiohead also gets valuable information about the level of a listener’s devotion to Radiohead’s music and their willingness to provide their hard-earned cash to support Radiohead’s creation of that music. (Note that these are not the same things: Someone can be a devoted fan but not a good customer—or, at least, not a good customer yet.) Radiohead can then use this information to tailor its direct marketing efforts to these listeners.

In practice those who responded to Radiohead’s offer for just the digital release (i.e., excluding people who got the digital release along with the discbox) probably fall into three general categories, and marketing to the categories can be prioritized accordingly:

• Those who paid 0p or 1p, or some other miniscule amount (under $1). These people are likely very casual fans of Radiohead or people who are not Radiohead listeners at all but were just attracted by the novelty of the offer, perhaps mixed in with a few people who really like Radiohead but have absolutely no money to spend. For the most part these people are not likely prospects for becoming good Radiohead customers; however at a minimum they might become serious Radiohead fans and help build good word of mouth around Radiohead releases.
• Those who paid some fraction of current prices for digital albums, say in the $2-5 range. These are probably people who like Radiohead but are not dedicated enough fans to pay full price. (I happen to fall into this category myself; I paid $4 for the album.) These people are probably not real good prospects for buying Radiohead merchandise, tickets, etc., but at least this offer captures incremental revenue from this group that Radiohead would not have otherwise seen with a traditional major label “everybody must pay full price” strategy. And of course Radiohead still has a chance to try and up-sell these listeners in the future.
• Those who were willing to pay a price roughly comparable to what they would have paid through the iTunes Store or Amazon, or even somewhat higher, say in the $8-12 range. These are probably serious Radiohead fans who are willing to go out of their way to support the band, especially when they can be assured that all their money is going to the band itself and not to the label. These people are prime candidates for marketing efforts aimed at turning them into truly dedicated fans and (even more important) lucrative customers for Radiohead physical merchandise and live shows.

So Radiohead not only gets a high-quality listener database, but it now has everything it needs to do highly-targeted marketing to its listeners, including marketing targeted to listeners in particular geographic areas. This is why I partially disagree with Bob Lefsetz’s comment that Radiohead “look like shitty businessmen”; no, they just look like shitty e-commerce site operators. However in my opinion the underlying business strategy is a brilliant way to maximize potential revenue in a way that also respects potential customers, and quite possibly will be the model for how at least established acts interact with their listeners (not just their hard-core fans) in the future.

matthew - 2007-10-05 05:54

This is a totally authentic piece, very accurate and on the money. Most people just don’t understand economics. Most business graduates fall into this category. Radiohead is going to make an insane amount of money on this deal - even at $1 a pop. The music is digital and being stored on a server somewhere - it costs them next to nothing to distribute and diminishes with each purchase.

Dwane Mann (europasol1@yahoo.com) - 2007-10-12 13:44

Are the things that they are doing wrong? Their business decision can maximize their outcome.

Michael (n@na.com) - 2007-11-17 02:50

One thing about the whole hubub about this album that people are missing is that it is really killer. This album has the most listening value of any album since the 70s.

• I predicted variable single track pricing from 60-75 cents for back catalog material, $1 for most material, and $2-3 for hot singles. Amazon instead seems to have opted for a standard price of $0.89, slightly undercutting the iTunes Store price for DRM-protected tracks, and significantly less than the iTunes Store price for DRM-free tracks.
• I predicted use of a single DRM-free format, namely MP3 at some high bit rate. This was an easy prediction, and I don’t deserve any credit for making it.
• I predicted that Amazon would offer variable pricing on digital albums, with album prices ranging from $2-3 at the low end to $10 at the high end, with the eventual maximum being in the $5-7 range. Amazon in fact is offering a limited form of variable pricing on digital albums, with most albums being $8.99 (again, slightly undercutting the iTunes Store) but some albums priced under $5. Note that these are true albums, not EPs; for example, Joanna Newsom’s Ys (only five songs, but they’re long ones) is sold for $9.99 at the iTunes Store but is only $4.95 at Amazon MP3. A less extreme example is the Decemberists’ The Crane Wife, a 12-song album that’s $9.99 at the iTunes Store but only $7.99 at Amazon MP3.
• I also predicted that Amazon would offer a discount on the digital album for people buying the corresponding CDs. This is not the case: If you want both the CD and the digital album you have to buy both separately at the standard prices. As I noted in my post offering such discounts on a regular basis would likely require changes to standard music licensing schemes, so their absence is not surprising.
• I predicted that Amazon would offer a sort-of-subscription plan with discounts (and/or free tracks) to people willing to commit to volume purchases. This is not part of the initial Amazon offering; Amazon has never offered this for books (to my knowledge), so it’s possible it may never be offered for digital music either. (Amazon does offer “club prices” for members of the CDNow Preferred Buyer’s Club. As I understand it, this is a function of Amazon’s having taken over operation of CDNow’s store, not an Amazon-native program.)
• Finally, I predicted that Amazon would leverage its existing technologies to provide two value-added services: backing up music libraries using Amazon S3, and personalized music recommendations using the Mechanical Turk service. Nothing like this is part of the initial MP3 store; in fact, Duke Listens! points out that Amazon currently doesn’t do a very good job of recommending new or future MP3 releases that might be of interest.

Overall I’m a pretty poor predictor, although in my defense I was deliberately trying to be over the top a bit in terms of suggesting things Amazon might do to differentiate itself from existing services.

Some other comments:

• As some others have commented, putting “MP3” in the name of Amazon’s digital music store is an interesting strategy. I agree with others that it advertises the DRM-free nature of the store and puts that front and center. (By contrast, eMusic has gone back and forth on this; some of their ads have put more emphasis on iPod compatibility than on the tracks being DRM-free and in the MP3 format.) I also think that this is a subtle thrust against Apple: It encourages buyers to think of the MP3 format as the standard DRM-free format, and by implication casts the AAC format used by the iTunes Store as being associated with DRM and non-openness. In fact AAC is a perfectly open and standard format, but its use as part of Apple’s proprietary Fairplay DRM scheme has perhaps tainted the format in some people’s eyes vis-a-vis the MP3 format.
• The Amazon page for a CD has two prominent links (one text link, and one in the sidebar) to the corresponding digital album (if one is available), including a mention of the digital album’s price. However the page for a digital album has only a small text link to the corresponding CD page, with no mention of price. I’m guessing that Amazon wants to promote digital albums as a lower-priced alternative to people unsure about a CD purchase, in the same way that it highlights lower-priced used CDs to people contemplating purchasing a new CD. However Amazon assumes that people buying a digital album have limited interest in a CD—probably a good assumption.
• The Amazon page for a digital album doesn’t display any of the listener reviews submitted for the corresponding CD. This seems a strange oversight: A major strength of Amazon is its user-contributed reviews; why make it difficult for MP3 buyers to find existing reviews for the same work in a different format?

In conclusion, I think the significance of the Amazon MP3 store is as follows:

• It represents a tipping point in the move away from DRM. Amazon has put its stake in the ground: this is an MP3 store, not a store for digital music some of which may be DRM-free and some of which may not. Amazon has no incentive whatsoever to accommodate labels that insist on using DRM, and at a certain point I think such labels will not be able to resist the pressure to make their digital releases available through Amazon.
• It intensifies the downward pressure on digital music prices, and in particular breaks the consensus that $9.99 is a fair price for the vast majority of digital albums. $8.99 is the new standard price for major label digital albums sold through major music retailers like Amazon, and I would not be surprised to see this drop to $7.99 or even $6.99 over the next couple of years.
• It constitutes the first real competition for the iTunes Store (as opposed to eMusic, which was and is merely would-be competition). At the same time it recognizes the primacy of the iPod and iTunes (i.e., the software as opposed to the store), as opposed to being yet another futile attempt to overthrow Apple.

As for its possible effect on eMusic, my thoughts on that must wait for a future post.

So what, right? The album was supposed to be released only to eMusic Europe and/or eMusic UK due to distribution restrictions, someone at eMusic messed up, and it got released for eMusic US before someone noticed the error and corrected it. As everyone familar with eMusic knows, it happens all the time.

Which makes me put on my [tin-foil hat][tinfoi] and wonder: is it an accident that “it happens all the time,” or is it somehow in eMusic’s interest that this occurs on a regular basis? I don’t necessarily mean that eMusic is deliberately making releases temporarily available in countries when and where it’s not supposed to. It might also be that this “accidental release syndrome” (as I’ll call it, or “ARS” for short) has enough benefits to eMusic that it’s not worth making the effort to absolutely prevent it from happening. (For example, by having eMusic staffers double- and triple-check each and every release before it goes live on each of the eMusic sites.)

Consider: As I [previously wrote][previou], one good way for labels to view eMusic is as a way to identify price-sensitive buyers and sell to them at prices they are willing to pay. Ideally this produces extra revenue and profits the labels would not otherwise see, because in the absence of eMusic the price-sensitive buyers would either stay out of the market or turn to P2P. (We’re of course assuming that labels aren’t losing money on each sale due to per-track fixed costs that exceed the eMusic per-track payout. If that’s not the case then labels shouldn’t be selling on eMusic.) In this sense eMusic is the digital music equivalent of [Filene’s Basement][Filene].

eMusic’s chronic case of ARS no doubt pisses some subscribers off but arguably also advances the strategy of price discriminating based on price sensitivity. First, to take advantage of ARS-affected releases you have to be reading the eMusic message message boards on an regular basis—really daily or even multiple times a day. This restricts accidental release availability to a very small proportion of hard core eMusic subscribers, who are probably also the most price-sensitive of eMusic’s customers. (You know, the people who are on Connoisseur plans and obsess about finding one-track albums to use that very last download.) So task one is done: we’ve identified our price-sensitive customers.

Second, product scarcity (including artificially-induced scarcity) is well-known to be a driver of sales. (For example, it’s one of Robert Cialdini’s “[six weapons of influence][six wea].”) I’m not really a big M.I.A. fan, but in this case reading a favorable review for Kala combined with the message board warning led me to spend some of my monthly downloads on it. (For the record, I don’t regret doing so, and even went on to download [Arular][], which I’d previously ignored.) As noted in the message board thread, some subscribers apparently bought booster pack downloads for the occasion—a pretty expensive proposition in eMusic terms, at $0.40-0.60 per track or $4.80-7.20 for the entire album. It’s possible that this ARS event bumped the album’s sales up across all eMusic sites, including the UK and European sites as well as the US sites, as even casual M.I.A. fans hurried to download the album before it might disappear; it may have increased sales of M.I.A.’s previous releases on eMusic as well, as in my case. So task two accomplished: getting the price-sensitive buyers to open their wallets and buy something.

(Before I go on, there’s an interesting question here: What happens to the revenues for tracks that are accidentally released in a geographical area without authorization from the label holding distribution rights in that area, including cases where the label in question may not have an existing relationship with eMusic? Perhaps eMusic sends an apology along with a check for the amount that would have been due the label, with an implicit or explicit message “Hey, if you sold through eMusic here’s the sort of money you could be making”? Recall also that before eMusic UK and eMusic Europe opened eMusic did in fact sell to subscribers in those areas, without necessarily having authorization to do so from the labels holding distribution rights for those areas, labels which might be different than the labels holding the rights in the US. I don’t recall ever seeing anything about how eMusic handled this; perhaps it treated all revenues as coming from US sales no matter the subscriber location?)

Given the potential for accidental release syndrome to goose eMusic sales, I’m wondering whether it would make sense for eMusic to make more use of artificial scarcity in its sales strategy. In particular, in my previously-referenced post on [optimizing sales through eMusic][optimiz] I discussed a possible product versioning strategy in which eMusic would make new releases available only to a certain group of customers, with other customers able to download the releases some number of months later. Why not carry that to an extreme, and arrange with labels to do special “n days only” sales of albums that would otherwise not be released on eMusic at all? eMusic could do such sales events a few days after the release date for other channels like iTunes, and not pre-announce that they’d be occurring. That way price-insensitive customers (including at least some eMusic subscribers who are devoted fans of the artists in question) would likely go ahead and buy the release through non-eMusic channels, resulting in higher per-track payouts to the labels, while eMusic would pick up that group of price-sensitive customers who would rather not buy the album at all than pay iTunes prices for it, at a time when marketing buzz for the release would still be at its height.

If eMusic were in fact to do such “n days only” sales then I don’t see any harm with officially announcing them (e.g., on the eMusic home page) at the time they occur; the key is not to pre-announce them (e.g., in the “coming soon . . .” section), because then otherwise-price-insensitive customers might be tempted to wait for availability on eMusic and not pay higher prices elsewhere. Also, when announcing such a sale for a release eMusic should make it clear when the sale ends and the release will no longer be available on eMusic; this would lend urgency to the customer’s decision and make it more likely that fence-sitters will opt to download the release.

Regardless of how they happen, accidental release events (more specifically, those releases that savvy eMusic subscribers apparently believe are accidental, and thus subject to being suddenly terminated without notice) might highlight a way for labels to derive incremental sales through eMusic without committing themselves to making all releases available through eMusic all the time.

[new pos]: http://www.emusic.com/messageboard/viewTopic.html?topicId=16410 “M.I.A. – Kala (It’s Here – August 20 [Kala]: http://www.emusic.com/album/M-I-A-XL-Kala-MP3-Download/11064657.html [tinfoi]: http://en.wikipedia.org/wiki/Tin-foil_hat [previou]: http://swindleeeee.com/2007/05/13/how-labels-could-optimize-emusic-vs-non-emusic-sales/ “How labels could optimize eMusic vs. non-eMusic sales” [Filene]: http://www.filenesbasement.com/our_story.jsp [six wea]: http://en.wikipedia.org/wiki/Robert_Cialdini#Six_.22weapons_of_influence.22 [Arular]: http://www.emusic.com/album/M-I-A-XL-Arular-MP3-Download/10909029.html [optimiz]: http://swindleeeee.com/2007/05/13/how-labels-could-optimize-emusic-vs-non-emusic-sales/

joey allred (joeyallred@yahoo.com) - 2007-09-09 00:29

Did Ayler Records “accidently” release the overseas catalog and then pull it?..Or was it eMusic? http://www.emusic.com/label/Migraine-CD-Baby-MP3-Download/144113.html

Amanda - 2007-09-10 23:17

Heh. The word “Swindleeee!” makes my day everytime I see it. Hee. The MIA is still available in Australia, pity I am utterly uninterested. ARS seems a bit haphazard to be a plan, but then it seems a bit frequent to be random. Alot of the new albums I’m most interested in – in the country/folk/blues/roots genres – are not available for download. A disproportionate number it seems, but perhaps that’s just confirmation bias in action. I don’t assume I’ll be able to get the new releasesI want on eMU so its a great treat when I do and I use eMu to explore the stuff I am more price sensitive about but want anyway. The new Mendoza Line isn’t available for me so I bought a hard copy in the real world – a disc that was actually made in Australia so I don’t blame the distributors/manufactureres for not letting me have it for a couple of bucks.

- 2007-12-22 17:39

Gymnast Nude… …

Let’s hop into Doc Brown’s DeLorean (before Universal sends it to the junkyard) and travel in time back to July 9, 2002:

EMusic.com Inc., a part of Vivendi Universal Net USA (VUNet USA), and Universal Music Group (UMG), a division of Vivendi Universal, today announced the availability of approximately 1,000 UMG albums through EMusic’s downloadable music subscription service (http://www.EMusic.com), as part of a consumer trial program. EMusic will feature tracks from a cross-section of UMG’s back catalog, which spans a variety of artists and genres. . . .

Designed for the avid music fan, EMusic allows its 50,000+ members to download as much music as they desire for one low monthly price. Because EMusic uses the popular MP3 format, members can easily burn their music to CDs and transfer it to portable MP3 audio players, such as the SONICblue Rio, Apple iPod or Creative Nomad.

In other words, not only did Universal previously experiment with releasing DRM-free tracks, it did so under a scheme that in terms of pricing was essentially identical to Bob Lefsetz’s oft-repeated proposal for monetizing P2P: “ten dollars a month for all you can eat, unprotected MP3s” (to quote from his April Fools story about Jimmy Iovine leaving Universal to go to Limewire).

Unfortunately the eMusic/Universal experiment ended fairly ignominiously, and its demise may hold some lessons regarding both Bob Lefsetz’s call for lower prices and Hypebot’s call for more experimentation. As noted in a Wired News story later in 2002 (about the major labels desire to support streaming-only services),

Even EMusic.com, which built its business selling downloads as a subscription service, is being forced to reconsider its business model after some users started downloading 2,000 tracks per month—roughly 165 albums—according to general manager Steve Grady. . . .

EMusic’s solution was to limit the number of tracks users can download. If it hadn’t instituted a cap, it would have lost money on the most frequent downloaders. EMusic subscribers pay $120 a year. But a subscriber who downloads 2,000 tracks a month costs the company $140 in licensing fees to music publishers, Grady said.

In practice eMusic didn’t impose a technical limit on downloading; instead it sent warning letters to customers who downloaded more than 2,000 tracks per month, and kicked at least at least some of them off the service. (Thus began the infamous 2K Club, still memorialized in some eMusic subscribers’ message board nicknames.) Eventually the unlimited download plan was discontinued when Dimensional Associates bought eMusic from Vivendi in 2003, just over a year after the Universal experiment started. Universal pulled all its releases from eMusic at that time or shortly before. (I haven’t been able to find an authoritative reference for the date.)

As implied by Steve Grady’s comments quoted above, the need to pay mechanical royalties to music publishers (amounting to 7 cents per track in Grady’s example, from 5-10 cents per track according to other sources) made it unprofitable for eMusic when (some) people took full advantage of the unlimited nature of the service. After ending the unlimited download plan eMusic in effect set a floor on the per-track prices paid by subscribers, by limiting the total number of tracks per month; initially this minimum price amounted to 25 cents per track for the lowest-price plan (40 tracks for $9.99), and has since been raised to 33 cents per track for the corresponding plan in eMusic’s current pricing (30 tracks for $9.99).

Even with these higher prices eMusic has had some troubles in its dealings with independent labels over the issue of per-track payouts, with Drag City being one of the most recent labels to defect. What does this say for the possibility of new pricing experiments in selling digital music in DRM-free formats? Larger corporations like Amazon might have more clout to demand better pricing and/or more money to treat digital music as a loss leader for other products. However I suspect that (nearly a decade after Napster) neither major labels nor independents are yet ready for a new world of ultra-low music prices, with a major sticking point presumably being per-track fixed costs in the form of mechanical royalties and other contractually-obligated payments. Until that changes I suspect that major innovations in pricing will not occur. Of course, as Bob Lefsetz continually and correctly repeats, the world is not waiting on the labels to get their act together, and in the meantime people will continue to take matters into their own hands on the P2P networks.

UPDATE: For some good commentary on Universal’s refusal to sell DRM-free tracks through Apple, see the post Dinosaurs with Jetpacks (found through Daring Fireball). The author’s premise that Universal is engaged in a grand (but doomed) scheme to hurt Apple is perfectly believable.

I’m also thinking about moving the blog from my own server to wordpress.com; if I do so I should be able to keep the current domain name, and I may also be able to ensure that the feed URLs don’t change either. I’ve already imported almost all the old blog posts and comments into the wordpress.com-hosted version of the blog, but want to do some more tweaking and testing before I throw the switch.

Sjoerd (sjoerd.witjes@gmail.com) - 2007-08-15 08:00

Good to read from you again. RSS proves it use once more :-)

beachdog67 (beachdog67@gmail.com) - 2007-08-15 17:29

Woof! “Distractions”, indeed. The “skin on” world has encroached on my cyberlife in a similar, economically-driven manner. I too, lost a couple months worth of DLs, and haven’t got a clue what’s up in the ever-shifting world of 68stationwagon, MusicLover, and Yancey. Any news on IowaJazz? I’m just now back live on the internet for the first time in two or three weeks – don’t even have speakers hooked up fer Dogsakes. Anyway, glad you’re back too. Woof!

Presumably Alltel picked eMusic both because it offers lots of DRM-free music (making it easy to work with MP3-capable mobile phones) and also because as “number 2” behind the iTunes Store it’s willing to do deals with smaller companies (as I noted in my discussion of the Johnny Rockets deal). As Apple and AT&T prepare to roll out the iPhone it will be interesting to see what other US-based mobile operators do to match the iPhone/iTunes offering. It may be that eMusic has had similar discussions with other mobile operators—I guess we’ll see.

In any case I can amuse myself with the thought of the city slickers from eMusic visiting the quiet burb of Little Rock, Arkansas (Alltel’s headquarters) to hammer out the deal. I hope they had a chance to stop by the Bill Clinton museum and catch a glimpse of one of his saxophones.

I think the most straightforward strategy for labels to address this concern is to work with eMusic to implement some form of price discrimination:

A seller price discriminates when it charges different prices to different buyers. The ideal form of price discrimination, from the seller’s point of view, is to charge each buyer the maximum that the buyer is willing to pay.

The basic idea is that selling at a single price divides potential customers into three groups:

• those who think the price is too high (and who therefore don’t buy at all)
• those who are willing to pay the price (but not much more)
• those who would be happy to pay a higher price (but end up paying the same price as everyone else)

In a single price scenario the seller (a record label in this case) makes no money at all on the first group, and makes less money on the third group than could be made in theory. The seller could increase overall revenues and profits by offering a lower (but still profitable) price to the first group, and a higher price to the third group.

However doing this is not trivial:

Every seller would price discriminate if there were not two major obstacles standing in the way. First, the seller must be able to distinguish between those buyers who are willing to pay a high price from those who are not. Second, there must be substantial difficulty for a low-price buyer to resell to those willing to buy at a high price.

In the context of eMusic the second obstacle corresponds to people buying low-priced MP3s from eMusic and then reselling them to others at higher prices (a form of arbitrage). Unless I’m missing something, this is a non-problem. If anyone is inclined to violate the eMusic subscription agreement then they’re far more likely to simply offer up their purchased music collections on P2P file sharing networks. While this adds to the labels’ general woes it doesn’t directly affect the eMusic vs. iTunes Store issue, since I’m assuming that the customers of both services are willing to pay some amount for music, no matter how small, and are not obtaining music solely via P2P networks.

I’ll therefore ignore the second obstacle and focus on the problem of distinguishing between price-sensitive and price-insensitive customers and then price discriminating on that basis.

Product versioning

One way to do this is through product versioning, i.e., offering multiple versions of the same product that differ in terms of quality or other aspects. Examples in the music industry include offering albums as CDs (including album art and liner notes) as well as in digital versions at varying levels of quality (e.g., 128Kbps MP3 vs. 192Kbps VBR MP3 vs. FLAC, etc.). Price-insensitive customers are happy to buy the higher-quality version, while others are willing to accept a lower quality product in return for a lower price. (In actual practice retailers typically offer at least three product versions at three different prices, using so-called “Goldilocks pricing.”)

However such versioning doesn’t directly address the eMusic vs. iTunes Store issue, since both are offering roughly equivalent products. In fact, for those releases available on both services eMusic has traditionally offered an arguably higher-quality product at a lower price, since unlike the iTunes Store it offered tracks that were playable on more devices and were free of DRM-imposed restrictions.

Before it left eMusic Tzadik used a particularly strange method of product versioning: It made albums available for downloading on eMusic but omitted tracks that were 15 minutes or longer in length. I strongly suspect that eMusic subscribers are much more interested in downloading albums than single tracks, both because independent music doesn’t tend to be singles-oriented and also because downloading complete albums reduces customers’ mental accounting costs. Tzadik’s policy thus amounted to offering a significantly inferior product on eMusic in the hopes that all but the most price-sensitive customers would go elsewhere to buy it. It’s analogous to a car manufacturer forcing low-cost car dealers to sell its cars without back seats: it might make superficial sense to someone in marketing, but customers would generally think that the manufacturer was taking them for fools.

My conclusion is that product versioning in the classic sense won’t work in the eMusic context, at least given current eMusic offerings. (However it’s possible that in the future eMusic and the labels could cooperate to offer certain premium products, as I’ll discuss in a future post.)

Release windows

Another strategy is to offer a product initially at a relatively high price, and then to later offer the same or a similar product at a lower price. (This can be thought of as a special case of product versioning, with the differentiating product aspect being time rather than quality.) This is the strategy that book publishers use with hardcover books vs. paperbacks: Price-insensitive buyers purchase the hardcover version, while price-sensitive buyers are willing to wait a few months for the paperback to come out. The delay is necessary because the differences between a hardcover and paperback book are not necessarily enough to promote proper price discrimination if they were released at the same time: Most if not all people would likely be willing to settle for the paperback version and ignore the hardcover version, since what’s most important to them is the content of the book (“What happens to Harry Potter?”), not the sturdiness of its covers.

In an eMusic context this strategy corresponds to labels releasing albums to CD and the iTunes Store first, and then waiting a few months before releasing to eMusic. The assumption is that the quality difference between the CD and the iTunes Store digital version is sufficient to promote price discrimination at the time of original release between very price-insensitive customers (who buy the CD) and moderately price-insensitive customers (who buy the iTunes Store digital version), and that the most price-sensitive customers will be willing to wait some time before purchasing the album at eMusic. Of course, some people won’t want to pay the iTunes Store prices and will go to P2P to get the album, but it’s not clear how many of those people would have paid in any case, even through eMusic.

One problem with this strategy is that it doesn’t take full advantage of labels’ marketing efforts at the time of the albums’ initial releases. Such campaigns are to some extent wasted on eMusic customers, especially those customers who predominantly purchase through eMusic, because they can’t buy a newly-released album through eMusic at the time when their interest in the album is at its height. By the time the album becomes available on eMusic customers may put a much lower priority on downloading it, having found lots of other albums to consider downloading in the meantime.

Similar considerations have motivated movie studios to consider reducing the window between theatrical release of movies and release on DVD. However others have claimed that it’s counter-productive to move toward shorter release windows and so-called “day and date” releases to multiple channels. Also, sales of movies are much more driven by marketing campaigns than sales of albums, many of which tend to sell well long after initial release.

Thus it’s likely a viable strategy for labels to have a window between availability in “full-price” digital music services and availability on eMusic. However as I discuss in the next section it’s also possible that labels could find a strategy that protects iTunes Store sales while not totally forgoing the possibility of realizing eMusic-related revenue starting at initial album release.

Behavior-based differential pricing

If a retailer has enough information about its customers then it can use customers’ past behavior to determine whether they appear to be price sensitive or not. Retailers can then implement pricing schemes that target particular purchasers for special treatment. For example, in the past Amazon has experimented with varying prices shown to different customers, a practice also followed by other online sellers. In one application of this strategy, a site may use targeted pricing to grow its customer base, offering special discounts to get new customers hooked while displaying higher prices to loyal customers, on the theory that they are less likely to switch to a competitor.

As the referenced articles indicate, while differential pricing may be economically efficient it is not easy to implement such schemes without running into customer concerns about fairness. The same Internet that makes online commerce possible also makes it possible for customers to compare the prices they are being offered, and to evaluate whether or not they’re being unfairly taken advantage of in particular circumstances.

In the case I’m considering the concern is about eMusic impacting labels’ sales through the iTunes Store and other services. The problem at hand is thus as follows:

1. Use what eMusic knows about its customers to identify which are most price-sensitive.
2. Implement a mechanism to allow labels to sell through eMusic only to the most price-sensitive customers, forcing less price-sensitive customers to go to higher-priced outlets.
3. Do this in a way that is fair and can be justified to all eMusic customers.

In my opinion the most price-sensitive eMusic customers can be identified as follows:

• They are long-time eMusic subscribers, having recognized early the value of the service as a low-cost way to purchase music.
• They have signed up to the higher-priced plans (e.g., Connoisseur plans or equivalent) and/or to annual or biannual plans, in an effort to get the lowest per-track price possible.
• They regularly max out their plans in order to not waste money on unexpired downloads, and make minimal or no use of relatively expensive booster packs.

It may be counter-intuitive that the customers spending more money at eMusic are generally the most price-sensitive, since we typically assume that big spenders don’t care about prices. However in the context of eMusic the highest-paying customers are most likely not wealthy individuals but rather people of average means who are dedicated music lovers and have an almost insatiable demand for new music. They are price-sensitive because even a small decrease in price makes a significant difference in the amount of additional music they can purchase. For example, someone on the $74.99 Connoisseur plan is downloading the equivalent of about 30 albums a month, one new album every day. A 10% decrease in price would equate to three extra albums per month for the same amount of money.

eMusic already has all the information it needs to identify price-sensitive customers according to the above criteria, since it obviously knows which plans its customers are subscribed to and how much they’re downloading. eMusic also has the ability to make particular releases available to some customers and not to others, since it has to do this already in order to implement restrictions on which releases are available in which countries. It therefore should be well within eMusic’s capability to allow labels to designate particular releases as being available only to customers previously identified as being price sensitive. The only remaining problem is to do this in a manner that is arguably fair to eMusic’s customers.

In my opinion the most fair mechanism would be based on either customers’ selected plans or on the length of (uninterrupted) time they’ve been eMusic subscribers, or both. For example, making selected new releases available only to people on Connoisseur plans could be justified as providing extra benefits to eMusic’s best customers. Similarly, making new releases available only to people who’ve been eMusic subscribers for at least six months (say) could be justified as a reward for customer loyalty. Using the third criterion above (maxing out plans and not buying booster packs) is arguably not fair, both because customers may have good reasons for not using all their downloads (vacation, sickness, etc.) and also because customers who don’t download their entire quotas and who buy booster packs are in fact contributing more to eMusic’s and the labels’ bottom lines.

Addressing concerns about selling through eMusic vs. other channels

Based on my comments above, I propose that eMusic work with its labels to allow them to designate certain albums (and associated tracks) as “premium” offerings that would be made available only to certain eMusic customers; these albums would typically be new releases but might also be back catalog albums that were still doing significant business at the iTunes Store and in CD format. Such releases would be made available only to eMusic customers who were currently on a Connoisseur plan or had been eMusic subscribers for at least the past six months.

(I think the ability to download premium releases should be extended to all eMusic subscribers if they stay with the service long enough, both because it’s more fair to existing customers and also because this encourages new subscribers to stick around long enough to become loyal customers and perhaps upgrade to more expensive plans. I chose the six-month window as being long enough to protect labels’ revenues and profits on new releases sold through non-eMusic channels, but short enough not to discourage new eMusic subscribers. Finally, eMusic could also extend the ability to download premium releases to other selected customers as appropriate, for example customers on older high-priced plans, customers on annual or biannual plans, and so on.)

Labels would then have the following options with regard to selling through eMusic, with pros and cons as noted:

• Not sell through eMusic at all. This would guarantee higher payouts in all cases, but could mean forgoing incremental revenues and profits from price-sensitive customers, who might otherwise purchase music from other labels that do happen to sell through eMusic, or who might simply resort to downloading the label’s releases using P2P networks. I’d recommend this option only for labels whose cost structures are such that they cannot sell any releases profitably through eMusic.
• Sell all releases through eMusic, without exception. This would maximize the potential revenue and profit obtained through eMusic, but might negatively impact revenue and profits through other channels with higher prices. This strategy would make the most sense for labels whose sales through the iTunes Store and other mainstream-oriented services are relatively insignificant.
• Sell only back catalog releases through eMusic. This would alleviate the financial impact of eMusic diverting new release sales away from the iTunes Store and other outlets, but (as with not selling through eMusic at all) would mean leaving money on the table by driving away price-sensitive customers who might otherwise have purchased the new albums through eMusic at the time they were originally released. I believe this option would thus be inferior to the next one.
• Sell all releases through eMusic, but designate new releases and certain others as premium offerings available only to certain eMusic customers (as described above). This would help preserve new release business through the iTunes Store and other services by limiting the extent to which more casual buyers could obtain new releases through eMusic (e.g., by signing up for a free trial), while still getting incremental revenue and profits on new releases from dedicated music buyers who have proven to be price-sensitive (and are therefore unlikely to buy from the iTunes Store or elsewhere).

The major downside of the fourth option is that it could hurt eMusic’s ability to attract new subscribers, since people just joining eMusic wouldn’t be able to immediately download certain new releases (including most likely those from the latest “flavor of the month” artists) unless they signed up to a high-priced plan. However at the same time this option might help with eMusic customer retention, since existing customers would retain their ability to get new releases at low cost only by staying with eMusic and not interrupting their subscriptions.

In the end I think this comes down to a trade-off between eMusic’s desire to grow its own business and the labels’ desire to protect theirs. As I implied in the conclusion of my first “sympathy for the labels” post, I believe it’s in eMusic’s long-term interest to keep labels reasonably happy, even if doing so harms its own business a bit. I believe my proposal above could help address labels’ concerns about eMusic’s negative impact on non-eMusic sales, and would arguably be better for eMusic itself than having labels using eMusic only as a back catalog outlet, or not selling through eMusic at all.

luckybleu (luckybleu@optonline.net) - 2008-06-10 15:40

QTRAX is coming signed sealed delivered

• Selling through eMusic is not profitable, period.
• Selling through eMusic isn’t profitable enough.
• Selling through eMusic lowers overall profitability by diverting sales away from the iTunes Store and other higher-priced outlets.

The first concern is that dealing with eMusic is simply unprofitable; for example, on the eMusic message boards Wesley cited this as a reason for Red House Records leaving: “According to a contact at Red House they felt it was time to leave because after paying the artist and songwriter royalities they were losing money on every track.”

As frogkopf has noted on the eMusic message boards, this problem is primarily due to traditional music industry royalty arrangements, in particular the practice of paying fixed mechanical royalties (X cents per track):

For along time, having a fixed rate for mechanical royalties worked in favor of the record labels, since it was inflation proof - as retail prices climbed the rate stayed the same, resulting in the payouts being a smaller and smaller percentage of the overall sales. Now that the price per unit is dropping under new pricing models such as eMu’s the labels are on the losing end of the equation, and they don’t like it a bit.

I see two things happening as a result of this trend. First, many individual artists will publish their own works, perhaps using someone like CDbaby as a distributor and keep what is left over as their profit (I believe CDbaby keeps 9% off the top and forwards the rest to the artist). Second, labels will have to restructure their contracts with artists into more of a profit sharing arrangement, where each party keeps X% of the sales, after original costs (recording, etc.) are re-couped.

(Long-time eMusic customers may remember that the problem of fixed per-track royalties was also what doomed eMusic’s original “all you can download” unlimited subscription model.)

Unfortunately this is not a problem that can be addressed in the short term, given that labels and music publishers aren’t going to change business practices overnight. In these circumstances it’s understandable why labels with unfavorable cost structures might want to leave eMusic if those cost structures prevent them turning a profit at all, and it’s not necessarily a slight on eMusic when they do so.

The next concern is that although selling through eMusic is profitable, it’s not profitable enough according to some measure (typically as compared to selling through the iTunes Store). Such concerns could be addressed either by eMusic raising prices across the board or by eMusic instituting some sort of variable pricing scheme that would allow labels to have more control over per-track prices.

Regarding across-the-board increases, it’s worth noting that eMusic has already raised its prices over the past few years since the unlimited subscription model was abandoned. For example, the eMusic basic plan for the US, which originally offered 40 tracks at $9.99, now offers only 30 tracks at the same price. This corresponds to an effective price increase of 32 per cent (from $0.25 per track to $0.33). Users in the UK and Europe also saw a price increase when the UK- and Europe-specific services were introduced. At some point further price increases would likely tend to drive customers away from the service, as David Pakman implied with his comments on price elasticity:

It’s the basic economic concept that says, for certain goods, when you raise the price, sales will fall disproportionately, and so the increased revenue doesn’t make up for the lack of sales. And if you lower the price, sales will rise disproportionately. Music is an elastic good, and we have now seen that by raising prices, the industry in fact did not make up the revenue, and, in the end, only slowed sales.

Regarding variable pricing, it’s difficult to see how variable pricing could be introduced in the eMusic subscription model without over-complicating it. One approach would be to change the subscription from being track-based to credit-based, with most tracks requiring one credit but some counting as two or more credits against the limit. This model has been adopted by Audio Lunchbox (another service offering DRM-free music from independent labels), but I question its viability. In particular, a credit-based model imposes considerable mental accounting costs on customers trying to decide what to buy, and thus likely dampens their enthusiam for buying anything at all.

(Audio Lunchbox takes this to insane levels: For a particular album you can purchase individual tracks at a cost of 1 to 4 credits depending on the track, you can purchase a whole album for a cost in credits that’s not necessarily that the same as the sum of the credits for the individual tracks, and you can purchase an album for an a la carte price in dollars that doesn’t necessarily match the cost of the album in the equivalent number of credits. A price-conscious customer would almost need to keep a calculator near to hand in order to use the service.)

The final concern is that the low prices at eMusic are attracting customers who would otherwise have bought either CDs or higher-priced digital albums at the iTunes Store or elsewhere. This in turn allegedly reduces label revenues and profits below what they would have been in the absence of eMusic.

To use Drag City as an example (a label that joined eMusic relatively recently): I was initially introduced to Joanna Newsom’s music on Last.fm, and then bought her debut album Milk-Eyed Mender on CD (from Amazon) because it wasn’t on eMusic. However after Drag City came on board with eMusic I then got Ys from eMusic, even though I liked Newsom well enough that I would have almost certainly bought the CD if the album hadn’t been on eMusic. So in my case Drag City did in fact paid a price for releasing to eMusic.

However there are other cases where I’ve bought albums from eMusic that I would have never bought on CD or as full-price downloads. In fact, this was the case with the Joanna Newson and the Ys Street Band EP, which costs $10.99 from Amazon, $10 direct from Drag City (in CD form), $3.99 from the iTunes Store, but less than $1 from eMusic under the plan I’m on. Given that the EP had only one new song, in my opinion even $4 at the iTunes Store was too high a price to pay.

How to move beyond such anecdotal evidence? One approach is to ignore the underlying dynamics of the market and simply conduct controlled experiments: For example, suppose a label has two albums that from past experience it expects to be of roughly equal appeal to the market. It could release album A to eMusic and hold back album B, reserving it for the iTunes Store and other services that have price points higher than eMusic, and then compare the revenue and profits for each album. If album A does better overall then releasing to eMusic is a net plus, and if album B does better then releasing to eMusic is in fact a bad deal for the label.

However this wouldn’t necessarily settle the question, since we may be comparing apples with oranges: Album A may differ from album B in ways that would affect the relative revenue and profits. In particular, the set of people interested in album A may have different buying behaviors than the set of people attracted to album B. The goal is to measure the impact on releasing to eMusic or not, all other things being equal, but it’s hard to arrange the other things so that in fact they are equal in reality.

An alternative approach is to apply what’s known about economic principles and come up with some sort of business strategy vis-a-vis releasing to eMusic that is both easy to implement and likely to be effective. I’ll defer discussion of this to my next post. This post is long enough at this point, and this particular topic is important enough to deserve a post of its own.

I recently expressed some scorn for the labels’ complaints, including using a rather colorful metaphor that I won’t repeat here. In fairness the labels do have real problems and at least some justification for their complaints, so I feel an obligation to show some sympathy for them and offer some constructive comment. I think there are at least three real issues that the labels are right to be concerned about:

• Labels are struggling to adapt to a world where CD sales are dropping and digital sales are not picking up the slack, and they’d like eMusic to be sensitive to that fact.
• Labels are at risk of leaving money on the table by putting releases out on eMusic at the same time they release on CD and to iTunes.
• Labels don’t have any assurance that eMusic-based revenues are going to show any growth.

In this post I address the first point, postponing discussion of the second and third to subsequent posts.

The sorry state of the music industry is obviously not of eMusic’s making, but it does inform everything the labels think, do, and say. As an outsider not working in the business I can see this as simply an inevitable historical trend: The golden age of the music business began when mass distribution of recorded music became possible at all, and ended when it became cheap and easy enough for anyone to do it. During this golden age (roughly coinciding with the 20th century) record labels were able to profit greatly from their control of music distribution, but that control has now disappeared, and with it the associated profits.

The current turmoil in the music industry is simply an unavoidable consequence of this trend, which the labels can attempt to delay (e.g., through draconian enforcement actions against illegal downloaders) but ultimately cannot stop. The only suitable response is thus to “make change [your] friend,” as Bill Clinton once said. However those living through this period (including paying—or struggling to pay—for mortgages, health insurance, child care, etc.) can’t afford to be dispassionate, as the whole world changes around them and they struggle to adjust their business models to adapt.

Beyond the competition from P2P downloading and the decline in CD sales, I think there will also be additional pressure on CD prices due to both competition from the used CD market (revitalized by sites like LaLa) and the increasing dominance of Amazon in selling indie CDs (and perhaps now indie digital tracks) as record stores bite the dust. (In particular Amazon may end up being to indie labels what Wal-Mart is to its suppliers.) In the end I think the labels need to plan for a future in which CDs don’t sell for more than $10 and digital albums don’t sell for more than $5. This will likely require some pretty wrenching changes to the cost structures of labels that are already very lean (even starving) operations in the first place.

Customers may or may not sympathize with the indie labels’ woes, especially given that the major labels and the RIAA have done such a great job of painting record labels in general as villains eager to screw both artists and customers. But although the major labels indeed may be a den of thieves (and not afraid to say so), indie labels don’t deserve to be lumped in indiscriminately with them. And in any case eMusic itself has to work with the labels, and clearly has an interest in keeping them at least reasonably happy.

It may be hypocritical of me to say so, given the snarky comments I myself have made in the past, but David Pakman might be advised to make an extra effort to show sympathy for the labels’ plight. It’s not necessarily that he’s seemed dismissive of their problems, but his attitude as conveyed in public comments (“Sure, on occasion, a few labels will come and go”) seems to be that periodic label defections are just a natural phenomenon that has minimal impact on the overall eMusic business. I actually agree with Pakman on this point; given the amount of music available on the service, eMusic can easily sustain the loss of a few labels here and there. However from a PR aspect label defections constitute a drip, drip, drip of bad news that is especially undesirable for eMusic now that people are raising serious questions about its long-term viability in the face of competition from Amazon and other services.

Stories focusing on the departure of key eMusic employees are another indicator of the PR woes eMusic finds itself in. The implied subtext of such articles is that eMusic used to have people who went the extra mile for indie labels, but now eMusic is just a cold-hearted business that doesn’t care if the labels live or die. Whether this is true or not, showing some extra indie label love might help eMusic lessen the PR impact of any further label defections; this includes both supportive public comments and some actual business moves (as discussed in my follow-up posts).

In particular, some people have questioned Pakman’s decision to post to 17 dots as opposed to seeking some other venue; for example, in a comment on Pakman’s post, “Bill” wrote: “A long, involved corporate response is at least out of place in what’s generally a space reserved for music appreciation.” For what it’s worth, I think 17 dots was not a bad place to post this. What were the alternatives? Let’s consider them one by one:

• Why not publish a press release? This really isn’t a press release sort of thing. Besides, Pakman wasn’t necessariyl addressing his comments to the world at large, I think he was primarily addressing them primarily to (a subset of) eMusic customers and secondarily to others in the music industry—basically the sets of people who’d already have read the negative eMusic stories.
• Why not talk to the press? The press deals in sound bites, and Pakman had a lot to say that couldn’t be summed up in a sound bite. Also, I’m sure he wanted to make sure his message didn’t get distorted on its way to the intended audience.
• Why not post something on the eMusic web site? As I implied above, I think only a fraction of eMusic’s customer base (and a fairly small fraction at that) knows about or cares about negative eMusic press stories. Presumably Pakman didn’t want to run the risk of provoking disquiet among eMusic customers who’ve been blissfully downloading and likely aren’t affected by a few labels pulling out here and there.
• Who not post something to the eMusic message board? I suspect that the number of people who are deeply interested in matters eMusic is significantly larger than the number of people reading the message boards and (especially) posting to them. (I certainly see comments on Pakman’s post from people whom I don’t recall ever seeing comment on the message boards.) I suspect that most if not all of these “power users” are reading 17 dots, especially given that it’s advertised on the eMusic site.

In the end I think 17 dots was probably the best venue at hand. If Pakman had already started a CEO blog he could have posted it there, but he didn’t and couldn’t. I actually think it would be nice if 17 dots could be expanded to have eMusic employees talk about more than music. However, other than noncontroversial topics like the new download manager, I think most of the topics that people might want more information on (e.g., customer support issues, complaints about price increases, and so on) are topics that eMusic isn’t comfortable with discussing in a public forum. We’ll see if Pakman’s post heralds a new era of management openness at eMusic, but I suspect it was a one-off event.

I’ve previously made my own views clear on the labels’ complaints about eMusic pricing, so I won’t repeat my comments here. I don’t want to denigrate the label’s concerns (now he says!), but I do think they’re trying to swim against the tide somewhat. Just a big-box retailers took music CDs and made them a loss leader, I think the long-term trend is for lower prices for digital music. As Amazon apparently prepares to enter the digital music market, we’ll see if I’m right.

Jonny Goldberg (jonjgoldberg@yahoo.com) - 2007-05-08 15:59

I am an avid fan of eMusic and their excellent service, like most of the indie music community, I suggest everyone go and read what their CEO has posted in response to this, a really terrific read -check it out now on the eMusic blog at: http://17dots.com/2007/05/07/its-a-brave-new-world-out-there/

Frank Hecker - 2007-05-09 11:22

For people reading Jonny Goldberg’s comment, note that the correct URL for Pakman’s post is actually http://17dots.com/2007/05/08/its-a-brave-new-world-out-there/ (The URL was apparently changed after the post was originally published.)

From the “pro” side of the fence (i.e., someone paid to have opinions and publish them) comes an article “Why Amazon is Important” by Mark Mulligan of Jupiter Research. (Incidentally, Mulligan blogs a lot about digital music but has mentioned eMusic only a few times, mostly in passing.) Mulligan refers to Amazon as the “sleeping giant of the digital music market” and notes that

Digital music is still niche and waiting to break through to the mainstream online, let along more broadly. Amazon is perfectly placed to aid that transition. They have mainstream online reach and are a key destination for music for mainstream as well as aficionado music fans.

This is not a stunningly original insight but it is something that the mainstream media overlooks at times. Mulligan also notes that Amazon needs to sell digital music that’s playable on iPods, an obvious point, but ties this to the less obvious argument that Amazon’s best customers tend to be technologically sophisticated early adopters, and that therefore Amazon offering digital music would be a defensive move against the possibility of losing those customers to the iTunes Store as digital downloads replace CDs as the main distribution vehicle for music. Unfortunately Mulligan ends on an off note as he claims that “Amazon really needs to either be DRM free or interoperable,” apparently buying into the myth that there could be such a thing as “interoperable DRM.” Remember, Mark, DRM is “defective by design.”

Now let’s turn to an “intelligent amateur,” Paul Lamere of Sun, who does research on improving music search and categorization and makes some Amazon predictions as part 5 of a series on the top 5 things in digital music that didn’t happen in 2006. (See also parts 1, 2, 3, and 4.) Lamere addresses some points that I and others have previously covered—the importance of using the MP3 format, Amazon’s strengths in music recommendations, the possibility of variable pricing, and so on—but also has some valuable insights I’ve not seen elsewhere, at least discussed in such detail. In particular, Lamere makes some key points about Amazon’s strengths in the area of web services and metadata that remind me of Tim O’Reilly’s argument that “data is the next Intel Inside”:

Amazon has a great set of web services built around their data. . . . Exposing their data in this fashion places Amazon at the center of the online literary ecosystem. Any startup company that wants to be in a business related to books will use Amazon’s API because it is easy, the data is of high quality and it is free. This is good for the startup, and even better for Amazon since all of those startups end up sending their customers to Amazon. Amazon is already a big part of the music ecosystem. They already have lots of data for music CDs that is available via their web APIs. They are probably the largest supplier of album art on the web. The Amazon part number—the ASIN—is used throughout the web as an unambiguous identifier for an album. Once Amazon starts to sell individual tracks, I would expect that Amazon will create an ASIN or an equivalent for each track in their database. This track-level identifier may become the primary way of identifying tracks in the music world since Amazon makes it so easy to get all of the information about an item once you have the ASIN. This could be a key enabler in the next generation of music—a ubiquitous song ID tied to deep metadata.

Lamere also has some interesting recommendations for Amazon: that it connect its own music IDs to existing MusicBrainz IDs in order to leverage community-generated metadata, that it support an open vendor-neutral standard playlist format, and that it make its 30-second clips available DRM-free to use as input to next-generation music discovery tools.

I didn’t intend to frame it this way, but in the end reading Mulligan vs. Lamere is a good contrast: competent but somewhat generic commentary vs. an interesting and (to a large degree) unique perspective. I doubt I’ll seek out Mulligan’s writings specifically, but I’ve added Lamere’s music-related posts to my NetNewsWire subscriptions.

The function of prices, from the point of view of a shopper, is to let the shopper map his personal resources (budget) to his personal values (unique and not directly observable). This mental process requires comparison of the purchase price of a good to its personal value. This entails a significant mental cost, which sets the most basic lower bounds on transaction costs. For example, comparing the personal value of a large, diverse set of low-priced goods might require a mental expenditure greater than the prices of those goods (where mental expenditure may be measurable as the opportunity costs of not engaging in mental labor for wages, or of not shopping for a fewer number of more comparable goods with lower mental accounting costs). In this case it makes sense to put the goods together into bundles with a higher price and an initutive [sic] synergy, until the mental accounting costs of shoppers are sufficiently low.

For “large, diverse set of low-priced goods” read “the millions of tracks available on eMusic” (or for that matter the iTunes Store, or any other digital music service with a large catalog). In the eMusic context the mental accounting issue shows up at two levels.

First, a customer must make a decision to actually purchase something. If eMusic were a pure a la carte service offering only individual tracks for sale then this decision would be made on a track by track basis: “Is it worth my spending 25 cents on track 4 of album X vs. track 7 of album Y vs. track 2 of album Z (and so on, ad infinitum)?” As Szabo notes, making such decisions almost certainly requires “mental expenditure greater than the prices of those goods.” For example, assume that a customer makes $6.00/hour (not much above the US Federal minimum wage). If it takes the customer more than 2.5 minutes to decide whether to purchase a given track (including the time spent in searching for the track, listening to a 30-second preview, reading user reviews of the artist, etc.) then the cost of the mental expenditure is more than the cost of the track. For a customer making $60/hour (not unrealistic for eMusic given that its customer base skews older) the opportunity cost of selecting and purchasing tracks one by one is correspondingly higher: spending any more than 15 seconds per track on a purchase decision isn’t economically rational.

eMusic addresses this problem by in effect bundling multiple tracks into a subscription product priced high enough that mental accounting costs become less relevant: The prospective eMusic customer simply has to decide whether or not it sounds like a good deal to be able to download, e.g., 30 tracks per month for $9.99. Assuming that the customer’s musical tastes are roughly congruent with what eMusic has to offer, this is an easy decision to make.

The next level (at least in the eMusic case) is deciding what to download. (In a pure a la carte model the purchase decision and download decision are of course one and the same.) The problem of mental accounting costs occurs at this level as well, as any eMusic customer who has an extensive “Save for Later” list can testify. However at this point dealing with mental accounting costs is the customer’s problem, not eMusic’s, since eMusic already has the customer’s money. In fact, customer indecisiveness at this level works to eMusic’s advantage: If the customer can’t decide what to download (or doesn’t want to devote the mental time to decide, which amounts to the same thing) and as a consequence lets unused downloads expire, eMusic and its label partners end up getting more revenue on a per-track basis.

However as I’ve previously commented, eMusic has at least some interest in relieving customers of this mental burden. The primary mechanism to do this is to provide the option to download an entire album at once, so the mental decision to download or not takes place at the level of the album and not at the level of the track. This is especially important for the types of music eMusic sells: “Everybody knows” what the hot single is on Justin Timberlake’s new album, but a customer would have to be pretty dedicated to know exactly which tracks are worth downloading from, e.g., Of Montreal’s latest. I don’t recall David Pakman or anyone else at eMusic ever providing hard data on this, but I wouldn’t be surprised if the ratio of whole album downloads to partial album downloads on eMusic is much higher than it is at the iTunes Store or similar “mainstream” digital music stores.

eMusic has other mechanisms to alleviate mental accounting costs for its customers. For example, the eMusic Dozens recommendations reduce the mental exertions of deciding which albums to download, while eMusic occasionally does the same thing for single tracks through a feature recommending “end of the month” downloads to use up one’s quota. As it happens, I couldn’t find an example of the latter feature on eMusic right now—which perhaps illustrates my point that eMusic’s concern for making it easier for its customers to decide which music to download has to be balanced against its business interest in not having them make full use of their subscriptions.

Anyway, back to the original article I referenced: Szabo also has some interesting ideas on how to reduce mental accounting costs in the context of online commerce, and if I have some time at a later date I’ll try to revisit his proposals and give my opinions on them.

Jim (maldoror9@aol.com) - 2007-05-06 12:15

Actually, eMusic posts that feature every month. JANUARY http://www.emusic.com/features/spotlight/277_200701ym.html FEBRUARY http://www.emusic.com/features/spotlight/293_200702-ym03.html MARCH http://www.emusic.com/features/spotlight/293_200703-ym02.html APRIL http://www.emusic.com/features/spotlight/293_200704-ym01.html

MP3s from participating artists will be blended into the larger, existing Amazon store. “They are not trying to replace iTunes, iPod, Zune, whatever,” one source said. “It’s going to look just like Amazon does today.” That means that a search for an artist will yield a number of results, including CDs, merchandise, DVDs, and MP3s if available.

As I previously pointed out:

One of the things I think is most interesting is the potential impact of having [Amazon] sell both CDs and DRM-free digital tracks in an integrated way, and how that might affect the way both CDs and digital tracks are sold and perceived.

Digital Music News also notes that Amazon will likely launch with an all-MP3 offering and without digital content from all major labels:

If major labels opt not to license their tracks in the open format, the ecommerce giant has decided not to wait. “They are utterly, unflinchingly confident that they have 100 percent of the leverage in this situation,” one source flatly stated. “They are not waiting for the [major] labels at all.”

Again, as I wrote before regarding the major labels wanting Amazon to push DRM:

As a top 5 music retailer Amazon presumably has some actual influence over the major labels, and may be able to help push them kicking and screaming into the post-DRM world, especially now that EMI has broken away from the pack. Why give in to major labels’ demands at this time, as opposed to waiting until they might be more eager to make a deal?

And finally, as almost everyone (including me) has speculated, Amazon will apparently offer some form of variable pricing:

Meanwhile, multiple sources also pointed to an approach that includes variable pricing, though the store will insist that providers sell in the MP3 codec.

Unfortunately sloppy language marred one other prediction in the article, namely the question of whether Amazon will introduce its own digital media software:

Instead of competing with iTunes, Amazon will encourage users to incorporate their downloads into the Apple store, and transfer tracks to their iPods. “Stick with iTunes, but buy from Amazon,” one source quipped.

Here the article is confusing the iTunes Store (i.e., the online service operated by Apple) with the iTunes player (i.e., the desktop software used to store users’ digital tracks and synchronize them with their iPods). Obviously Amazon will be offering an online service that is independent of and competitive with the iTunes Store, but apparently Amazon will not attempt to compete with the iTunes player. It remains to be seen whether Amazon will offer some automated or semi-automated way for people to have tracks purchased from Amazon moved into the iTunes player’s catalog. That point aside, coexistence with the iTunes player is a good strategy, at least for now, especially given the immature state of would-be iTunes competitors like Songbird.

Update: Paul Resnikoff of Digital Music News has some additional comments on Amazon’s entry into the digital music market. His main point is that Amazon’s strategy of incrementally adding MP3 content is tailored to Amazon’s strengths as a music retailer, and wouldn’t make sense for anyone else; I agree 100%. He also thinks that the major labels (except for EMI) will sit out this round and wait to see if this whole “let’s sell DRM-free music” thing is just a fad; no surprise there.

neal - 2007-04-26 18:37

Amazon’s goal should be to make it as easy as it is to move songs downloaded from eMusic into iTunes. Initially, it was a turn off for me to have to move songs purchased from eMusic into iTunes, but then when I realized it took all of two seconds to do this, eMusic became the first place I look for new music. It is going to be awfully tough for anyone to beat the iTunes library/player at this point. Amazon and others should focus on making their stores as compatible as possible with iTunes and the iPod. The “iLike” sidebar (from iLike.com) is a perfect example of this kind of compatibility/integration.

First, I’ll repeat my previous point that the key concern for labels should ultimately be total revenue and profits, not necessarily per-track margins and certainly not per-track list prices. As David Pakman notes in his recent Forbes interview, eMusic’s payout to labels is not a direct function of track list prices, but rather is based on revenue sharing arrangements, which in turn are influenced by customer behavior. The more customers who don’t use up their subscription quotas, the more money labels end up getting on a per-track basis:

It doesn’t come down to a wholesale price, it’s a revenue share. We take all the revenue the company generates from every plan and cut it in half. Half of it gets paid out to all the labels each quarter pro rata based on the number of downloads they got. The important thing to note is if you signed up for the Connoisseur 300 plan at $75 a month and you went on vacation for a month or you just didn’t use the service or you only downloaded 10 songs, we still take the $75, put it in the pot, divide it by half and pay [it] out to all the labels.

This ties back into Tony Brummel’s and others’ (mis?)perceptions about the Connoisseur plans. From a naïve point of view it might appear to be bad for labels for eMusic to allow customers to download more tracks per month at a $0.25 per track price point. Wouldn’t it be better to force customers to buy booster packs, which are much more expensive on a per-track basis (from $0.50-0.60 per track at present), and thus achieve per-track payouts closer to those of the iTunes Store?

However this analysis ignores the point that people maxing out on their monthly downloads may be reluctant to buy booster packs, given the steep incremental cost over that for subscription downloads. (This is certainly the case for me, and based on comments on the eMusic message boards it appears to be the case for others as well.) People who max out their subscription downloads may prefer to upgrade to a plan offering more downloads, and run the risk that in some months they may not download their full quota. In effect they are opting for certainty in their per-track costs (locking in a nominal $0.25 per track price) as opposed to trying to optimize things by having a less expensive plan supplemented by booster packs.

To better understand the logic underlying the introduction of the Connoiseur plans, let’s look at an example: Consider a user who is on the current eMusic Premium plan (75 tracks for $19.99, or just under $0.27 per track), regularly maxes out his quota, and finds himself adding at least one or two albums per month to his “Save for Later” list. (Since eMusic’s customer base has a lot of frequent music purchasers, I suspect many customers found themselves in this situation.) To satisfy his desire for more music each month he decides to upgrade to the cheapest Connoisseur plan (100 tracks for $24.99). However once he upgrades he then for whatever reason ends up downloading only 85 tracks per month on average over the next year. At the end of the year he would have paid $299.88 (12 times $24.99) for 1,020 tracks (12 times 85), or on average $0.294 per track.

In hindsight the customer would have been equally well off staying on the Premium plan and buying four 30-track booster packs (at $14.99 per pack) as necessary to account for the 10 extra tracks per month (120 extra tracks per year) that he was downloading. His average per-track price would then have also been $0.294 (12 times $19.99 plus 4 times $14.99 for a total of $299.84, divided by 1,020 tracks). He would also have had more flexibility in downloading tracks, since booster pack downloads don’t expire at the end of each month.

However this approach has two disadvantages from the customer’s point of view:

• Combining a (maxed-out) subscription plan plus booster pack purchases requires a degree of forethought and rational calculation that most users are likely not willing to devote to the question of buying downloadable music. In particular, buyers incur a mental transaction cost for each buying decision they make, so in general it’s better for a retailer to minimize the number of separate buying decisions a customer has to make. (For example, this has been used as an argument against micropayment schemes.) When upgrading to the Connoisseur plan the customer in the example above needs to make only one decision, but when taking the booster pack approach he would have to make more, given that he probably wouldn’t buy all the booster packs at once.
• The “maxed-out plan plus booster packs” approach also runs the risk that customers may end up paying more on average than if they had upgraded to the next higher plan. If the customer in the example above downloaded 90 tracks per month on average instead of 85, then over the course of a year he would have had to buy two more 30-track booster packs to account for the additional 60 tracks (five per month) he wanted to download. Doing this in turn would have raised his total cost to $329.82 ($299.84 plus 2 times $14.99) and his average per-track price to $0.305 ($329.82 divided by 12 times 90 or 1,080). This is significantly more expensive than the $0.27 per track he was originally paying under his maxed-out Premium plan. Given that people generally are more concerned with avoiding losses than pursuing gains, the customer in our example would likely opt for a plan upgrade and stability in his eMusic-related expenses as opposed to running the risk of overspending on booster packs.

The upshot is that for our example customer it makes sense (at least from a behavioral economics point of view) to upgrade to a higher-priced plan. It also makes sense (from a rational business point of view) for eMusic and its labels to offer him this option, as long as the customer doesn’t download more than 92 tracks per month (out of a quota of 100). Below that point the per-track payouts are higher than for a maxed-out Premium plan, while above that point they are lower.

However if it’s likely that lots of customers would be maxing out (or close to maxing out) the 100-track Connoisseur plan then eMusic could simply offer a high priced Connoisseur plan providing more monthly downloads, and encourage people to upgrade to that. This of course is exactly what eMusic did, offering a $49.99 plan with 200 downloads and a $74.99 plan with 300 downloads. The logic is the same as before: for customers maxing out their current plans it’s typically simpler and more attractive to upgrade to a more expensive plan than to rely on booster packs to supplement a lower-priced plan.

eMusic could make this approach more attractive from a business point of view (for both itself and the labels) by increasing the price of booster packs (which increases the incentive for customers to upgrade their plans instead) and by raising the minimum price for the higher-priced plans (to minimize the impact on profitability of extremely heavy downloaders). Again, this is exactly what happened: eMusic increased the minimum per-track prices for booster packs from $0.30 to $0.50, and set pricing for the Connoisseur plans so that the per-track price is never lower than $0.25 (vs. $0.22 under the Premium plan prior to the current one).

David Pakman did a good job of summing up this strategy in the Forbes interview:

For us, subscription business optimization is about making sure customers are never always maxing out their plans. That way, the customer feels they have some headroom and we’re able to optimize the profitability of our business.

The result of this optimization is a win-win for eMusic and the labels as well as for eMusic customers (at least some of them):

• eMusic and the labels realize both higher overall revenue and higher profits: higher revenue because customers are on higher-priced plans, and higher profits because per-track payouts are higher than they would be if customers were maxing out on lower-priced plans and didn’t have the option of upgrading to higher-priced plans that many of those customers in practice wouldn’t take full advantage of.
• eMusic customers in general can plan their music purchasing and minimize the risk of over-spending their budgeted amounts per month, and price-sensitive eMusic customers in particular can get a good deal in terms of actual (not nominal) per-track prices by purchasing tracks in volume and downloading all the tracks per month to which they’re entitled.

Since eMusic presumably has complete records on the buying and downloading activities of its customers, and has also in effect conducted experiments in pricing strategies by changing its pricing model in the past, I’m presuming that eMusic can in fact demonstrate to labels using hard data that its current business model is good for both eMusic and the labels. In other words, the labels don’t just have to take this on faith.

GeorgeO (djtweed@yahoo.com) - 2007-04-25 14:40

I know I’m an eMusic junkie, but doesn’t EVERYONE download the max number of songs every month? I have a Yahoo reminder just to make SURE I don’t forget. :) If I’m stuck with 2 or 3 songs left over, I just head to the House music section and download a few 60+ minute DJ mixes. :)

This practice is not unique to 17 dots, of course. Bob Lefsetz does this too, and the excerpts in his feed are often even more abbreviated. I can sort of see why Lefsetz is doing this; presumably among other things he wants people to come to his web site and subscribe to his email newsletter. But what’s the reasoning behind 17 dots not offering a full feed? There’s no “pitch” on the web site itself; the post pages don’t have ads for eMusic or even a link to eMusic. So why deny us our God-given right never to leave our feed reader?

P.S. I noticed that James Governor (of Redmonk fame) also complained about this.

Tim - 2007-04-21 12:50

Hear, fucking hear!

mrshl - 2007-04-21 13:39

Indeed

mike - 2007-04-21 15:37

That behavior is a function of wordpress. Any posts with a more link will be truncated up to that link when the feed is generated. The only option is not using ‘more’ and having posts display full length on the blog.

yancey (ystrickler@emusic.com) - 2007-04-21 16:12

yeah, mike is right. i’ll see if i can find a work-around, but the fact remains that the vast majority of our traffic is non-rss, and for those folks i think the more buttons are a better experience. we’ll try to sort something out, though.

Frank Hecker - 2007-04-22 12:50

Mike and Yancey: Thanks for the update. The problem I have is that if I fall behind on posts and go to the web site to catch up, there’s no easy way to read all the posts in the archives. (There’s the list of recent posts in the right hand navigation bar, but that only goes so far.) Note that one possible workaround to make things easier would be to include links at the top of each post to the previous and next posts in time. (This is what Bob Lefsetz does on his posts.) Then you could start at the most recent post and go back in time reading every post in sequence with a single click.

Ric - 2007-04-23 12:10

What’s the issue with full posts on the blog? I’m with Frank and James in disliking have to continually hit more buttons to see it all … Frank’s last suggestion is the very least 17dots could do, because it’s especially annoying not to be able to go from one full post to the next …

Ric - 2007-04-23 12:11

Oooops - meant to add that this is the one and only reason I don’t subscribe to 17dots, and I’d like to, because I love eMusic.

James Governor’s Monkchips » links for 2007-04-23 - 2007-04-23 23:36

[…] Swindleeeee!!!!! › 17 dots plus 3 dots is too many dots A drumbeat for full text feeds by seventeen dots, the eMusic review blog, begins. All I can see is Hear Hear! (tags: music MP3 eMusic blogs 17dots) […]

How will increasingly savvy artists and managers react when they understand that eMusic is in effect selling their art at a deep discount?

Attention label owners: May I suggest you stop obsessing about per-track payouts, and start looking at your total revenue and profits instead? You guys are worrying about the size of your penises when you should be worrying about how much action you’re getting. As noted in the Hypebot article, eMusic downloads account for a significant fraction of some labels’ overall digital music business. Suppose your dreams came true and eMusic guaranteed payouts comparable to the iTunes Store, raising its prices to make that possible. Do you think your eMusic business would remain the same? If so, please think again. People download more music from eMusic because it’s cheaper than from alternative (legal) sources. Make that music more expensive and they’ll buy less of it. If business drops off far enough then you’ll be worse off overall even though your per-track payouts are improved. This is just economics 101, folks.

Here’s a homework assignment for you: Go to Amazon and buy a copy of Information Rules. Turn to Chapter 2, “Pricing Information,” especially the section beginning on page 37 relating to product pricing. Note that what you are doing with your eMusic relationships is essentially a form of price discrimination: You are offering lower prices to a particular set of customers, those who listen to a lot of music, are relatively price-sensitive, and are willing to put up with the cumbersome eMusic subscription model in exchange for a good deal. By doing this you are potentially making more money overall than you would if you sold digital music under a “one price fits all” model. I realize that digital music doesn’t fit the ideal model for information goods because your marginal costs per unit are not zero, due to mechanical royalties and other factors. However as long as your per-track payout is high enough to cover mechanicals and other per-track costs, you should be able to take advantage of differential pricing schemes to get incremental revenue and profits you might not otherwise have seen.

Note that this applies to Amazon as well as to eMusic: I previously predicted that Amazon might want to sell digital music as an incremental add-on to CD sales, with pricing that allows people to buy both the CD and the downloadable version at a significant discount to buying both separately. If Amazon wants a lower wholesale price for digital tracks sold in this scenario then I suggest you seriously consider doing just that. I think you would see significant incremental new business with minimal or no impact to your existing digital sales.

Update: The great folks over at the eMusic message boards come through again; check out this thread for lots of informed and passionate commentary.

• Hypebot brags that they’ve been out in front on the Amazon story for some time now. Fair play to them, they’ve done a good job of keeping up to date with Amazon-related developments.
• Billboard revisits the complaints of the major labels that Amazon wasn’t willing to take on Apple with a DRM-based offering. Sorry, folks, I pointed out over a year ago [what a stupid idea that was][what a]"), especially given that Amazon is in business to serve its customers, not the business models of the major labels.
• As [I predicted][I predi], Amazon has at least been trying to establish price points for a la carte downloads below the prevailing $0.99 per track model (which in turn is based on a wholesale price to labels of $0.70 per track). However Amazon is encountering resistance, and it’s not clear if it will be successful, at least initially.

Interesting times. But enough Amazon for now; this is an eMusic blog, so I’ll try to post on eMusic next.

[what a]: http://internet.seekingalpha.com/article/7141 “Frank Hecker on Challenges to Apple’s Digital Music Business (AAPL, AMZN [I predi]: http://swindleeeee.com/2007/04/07/amazon-predictions-part-2-selling-digital-music-and-cds-together/

Be the first major US store to sell EMI in the mp3 format.

This advice seems overly short-term: Sure, Amazon might get some initial press for being the first major US store (note the qualifiers!) to enter the digital music market with major label MP3 offerings, but this does not a long-term strategy make. I think it needs to be coupled with something else, and I think that that something else is Amazon having a clear and public goal to be the market-leading commercial provider of digital music in the MP3 format—a goal which in essence amounts to supplanting eMusic as the perceived number two player behind the iTunes Store. As [I’ve written previously][Ive wr] I think this is a realistic goal, and achieving it would pay big dividends for Amazon in terms of market credibility, just as [it has for eMusic][it has].

Offer labels and consumers variable pricing.

I agree that any Amazon digital music store will use variable pricing, so Hypebot and I are in sync here. The key point (as noted by Hypebot) is that for variable pricing to succeed in the marketplace it must offer benefits to both labels and customers—it can’t just be an excuse to charge people more for the latest Justin Timberlake hit. Given that Amazon is already known as a place to get good (though not necessarily the best) deals on CDs, having a variable pricing scheme that offers (at least some) music at prices below the iTunes Store will reinforce Amazon’s existing music marketing strategy.

(By the way, Hypebot gives the example of a music label “netting 15 cents a track from eMusic for that old Joy Division track.” To my knowledge there is one and only one Joy Division track on eMusic, on a [soundtrack album][soundtr].)

Offer multiple formats.

I’m not convinced that Amazon should offer music in formats other than MP3, despite the claim that “UK’s 7Digital and indiestore are already doing it with great success.” There are at least three differences between [7digital][7digita]’s case and Amazon’s:

• Unlike 7digital Amazon sells digital music players, and in particular sells a lot of iPods. Given that a key part of Amazon’s strategy is cross-selling across different product categories, why would Amazon offer to sell customers digital music in formats like WMA that can’t be played on the iPods Amazon is trying to sell those exact same customers?
• Unlike 7digital, for Amazon selling digital music will not be the main event, but will likely be a supplement to selling CDs. Given that, it is not necessarily essential that Amazon offer digital versions of every major label release that it’s already selling on CD. If a particular label doesn’t care to offer its releases in MP3 format, Amazon can simply not offer a digital version to customers as an option when displaying its (existing) pages for those releases. (In some ways this situation is analogous to Amazon’s “Search Inside” feature for books, where some publishers allow Amazon to do this and the more paranoid or hidebound ones do not.)
• Unlike 7digital, as a top 5 music retailer Amazon presumably has some actual influence over the major labels, and may be able to help push them kicking and screaming into the post-DRM world, especially now that EMI has broken away from the pack. Why give in to major labels’ demands at this time, as opposed to waiting until they might be more eager to make a deal?

By offering only MP3 tracks Amazon would simplify choices for customers and offer compatibility with all digital music players they sell—why would it do otherwise?

Why not sell CD’s alongside downloads?

An obvious piece of advice, and one with which I agree wholeheartedly. However it would have been good for Hypebot to go further and offer more detailed advice on [how Amazon could combine CD and digital sales][how Ama02]. I can’t overstate how important is Amazon’s ability to offer an integrated CD/digital offering; in my opinion it is the only thing that gives Amazon a realistic shot at threatening the dominance of the iTunes Store.

(Incidentally, with regard to selling downloads alongside CDs Hypebot is wrong in saying that “amazingly no other download service does it.” [Magnatune][Magnatu] does this, and perhaps others as well, though to be fair Magnatune is a special case since it is not a general digital music retailer offering releases from multiple labels.)

Enable over-the-air downloads.

I don’t know enough about the market for OTA downloads to venture much in the way of an opinion here. However I will say that, unlike selling CDs and MP3 tracks, selling OTA downloads will require Amazon to go outside itself and its own technical infrastructure and rely on partners, and I don’t know whether the benefits of participating in the mobile market would be worth the costs and complexities of doing so.

Overall I don’t disagree with any of Hypebot’s advice, and it’s great to see some Amazon predictions from someone who’s actually in the business. However I felt Hypebot’s treatment of the topic was somewhat superficial, and I’d really like to see more people take a detailed look at the options open to Amazon in the digital music market. Is anyone out there already doing that?

[my own]: http://swindleeeee.com/2007/04/11/final-thoughts-for-now-on-an-amazon-digital-music-service/ “Final thoughts (for now [Ive wr]: http://swindleeeee.com/2006/12/20/amazon-versus-emusic/ “Amazon versus eMusic” [it has]: http://swindleeeee.com/2006/09/20/emusics-positioning-its-just-itunes-and-us/ “eMusic’s positioning: It’s just iTunes and us” [soundtr]: http://www.emusic.com/album/10750/10750966.html “Music From The Motion Picture” [7digita]: http://www.7digital.com/ [how Ama02]: http://swindleeeee.com/2007/04/07/amazon-predictions-part-2-selling-digital-music-and-cds-together/ “Amazon predictions, part 2: Selling digital music and CDs together” [Magnatu]: http://www.magnatune.com/

tj halpin (tjhalpin@gmail.com) - 2007-04-12 19:03

wal-mart.com sells cds and downloads as well.

Frank Hecker - 2007-04-12 19:57

You’re correct, Wal-Mart does sell both CDs and digital downloads on its web site, as does Best Buy for that matter. However neither of them sell CDs and downloads in an integrated fashion. Instead they have in essence separate music stores that just happen to be under the same domain name. I mentioned this in one of my prior posts but forgot to reiterate it here.

I’m looking forward to reading Hypebot’s thoughts on how Amazon could create a successful strategy for entering the digital music business. In the meantime before the pros weigh in I thought I’d make one more amateur’s attempt to speculate on a future Amazon offering. After re-reading my posts, here’s my current thinking on the key approaches Amazon should take:

• Amazon should leverage the fact that it will be selling both CDs and digital tracks, including offering cost-effective ways for customers to add digital track or album purchases to a CD purchase or vice versa, whether at the same time or at a later time. For example, a person might buy a digital track, like it, and then come back later and buy the digital album and/or the CD; Amazon should make it easy and cheap to do this.
• Amazon should offer some sort of pricing scheme that allows it to offer more value to its customers, for example by offering at least some digital tracks and albums for amounts significantly lower than the current standard $0.99 and $9.99 prices respectively, and/or by offering reasonably aggressive discounts on digital music to customers willing to commit in advance to a certain volume of purchases.
• Amazon should leverage its strengths in the area of back-end infrastructure to create Amazon-specific service offerings that others would find relatively difficult to match. I mentioned a music backup service based on Amazon S3 and a personalized recommendation service based on Mechanical Turk; there may be other such possible offerings as well.

There are also the obvious things Amazon could do, like using buying data for digital music to further refine its existing recommendation engine. (For example, the fact that someone bought a given CD after buying the corresponding digital album should be taken as a positive recommendation for that album.) There may also be other things I’ve neglected to mention; for example, I didn’t address the issue of Amazon bundling digital music with the music players it sells, either by offering coupons for later downloads or by pre-loading music on the devices.

Finally, two areas where I think I went a bit astray in my predictions:

• In retrospect I think my advocacy of a relatively complicated form of variable pricing was probably a mistake. I think any form of variable pricing is more likely to feature a set price for a given track, based solely upon the identity of the track.
• I think Amazon would not be able to rely as much as eMusic on people not downloading their maximum entitlements under their subscription plan. In eMusic’s case the subscription plan is mandatory, so casual users are thrown into the same pool of downloaders as the heavy users, with the former subsidizing the latter. In Amazon’s case the casual users would have (and would no doubt take advantage of) the option to buy tracks or albums a la carte, so the pool of subscription users would be much more weighted towards heavy downloaders who’d be more likely to use up their monthly quotas, resulting in corresponding lower discounts.

At this point I’ll conclude and await Hypebot’s next Amazon-related post.

Amazon will offer a backup service for digital tracks purchased through Amazon or otherwise, leveraging the infrastructure used for the Amazon S3 offering. As noted in my first post, CDs can serve as a form of backup for people buying digital music. However at the same time many people (including current eMusic customers) have digital music collections for which they do not have the corresponding CDs. Amazon already has a “Simple Storage Service” offering whereby (sophisticated) customers can store data on Amazon’s servers, at a price of $0.15 per GB per month for the actual storage used and $0.20 per GB of data transferred from the customer to Amazon. This existing infrastructure will be leveraged to provide a custom service whereby Amazon customers can backup all or part of their music libraries to Amazon’s servers.

The service will work as follows: When purchasing digital music, whether by itself or in conjunction with a CD purchase, Amazon customers will be offered the option of having Amazon keep a copy of the track(s) in a “music locker” tied to their existing Amazon accounts. No separate registration step or account setup will be required, and nothing will actually need to be transferred from the customer to Amazon (since Amazon already has a copy of the track(s) in this case). For customers currently signed up to a subscription plan (as discussed above) the cost of backup will simply be added as an incremental charge to the customer’s existing monthly subscription fee. For customers not on a subscription plan the cost of backup could be charged as a one-time fee, based on Amazon’s future costs for the needed disk storage over the customer’s lifetime.

Amazon customers will also be able to able to backup digital tracks previously purchased through other services or ripped from CDs. In this case the backup will be done by Amazon-provided desktop software. For example, such capability could be included in an Amazon-specific download manager (like the current eMusic download manager) or a full-fledged Amazon digital music player (like iTunes or Songbird).

Assuming pricing comparable to current S3 pricing, a customer with a 40GB music library could back it up through Amazon for $6 per month at present, with this cost decreasing over time. (This assumes that Amazon actually stores separate copies of a given track for each customer. If copies can be shared among customers then the price could be reduced even further.) The music locker service will thus be a relatively straightforward up-sell for customers already on an Amazon music subscription plan.

Two final notes: First, this service will not be like eMusic’s current scheme whereby customers can re-download tracks previously downloaded. That service works only for tracks currently offered by eMusic; if a label pulls its offerings from eMusic then customers lose the ability to re-download previously-purchased tracks from that label. This is not acceptable in a true backup service.

Second, this service will not be usable as a way to share tracks with other users (at least not in practice). Each locker will be specific to a customer and will be accessible only using that customer’s standard Amazon userid and password, the same credentials used for one-click purchases and other actions. A customer allowing others to download from his or her account would be putting his or her own credit card account and personal information at risk.

Amazon will offer a personalized music recommendation service based on a combination of the current Amazon recommendation engine and human tweaking of recommendations done using Amazon’s Mechanical Turk service. Amazon already has a number of features to drive customers purchasing one item to consider purchasing another one, including automated recommendations based on a customer’s past buying history, information on related items (e.g., “people who bought this item bought these items too”), recommendation lists created by other customers, and so on. If it acquires eMusic then Amazon can also add eMusic’s editorial content (eMusic Magazine, the eMusic Dozens, and so on) to the mix.

As I noted in an earlier post, a major problem for many customers on a subscription plan is finding enough music worth downloading each month; this is especially true for busy people who are interested in discovering new music but do not have the spare time to explore the net reading music-related web sites and blogs and listening to sample tracks and Internet radio stations. On the one hand eMusic (and in future Amazon) is happy enough to have customers paying money and not actually using the service. On the other hand customers not getting value for money will eventually end up being ex-customers, and possibly disgruntled ones at that. Thus Amazon will have an incentive to keep subscription plan customers satisfied and wanting to come back for more.

In an ideal world each customer would have a real person serving as their dedicated guide to the world of new music, with that person taking into account the customer’s unique tastes. The eMusic message boards provide frequent examples of such personalized recommendations provided by live humans in response to requests, but unfortunately the message board approach won’t scale.

Perhaps the optimum way to approach this problem is to start with a machine-generated list of recommendations and then have a human review the list to vet it for compatibility with a given customer’s tastes, as well as to perhaps suggest additional items which the recommendation algorithms somehow missed. As it happens, Amazon already has the basic infrastructure needed to construct such a mixed automated/manual service, in the form of the Mechanical Turk service, its existing recommendation engine, and related technologies. As with music backups I think this is a service for which many customers will be willing to pay extra, for example as an additional charge (say of $2-3 per month) over and above the subscription plan price.

Ideally the personal recommendation service could be configured to have recommendations be automatically purchased and scheduled for download to the customer’s computer (e.g., when the customer nexts run the Amazon-provided software). That would minimize the total amount of work time-starved customers would have to do. However note that it will not be in Amazon’s interest to have a customer’s entire download allotment used up in this manner, for reasons noted earlier. It will be better to leave the customer a partial quota of downloads that they can either use at their own discretion or let expire unused (and thus subsidizing more active customers).

This completes the fourth and final post in the series. I’m all written out at this point, so I don’t have any grand final conclusions to draw, other than that I think that online digital music stores are past due for more customer-friendly pricing and useful customer-oriented innovations, and that based on its technology platform and music retailer experience Amazon is perhaps the most likely company to bring such pricing schemes and innovative services to market.

music promotion guy - 2010-02-20 16:33

how much of this has happened?

hecker - 2010-02-20 20:07

music promotion guy: Very few of my predictions regarding Amazon came true–pretty much only the conventional ones about Amazon selling only MP3s and trying out various pricing schemes. I think my other ideas are worthwhile, including the one about treating selling CDs as upgrades to MP3s and being able to get MP3 downloads as soon as you purchase your CDs. However existing licensing schemes by rightsholders will I think prevent this for the foreseeable future, until such time as the CD is a dead format in any case. P.S. Even if yours was a spam comment it was a relevant one, and worth responding to. Your prize is to get your link on my blog :-)

Amazon will offer a subscription service providing extra discounts and/or “free” tracks in exchange for a commitment to purchase a given amount of music per month or per year. I think that the current eMusic subscription scheme (e.g., 30 tracks for $9.99 per month) will break down somewhat if/when major labels are introduced into the mix, since they’re going to want some form of variable pricing, whether in the form of a true a la carte price model (as in the iTunes Store), a credits-based system that requires more credits for certain tracks (as with Audio Lunchbox), or something else. However at the same time it’s clear that the subscription model is very attractive from the retailer’s point of view, offering as it does a stable revenue stream, and I think it can be made attractive to customers as well.

I think the most straightforward way to implement a subscription model in an Amazon context will be to move away from a model based on a fixed number of tracks and towards a model that essentially offers discounts to those customers willing to commit to buying a certain amount of music per month or per year. (As with eMusic the commitment will be up-front, i.e., customers will pay Amazon each month or year before actually selecting the music they wish to purchase.) In an ideal world discounts offered by a subscription plan would apply to both digital tracks (and digital albums) and to CDs. However because Amazon already offers significant discounts on CDs it’s much more likely that discounts will be offered only for music purchased in digital form, although Amazon could and I hope would count CD purchases towards a customer’s monthly purchase commitment.

For example, a commitment to purchase $10 of music per month (whether in digital or CD form) might get customers a 30 percent discount off standard Amazon digital music prices, with customers willing to commit to higher amounts getting correspondingly higher discounts, up to a maximum discount of perhaps 50 percent or so. (Alternatively the discount could be offered in the form of extra “free” digital tracks, although with variable track pricing such a scheme would be more complicated to manage and understand.)

By way of comparison note that eMusic’s current Basic plan runs $9.99 for 30 tracks and its new Connoisseur Plan runs $25 per month for 100 tracks. At 33 and 25 cents per track respectively these plans offer 45 and 58 percent discounts respectively from the 60 cent per track price offered with the 10-track booster pack, the nearest thing eMusic currently has to an a la carte single track offering.

Amazon already has one analogous scheme, namely the Amazon Prime program in which people pay $79 per year to get “free” two-day shipping. As with Amazon Prime and with eMusic currently, customers buying lots of music under the Amazon subscription plan and maxing out their quota will be subsidized by customers who for one reason or another don’t end up using their allotment and thus don’t take advantage of the full discounts to which they’re entitled. The exact discounts for the various plans will in practice be tweaked periodically to ensure that the actual per-track revenue received (after accounting for unused downloads) is high enough to satisfy the various labels, major or otherwise.

Obviously customers on a monthly subscription plan will be very valuable customers for Amazon, and it would be nice if Amazon could offer additional things that such customers would want to buy. In my next (and final) post I discuss two such added-value offerings.

Single digital tracks will be sold in a variable pricing scheme based primarily on the perceived demand for the track, both on its own and in relation to the demand for the album containing it. Rather than try to come up with such a scheme on my own, I’ll simply point to Digital Audio Insider’s proposal for variable pricing that aims to be friendly to labels while being acceptable to customers. The basic idea is simple:

Allow variable pricing for individual songs based on purchase order. That is, charge more for the first track a customer downloads from an album, but then charge that customer less for additional downloads from that same album.

In this scheme a given track does not have a fixed price (since the price may vary based on purchase order), but we can take the price for the first track purchased from an album and reference that as the nominal per-track price. Such nominal track prices would further vary from album to album, for example between new releases, “mid-line” releases, and “budget” releases. More specifically, my prediction is for nominal per-track prices as follows:

• 60-75 cents for back catalog material and for albums containing a large number of tracks of relatively equal importance (as is the case for many classical CDs)
• $1 for the majority of releases
• $2-3 or even more for albums containing one or two hot singles plus a fair amount of filler, as well as for albums with a small number of very long tracks (as in the case of many CDs of electronic music, as well as many CDs of classical symphonic music)

Note that the prices we’re discussing here are list prices for a la carte purchases; users signing up for a subscription plan will get significant discounts, as discussed in my next post.I’ve estimated a minimum price of at least 60 cents based on eMusic’s current pricing for “booster packs” ($5.99 for 10 tracks, or 60 cents per track). Since booster pack downloads never expire and can be used at any time. I’m guessing that eMusic set booster pack per-track prices high enough to cover the minimum royalties demanded by the independent labels eMusic deals with. Major labels will of course want more, and for at least the immediate future they will no doubt get it; hence the predicted $1 nominal per-track price for most releases, consistent with current practice in the iTunes Store and elsewhere.

All digital tracks will be sold in a single high-quality DRM-free MP3 format. In other words, I think that Apple’s current plan to offer both DRM-restricted and DRM-free versions of a track at two different prices is simply due to “legacy issues.” If Amazon were to offer digital downloads then I see no reason why it should offer DRM-restricted tracks, given the likelihood of other major labels following the lead of EMI. The format will be MP3 because that is the universal format understood by all digital music players (including of course those sold by Amazon itself). Again, I think the choice of AAC for the iTunes Store DRM-free format is an Apple-unique decision due to Apple’s own championing of the format as part of the Fairplay scheme and its desire to disadvantage non-iPod players that don’t happen to support AAC. Finally, I doubt that most customers know of or care about the sound quality differences due to different MP3 bit rates, fixed-rate vs. variable-rate MP3 encoding, and related factors, so offering a given track in multiple levels of sound quality will just confuse them. The default format (whether 192Kbps VBR or something better) will be high-quality enough to satisfy the vast majority of customers. Anyone else can just buy the CD and rip it themselves.

Digital albums will be sold both as a discounted alternative to buying single tracks and as an low-cost add-on when buying a CD. As with the iTunes Store and other digital music stores, those buying all their music in digital form will have the option to buy an entire album at a price lower than that of buying all the album’s tracks separately. However unlike the iTunes Store (and like Amazon’s current CD pricing) digital albums will be sold in a variable pricing scheme analogous to that used for single digital tracks. Digital album prices will range from $2-3 at the low end to a maximum of $10 at the high end; however over time the maximum price will be forced down to the range of $5-7. As in the current Complete My Album feature of the iTunes Store, people who have already bought digital tracks through Amazon will get credit for their track purchases when buying the albums containing those tracks, so that in total they will never pay more than the price of the album.

At the same time, those buying a CD of an album will be offered the option to also get the digital version at a low fixed incremental cost, perhaps $2-3 or so. This extra charge will be justified based on the convenience of getting the digital version right away (i.e., before the CD arrives) and avoiding the need to rip the CD once it’s received. The “digital option” will also tie into the Amazon-provided backup scheme discussed in a future post.

(Incremental pricing like this will of course require changes to the current royalty regime, since both labels and music publishers will naturally want to continue to be paid full royalties on both the CD and digital album considered separately. This change can be justified on the basis that otherwise labels and publishers would not see any incremental royalties at all, since customers buying CDs would balk at paying full price once more for a digital version of the same album, and would just rip the CD themselves.)

CDs will be sold both on their own and as an upgrade to digital albums. Amazon will of course continue to sell CDs as standalone items for those who wish to buy them. However at the same time it makes sense to sell CDs as an incremental “upgrade” when a customer is buying a digital album. The cost of doing so should be (and I think will be) such that a customer adding a CD purchase to a digital album purchase will pay the same total cost as a customer adding a digital album purchase to the CD purchase.

Ideally it should not matter whether the purchases are made at the same time or different times. In other words, a customer should be able to buy a digital album, listen to it, decide they want the CD, and then come back to Amazon and purchase the CD at an incremental price identical to what they would have paid if they had purchased the CD at the same time as the digital album.

Over time the list price of digital albums will be driven down below the current $10 per album “standard,” with CD prices possibly dropping a bit as well. Thus it’s possible to imagine purchasing a CD and digital album combination for the same price or even less than Amazon charges for CDs today. In the meantime Amazon has another possible way to sell digital music at discounts below present-day list prices, namely to adapt eMusic’s subscription model to Amazon’s own business model, as discussed in my next post.

(Note that I’m assuming here a relatively incremental model of change, as opposed to the sort of wholesale revolution like that envisioned by people like Bob Lefsetz, e.g., in his recent April Fools Day post. However many of the changes I’d like to see will likely require changes to the complicated world of music licensing, including minimizing payment of double royalties when a given customer purchases a given work in multiple formats.)

Traditionally CDs and digital tracks have been seen as competing products: Someone who downloads a digital track (via a paid service or P2P) is supposedly one less CD buyer, and someone who buys a CD will presumably rip digital tracks from it on their own and not pay for them separately. Thus the perception arose that a rise in digital sales inevitably accompanies a decline in CD sales, leading ultimately to the death of the CD. However I don’t see this as inevitable at all. I see CDs and digital tracks as two different but complementary forms of the same product, with a given customer buying either or both. What I do see as doomed are the traditional pricing schemes and sales models for CDs and digital tracks.

Let’s start by putting aside the views of music labels, publishers, and retailers, and instead adopt the view of the customers (who after all will ultimately drive the direction of the music industry). From the customer’s point of view digital downloads are attractive for their convenience and immediate compatibility with digital music players: You can buy a digital track or digital album, download it, and transfer it to your iPod or other device, with the whole process taking just a few minutes. On the other hand CDs are attractive as mementos (especially CDs with more elaborate artwork and packaging) and for their usefulness as a tangible backup of the same music in digital form: You can keep a CD for use if you ever need to have the digital music in a different format (e.g., MP3 vs. AAC vs. FLAC) or in case you lose your digital copy entirely, e.g., due to accidental deletion or a total disk failure.

Buying a CD doesn’t preclude wanting the same album in digital form, or vice versa. Indeed everyone buying a CD and ripping it is an example to the contrary, as is everyone burning a CD from digital tracks they’ve purchased. It’s simply that customers purchasing music in one format are not paying for the other format, in large part I think because the current business models for selling music make it too inconvenient and expensive for customers to do so.

Next, consider the fact that CD prices and digital album prices are converging: As noted in a Digital Audio Insider article, for many releases Amazon CD prices are comparable to or even lower than iTunes digital album prices. You still have to account for the cost of shipping, but this matters less than one might think. For many people this makes it hard to justify paying for a digital album vs. buying a CD and ripping it, and will likely lead to pressure to lower the prices of digital albums. (Of course eMusic customers already live in this world, where typical albums cost from one to five dollars depending on the customer’s subscription plan and number of tracks on the album.)

Finally, the “one size fits all” pricing model of the iTunes Store and other services seems to be breaking down, with the introduction of variable pricing for different formats (e.g., $0.99 for DRM-protected tracks on the iTunes Store, vs. $1.29 for higher-quality DRM-free tracks), to be possibly followed in the future by variable pricing based on other factors. Steve Jobs to the contrary, I think customers are perfectly able to understand variable pricing schemes and perfectly willing to accept them as a standard business practice. After all, they’re prevalent in practically every business people are familiar with. (For example, people who buy DVDs know that they’ll pay more for a current hot movie than for something their parents watched while they were in high school.) At the same time customers don’t want to be ripped off by pricing schemes that in essence force them to buy the same thing twice.

Based on the above thoughts and others ideas about how Amazon could leverage its existing features and technologies, I’ve come up with a number of blue-sky predictions for a hypothesized Amazon/eMusic offering. (Of course Amazon or even some other digital music store might do this in any case, eMusic acquisition or no, but this is an eMusic blog so I have to bring it in somewhere!) Note that this is all fevered speculation and nothing more; I do not have any inside information about a possible Amazon acquisition of eMusic, nor about other future plans of Amazon or eMusic.

For reasons of length I’ve split this article into multiple posts; my next post predicts how Amazon might sell digital tracks, digital albums, and CDs as complementary offerings.

a quiet revolution - 2007-04-24 21:09

Amazon’s Music Plans…….. There’s been plenty of talk, rumors and speculation regarding Amazon entering the digital music marketplace. Recent rumors regarding their purchasing eMusic proved unfounded but it appears that they will still be launching a service of their own….

Some time ago I wrote about the competitive advantages Amazon could bring to the digital music store market, especially in comparison to eMusic. As it happens I think that the combination of Amazon’s advantages and eMusic’s might make for a formidable pairing (the dreaded “s-word”), especially if other major labels follow the example of EMI:

• Unlike present-day eMusic, Amazon/eMusic would be able to offer an unparalled selection of independent and major-label music. (This assumes that EMI would offer a similar deal to Amazon as it offered to Apple—a good assumption I think.)
• Unlike the iTunes Store, Amazon/eMusic would be able to offer music in both physical form (CD) and digital form (MP3), with both formats universally playable on all relevant devices, including the iPod and its competitors. There would also be many opportunities for cross-selling the formats—for example, buy the CD and get the digital version at a low incremental cost or even no cost. (See my next post for more on this point.)
• Amazon/eMusic would offer industry-leading facilities for music discovery, combining Amazon’s recommendation engine, Amazon’s and eMusic’s user reviews and lists, and eMusic’s editorial content.
• Unlike the iTunes Store, Amazon/eMusic would have a large base of people committed to paying on a continuing basis for new music offerings. If David Pakman’s estimate (quoted in a recent article) is correct and the potential eMusic subscriber base is 3-5 million people, this could produce a relatively stable revenue stream for Amazon/eMusic of several hundred million dollars per year.
• Finally, Amazon/eMusic could (but might not) offer more of a “community” experience than the present Amazon service, by carrying over the eMusic message boards, blogs, and related features and integrating them into other Amazon services.

A remaining Amazon/eMusic disadvantage vis-a-vis Apple would be that Apple would continue to control the iTunes music player and its tight integration with both the iTunes Store and the iPod. Amazon/eMusic could offset this to some extent by promoting its own alternative music player, perhaps based on the new eMusic download software or the (currently) independent Songbird player (which already has a third-party extension for iPod support). Both of these approaches could address the limited problem of replacing iTunes as a way of getting music on an iPod; however they would not address Apple’s grander plans for iTunes as a master synchronization mechanism for more general-purpose devices like the iPhone and Apple TV.

A final note about valuation: In an earlier article Hypebot claims that the asking price for eMusic might be as high as $100 million and notes that “the figure seems high” given the likely competitive landscape. As I noted in a recent “Pakman speaks” update, per David Pakman eMusic is currently making an average of $14 per customer per month on a subscriber base “well north of 250,000.” This translates into an annual revenue run rate of at least $42 million and likely more. An asking price of near $100 million would thus represent just over two times annual revenue. Given that Amazon would be acquiring a paying customer base (many of whom are locked into 1-year or 2-year contracts) this seems a realistic figure and certainly a far cry from the speculative nature of a YouTube deal.

bklynd (ds1@davesmey.com) - 2007-04-03 13:01

Emusic making $14 per month per customer? Maybe that’s what they gross, but it can’t be what they net. Last we heard they weren’t turning a profit.

Frank Hecker - 2007-04-03 14:28

I took Pakman to mean that the $14 per customer referred to eMusic’s monthly revenue per customer, not profit. I agree that eMusic’s not making any significant money in terms of profit. But then no one else in the digital music business is making large profits, including Apple. I think the significance for digital music (and a possible eMusic acquisition) in the case of Amazon is more in the opportunities for up-selling and cross-selling.

mrshl - 2007-04-03 14:32

So much good info, here. Nice. But 100 million is cheap to buy annual revenues of 42 million. Really cheap. I’d expect that either that there is nil profit there, or that the actual sale price will be considerably higher. Had no idea they had a new download manager. I need to keep up.

The Free Prize is the experience of service at the Ritz Carlton, when what you paid for was a good night’s sleep.

The Free Prize is the change counting machine at Commerce Bank, when what you needed was a checking account.

The Free Prize is the line at Al Yaganeh’s soup stand, when what you came for was the soup. . . .

(Godin also wrote a book on this topic, which I haven’t yet read.)

The post got me thinking: What is eMusic’s Free Prize? I’m wondering whether the answer is “community”—the feeling that you’re not just a lonely music lover out there in the void, but rather you’re part of a group of people who share some of the same tastes, help each other out, evangelize the faith and defend it against outsiders, maintain key bits of history and shared information, have catchphrases and private conversations, and (touchy-feely though it might sound) find meaning in their mutual relationships and their shared love of music.

What I find interesting about community in the context of eMusic is that it appears to have been unplanned on the part of eMusic management, who at some point decided to implement a message board feature and then for the most part left the kids alone to play by themselves. In general I think this is all to the good. eMusic has some “community features” (“neighbors,” user-contributed reviews and ratings, user-published lists, and so on), and could do much better in terms of implementing ways for eMusic subscribers to connect with one another and add value to the service. However as Tara Hunt has noted we shouldn’t confuse the communities people build together with the “communities” that corporations want to build for them: “Community . . . isn’t meant to be a marketing tool.”

In essence the “eMusic community” exists because of but apart from eMusic proper; eMusic was simply the catalyst, the sand but not the oyster. In that sense the most interesting recent news about the eMusic community isn’t a web site enhancement or a marketing initiative, but rather the fact that eMusic employees are now (unofficially) speaking for themselves through their 17 dots group blog. For the most part they’re not really talking about eMusic itself—its plans, policies, products, and so on—probably because eMusic management is wary about having them do so. (And perhaps rightly so: if I want answers to questions about eMusic as a business I’d rather hear from someone like David Pakman who can actually speak authoritatively on those issues.) Instead they’re doing something more important, promoting great music and the artists who create it—the “higher purpose” that I think makes the “eMusic community” a true community.

A while back I speculated about how eMusic could survive Amazon entering its market, and somewhat peremptorily dismissed the importance of a thriving eMusic user community as a competitive advantage. On second thought I think I was right, at least in terms of eMusic’s strategy. eMusic should concentrate first and foremost on making discovery and downloading of new music as easy and delightful as it can. “Community” would then remain an unexpected but welcome bonus.

Babs (brackettbeth@sbcglobal.net) - 2008-01-24 17:54

Did I miss something here???? I signed on to eMusic as a consumer under a so called trial for 14 days only to find that they have no popular music to offer. What, no Journey??, no Sheryl Crow?? Their ideas of 70’s is artists I have never heard of. Cancelled my membership which was a monthly at 9.99 offer only to be sent to the account page indicating that I will not cancel for one year!! Forget the Customer Service, for God’s sake. You will get a canned reply that tells you you agreed to sell your life away and cannot hire a lawyer! e-Music is just e-Poor.

hecker - 2008-01-24 18:03

Just to clarify: I don’t work for eMusic, I have no affiliation with eMusic, I am simply an ordinary eMusic subscriber. I don’t mind if people leave comments critical of eMusic and its customer service; however I am not in a position to help people with their complaints.

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.

To a certain extent Amazon may be forced into this strategy, given Microsoft’s de facto abandonment of its PlaysForSure system in favor of the Zune, and the lack of any other reasonable alternative DRM scheme to Apple’s FairPlay. However this also might be the basis of an interesting alternative approach for Amazon. Hypebot and others commenting on the Amazon rumor have pooh-poohed the idea of Amazon selling DRM-free tracks, based on the presumption that the major record labels won’t sign on to this idea. I agree that Amazon won’t get much if any major label cooperation (at least in the short term), but I disagree that this renders this proposed strategy senseless.

In fact, it may make much more sense for Amazon to forgo a full-frontal assault on Apple and the iTunes Store (at least for now) and focus its full attention on competing with eMusic (implicitly if not explicitly). This may seem like a wimpy sort of strategy, but I think there would be real benefits to Amazon of supplanting eMusic, not least of which would be moving into the role of the (perceived) #2 power in the digital music business after Apple. (As I’ve written before, I think eMusic’s claim to be #2 is somewhat suspect; however few if any people seem to share my suspicions.)

A fight against eMusic would also be a winnable fight for Amazon, given the strengths Amazon brings to the table:

• As a “long tail” Internet retailer Amazon already sells a lot of music from independent labels, certainly significantly more than the three retailers ahead of it in terms of overall market share (Wal-Mart, Best Buy, and Target). Amazon thus already has a built-in audience for selling digital downloads from independent labels, and thus the lack of major label content would not hurt it as much as it would others.
• Amazon would be able to leverage all the infrastructure and content it’s built up for selling CDs, in particular its recommendation engine and its database of user reviews and lists. (When deciding what to download from eMusic I make extensive use of Amazon reviews, which are much more comprehensive than eMusic’s.)
• Amazon could position digital downloads as just another option for buyers, similar to the way it positions used CDs today. Someone initially intending to buy a CD may buy a digital download instead, given that there’s no waiting time as there would be for a shipped CD, and in many cases the buyer would probably just rip the CD and then forget about it. Digital downloads would thus be attractive both to Amazon customers (especially if priced relatively low compared to CDs) and to Amazon (no need to carry inventory or do shipping).
• Amazon already has a significant business presence in lots of countries around the world, and would be able to relatively easily match or exceed eMusic’s non-US offerings.
• Since it’s a major seller of major label products Amazon may have enough clout with the major labels to be able to persuade them to provide at least some back-catalog content for sale in MP3 format. This would be a significant differentiator compared to eMusic, and again would fit well with Amazon’s long tail orientation and experience.

What strengths would eMusic have in such a battle? Maybe I’m missing something, but I can only think of the following, with counter-arguments as indicated:

• eMusic would still have cheaper prices (on the order of $2-3 for a typical album). However getting these prices requires signing up for an ongoing subscription, while Amazon would offer the ease of a one-off transaction. Also, Amazon could (like Wal-Mart and others) use digital downloads as a loss-leader for other products (e.g., iPods and other devices); if Amazon offered full MP3 albums at a low enough cost compared to the corresponding CD prices (say $5-7 as compared to $10-15 for CDs) then eMusic’s price advantage may not be significant in practice.
• eMusic has at least some lock-in of existing users, especially for those (like me) who’ve signed up to annual or bi-annual plans. This may help eMusic protect its customer base from switching en masse to Amazon, but it doesn’t really help in growing that base–and judging from its recent reluctance to release updated subscriber figures, eMusic may be having exactly that problem. The danger for eMusic would not be Amazon taking its existing subscribers, but Amazon taking a disproportionate share of new customers for digital music.
• eMusic has good original content for music discovery, including the eMusic Dozens, the eMusic Magazine columns, and so on. Much as I love reading this material, I don’t see it as a major competive advantage given Amazon’s strengths in user reviews and recommendations.
• eMusic has a reasonably thriving user community. Again, much as I love reading the eMusic message boards I don’t see them as a killer feature of interest to typical users.
• eMusic is totally focused on independent music, while it’s just one piece of the overall business for Amazon. Sorry, focus didn’t help Tower Records against Wal-Mart et al., and I don’t see it as being a decisive factor here.

Would eMusic be doomed in a head-to-head fight with Amazon? I think there are things that eMusic could do that might be helpful and that it’s not doing today, in particular taking a much more “Web 2.0” approach and looking at tight integration with the music blogosphere, online music recommendation services like Pandora and last.fm, more creative approaches to fostering community among its members, and related ideas. Whether it can actually do such things is an open question, and whether they would help is another one. In any case if I were an eMusic senior manager I’d take any entry by Amazon into the DRM-free digital music market as a definitely serious competitive threat.

Somewhat off-topic: Jon’s blog has a very nice Wordpress theme that’s making me quite jealous. However he could improve things further by configuring his blog to offer better permalinks and ditch the “index.php” crud. He could also list his blog with Technorati as an eMusic-related blog to help people find it.

PunkGuy (sjoerd.Witjes@gmail.com) - 2006-12-19 15:53

Thanks a lot for this tip. This mash-up is really handy (too bad 90 DL’s go by even faster this way).

Johnny Rockets will be expanding its branded music to bring the classic Johnny Rockets music experience to consumers and music fans in new ways.

The new local market campaign will include custom playlists on eMusic, a retailer of independent music, free eMusic downloads, Johnny Rockets branded iPod giveaways, and radio and online contests.

For an example of what they mean by “custom playlists” see the Johnny Rockets Heritage Playlist on the eMusic site, consisting of tunes by the Drifters, the Temptations, the Beach Boys, and so on. (Given that all of these were major-label artists, the playlist doesn’t appear to contain original versions of the songs but rather live and/or re-recorded versions. But then, as I noted above, Johnny Rockets isn’t an authentic 50’s establishment either.)

To be honest some of the concepts behind this promotion seem a bit strained to me, like the Johhny Rockets Music Routes Map (which, among other things, takes you from Van Morrison to Yo La Tengo by way of the Eagles). However it does illustrate an interesting point: Potential customers like Johnny Rockets who are contemplating promotions with digital music tie-ins want to be able to support the iPod, since that’s the music player its customers know, but Apple is too high and mighty to want to do deals with any but the largest and most high-profile companies (e.g., Coke, Nike, etc.). Enter eMusic: iPod-compatible tracks from a company hungry enough to pursue business opportunities Apple would turn up its nose at. Johnny Rockets gets to implement the favorite schemes of its marketing department, and eMusic gets a chance to pick up some spare revenue and promote the service.

Second, since this is Swindleeeee!!!!! we have to have an eMusic tie-in, and fortunately Erik Staats came through for us, announcing his new eMusic extension for Songbird. The extension eliminates the most annoying (at least to me) feature of the eMusic web site, namely that listening to the 30-second track samples requires launching an external application (in my case iTunes for OS X). The extension still has a few rough spots (as noted in my posts to the eMusic message board thread linked to earlier), but it’s definitely full of promise.

Altogether this is great news for people looking for alternatives not only only to the iTunes Store (in the form of our favorite music service) but to the iTunes application as well. Congratulations to the Songbird team and to Erik; I’m really looking forward to seeing these applications come together.

EverythingFusion (jadamshome@comcast.net) - 2006-12-21 06:09

“The extension eliminates the most annoying (at least to me) feature of the eMusic web site, namely that listening to the 30-second track samples requires launching an external application.” I’m glad it launches an external application. LaLa.com plays it iside the browser window using Javascript (ick!), with the result that: (1) I can’t tell which track of an album it’s playing at the moment; (2) there’s no way to skip one of the tracks; (3) have the time it simply doesn’t work.

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. . . .

At least that’s how it was in 12/2003 when I stopped for while.

As it happens, I did the exact same thing: I initially subscribed to eMusic in June 2002, cancelled my subscription in December 2004 (because I was having trouble finding enough new music worth downloading) and then resubscribed in June 2005 (just over six months later) with all my account information restored to the state it was at prior to my cancellation.

Now eMusic gives departing subscribers a 60-day grace period after they cancel service, after which it deletes all their account information; from the current message eMusic is sending upon cancellation:

Your eMusic . . . subscription has been cancelled and will expire at the end of your current billing cycle. Your profile data and download history will be deleted from our records in 60 days unless you reactivate your account within that timeframe.

Because eMusic provides DRM-free MP3 tracks, departing subscribers still retain all the music they downloaded prior to cancelling; at worst they’ll now lose the ability to redownload tracks from eMusic should they ever resubscribe past the 60-day window. That ability was and is a convenient way to replace any tracks a subscriber might have lost to due to a hard drive failure or accidental deletion.

(However note that such redownloading is not a true substitute for backing up your eMusic MP3 collection, because you can’t redownload tracks that have been pulled from eMusic by their labels. Again, this happened to me: I deliberately deleted some Butchies albums from my collection, regretted it later, and then found that the albums in question were no longer available on eMusic.)

eMusic’s retaining subscriber profile information indefinitely also meant that returning subscribers would find all their “save for later” choices intact, as well as any album and track lists that they might have published for others to view. Subscribers posting on the eMusic message boards could also come back and participate in discussions under the same nickname, as if nothing had happened in the interim.

Although this policy change is a net loss from the point of view of eMusic subscribers, I have to say that I’m sympathetic to eMusic’s position in this matter. The problem from eMusic’s point of view is that some subscribers were apparently deliberately dipping in and out of the service: They would subscribe for a few months, downloading their full quotas each month, cancel their service, resubscribe a few months later when they felt like downloading more tracks, and then repeat the whole process. If enough people did this then it would mess up eMusic’s business model, which depends on the average subscriber not downloading their full quota each month.

Thus eMusic has made what I think is a reasonable compromise: If you cancel and regret it soon thereafter, you can come back within 60 days and be treated like the prodigal son. After that time it’s “hey, I don’t think I know you” and you have to start afresh just as if you were an eMusic n00b.

duggie (dathompson@gmail.com) - 2006-09-21 06:07

I got this message upon closing my secondary account. I reactivated it several months later and everything was still there.

Frank Hecker - 2006-09-21 14:30

Interesting. This may then be a good example of eMusic informally continuing the past policy, but laying the legal ground work for it to be more restrictive in how it treats departing subscribers in the future, should it decide to do so. As Harald Walker noted (but I neglected to mention), in the past the message from eMusic was “If you would like to reactivate your eMusic account at any time, …”, which constituted an implied commitment to retain a subscriber’s data forever.

derek (zerocaps@gmail.com) - 2006-09-22 19:55

Why would eMusic’s business model depend on “the average subscriber not downloading their full quota each month”??? What difference does it make how many tracks are downloaded, as long as the customer remains a continuous subscriber? Is it a bandwidth issue? Anyhoo, the fact that my old account data won’t stay around if I cancel won’t stop me from cancelling. I’m not going to keep paying month-to-month if I can’t find anything I want to download.

Frank Hecker - 2006-09-22 20:07

If people don’t download their full quote per month then this raises the revenue that eMusic is getting per-track. For example, if a person on the Basic plan ($9.99 per month) downloads only 20 tracks instead of 40 then in effect they are paying eMusic $0.50 per track, not $0.25. This means more profit for both eMusic and the labels. (As I understand it, eMusic has revenue sharing arrangements with labels where they get a percentage of the per-track revenue.) It also provides more money to cover per-track fixed costs, most notably the so-called mechanical royalties paid to music publishers (distinct from the labels). If everyone downloaded all the tracks they possibly could given their subscription, per-track revenue would drop, there would be less profit for eMusic and the labels, less money to cover mechanical royalties, and in general it would be a much less attractive business proposition for eMusic.

david - 2006-09-25 18:59

A friend (and fellow eMusic subscriber) pointed out that because of the “backup” potential, the longer you’ve maintained a subscription, the more valuable it becomes. That is, if you’ve been using all of your allotment each month, after two years you’ll have an eMusic library of nearly 1,000 songs. (Under the 40-a-month plan.) While a back-up system for those songs isn’t – by itself – worth $9.99 a month, I think it figures into the decision-making process. Offering the ability to re-download the music probably costs eMusic relatively little. (I don’t think they have to pay labels for later downloads so it’s pretty much just the bandwidth expenses.) Yet it probably keeps some subscribers from ever canceling. Seems like a smart business decision.

Paul (pahool@gmail.com) - 2006-10-03 15:27

There used to be a third party utility (I think it was called myCollection and I think it was written in Perl) that would download a list of your entire collection from emusic and put it in a csv file. I think it also had a function where it would check the files on your machine vs. the csv file to see if your collection was complete. I am no longer a member of emusic, but I think I’m missing some mp3’s from my collection. I’d like to check my collection vs. all my downloadable files and re-instate my account before I don’t have access to my old downloads anymore. Does anyone know where I can get this utility and if it is still functional?

Harald Walker - 2006-10-07 12:35

Looks like eMusic is loosing some European customers. I got this offer from them: “Reactivate your eMusic subscription today and for a limited time your first month is free! (…) This limited time offer expires on October 13, 2006. By clicking the link above you will be reactivated into an eMusic Europe account. You will be entitled to one free month of eMusic at the plan level into which you reactivated. Note that the price of your subscription plan may have increased since the time you cancelled your account.”

hecker - 2008-08-12 23:00

To Robert Kennedy: I deleted your comment because a) this is not the eMusic customer service department and b) it’s not a good idea to put credit card info (even partial) on a public site like this. Go to emusic.com and follow the link for customer service.

Joyce eggemeyer (joyceeggemeyer@yahoo.com) - 2008-10-28 18:47

I am trying to canncel my subscription, cannot find out how to

perrypowell (perrypowell8@aol.com) - 2009-05-07 18:52

not much using

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:

First, while it’s repeated uncritically by many people (including me, I’m sorry to say), eMusic’s claim to be number two is somewhat qualified. In conjunction with a press release on April 12, 2006, eMusic first claimed that

eMusic (http://www.emusic.com) is the world’s leading digital retailer of independent music, and the #2 digital music service overall, second only to iTunes in number of downloads sold.

Beginning with the next press release on April 24 this was shortened to the following statement, used in all subsequent press releases:

eMusic (http://www.emusic.com) is the world’s leading digital retailer of independent music, second only to iTunes in number of downloads sold.

Note carefully that eMusic is not currently claiming to be the “#2 digital music service overall,” instead they are simply claiming to have sold more music downloads than any other service except for the iTunes Store. This claim appears to be based on a market share study done by the NPD Group showing eMusic to be #2 in market share behind Apple. This study has been widely reported in the press (most notably in a USA Today story on eMusic), but details about it are hard to come by; in particular it’s not clear exactly what was measured in the study and, assuming that the study measured paid downloads, how that term was defined.

Based on other factors I’m guessing that “downloads” in this context refers to downloaded tracks that can be burned to CDs, and excludes so-called “tethered downloads” that are restricted by DRM schemes to be playable on a PC or digital music device only while a subscription is active. If so, this goes a long way to explain the results of the study, as both the iTunes Store and eMusic sell only burnable downloads, while other services like Napster and Rhapsody deal primarily in tethered downloads, with burnable downloads being an optional purchase.

Note that eMusic is not in the #2 position based on either number of subscribers or total revenue. The most recent figures I can find (quoted in a Financial Times article, among others) have eMusic at 200,000 subscribers, which would put eMusic’s yearly revenue at $25-50M, depending on the mix of subscribers on the different price plans. By contrast, as noted at Digital Audio Insider, Napster has over 600,000 subscribers and almost $100M a year in revenue. (Actually these numbers are outdated; Napster’s most recent SEC filing shows it with a revenue run rate of over $110M per year.) However most of Napster’s revenue is presumably from its Napster and Napster To Go subscription service for tethered downloads, as opposed to sales of burnable downloads.

Second, eMusic masterfully used the hype around the recent Apple announcements to advance its strategy of being Avis to Apple’s Hertz. Although eMusic launched its European service over a month ago, it waited to formally announce it until just before Apple “Showtime” event, at a time when the press was in a frenzy about Apple, iPods, iTunes, and digital music in general, but didn’t yet have any actual Apple-related news to report. eMusic managed to get substantial press coverage for its launch, with most stories picking up on the theme that eMusic’s offerings are compatible with iPods, and thus eMusic was a viable alternative—really the only viable alternative—to the iTunes Store for iPod users wanting a choice of digital music services. And since (as we all know) the iPod is the only digital music device worth mentioning, that means (according to the eMusic script) that eMusic is the only alternative to the iTunes Store, period.

As David Pakman was quoted as saying (in an MP3.com article), “The monopoly of iTunes in Europe is over.” As he didn’t say (but may have wanted to), “Napster and Rhapsody are history. Zune won’t be a factor. From here on out it’s just Apple and eMusic.”

As Paul Resnikoff puts it in his “Parting Shot” column “Interoperability Lost”,

The music industry—and in particular major labels—have long painted a vision of seamless interoperability, one that would allow flexibility and hassle-free portability. During a recent CTIA roundtable in Los Angeles, executives from Sony BMG, Warner Music, and Universal Music argued that DRM itself isn’t the problem—it’s the lack of communication between the competing systems themselves. . . .

But with the latest news from RealNetworks, and Microsoft before it, that vision is starting to look like a pipe dream. The reason is that each digital music retailer—whether it be Apple, Microsoft, or RealNetworks—has narrow business interests that run contrary to consumer needs. And as the battle for market share gets more intense, so do the usability restrictions related to each service. Now, each company wants to command a tight relationship with the consumer by building an insular, walled garden.

Resnikoff goes on to argue that this “balkanization” harms all the digital music stores, including the iTunes Store, because it causes consumer confusion and a reluctance to buy legal music downloads. He neglects to mention that Apple doesn’t care one whit about any harm to the iTunes Store, because Apple makes the vast majority of its revenue and (especially) profits on the iPod, and iPod users primarily get their music from CDs and P2P networks.

The silly situation is that (as I’ve previously written) the labels have a simple way out of the prison Apple has locked them into: stop insisting on DRM schemes, license their releases as DRM-free MP3 tracks, and thus allow any digital music store to sell into the iPod user base, removing Apple’s FairPlay DRM scheme as a choke point. It would be suicidal for Apple to try to protect its position by designing iPods to not play MP3 files; as I noted, MP3 is “the one digital music format that Apple doesn’t control but can’t afford not to support.”

Of course, in their obsession over controlling their customers the major labels aren’t going to do this, thus leaving it to “upstarts” like eMusic to build a digital music business that works with every device on the market today. There’s no “interoperability lost” in the world of independent music; it’s a paradise by comparison.

1. Apple doesn’t offer a subscription service for the iPod.
2. eMusic has built a successful digital music business on a subscription model.
3. Microsoft will offer a subscription service for Zune.
4. 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:

• In the eMusic model the customer pays a set amount per month for the privilege of downloading and listening to a fixed number of DRM-free tracks (e.g., $9.99 per month for 40 tracks); once downloaded the customer can listen to the tracks forever, whether they continue to subscribe to eMusic or not. One analogy is to traditional “book of the month” clubs: The customer is paying for a fixed number of books per month, whether or not they actually read them, and any books bought are theirs to keep forever.
• In the Napster To Go model the customer pays a set amount per month for the privilege of downloading and listening to an unlimited number of DRM-protected tracks; however the tracks “disappear” once the subscription ends. One analogy is to having a library card: You can check out and read as many books as you wish, but you don’t own the books and have to return them at some point, in particular when you give up your card.

These models are very different, and right now it’s not clear which model Zune will be using (though we can guess, as noted below); thus the article’s name-checking eMusic in the context of Zune is premature at best.

The article also confuses what appeals to the music business (and in particular to major music labels) with what appeals to music consumers. For example, the article states:

Now every company wants to be in [the] subscriptions business—it means costs and revenue are predictable, and while the cost of acquiring a punter is higher, this can be amortized over a very long time period—possibly a lifetime. (And if you’re really lucky, you can keep billing them after they’ve died). But labels love subscriptions more than most, because it gives them a chance to monetize their dormant back catalogs. They’ve wanted to do this long before the idea acquired its most recent buzzword, “Long Tail,” and eMusic has become the model for low volume aggregation.

It goes without saying that any business would love to have customers send it a fixed amount of money every month without fail, especially if (like eMusic) the customers are sending that money even if they’re not actually making use of the service. But just because businesses love the subscription model doesn’t mean that customers love it as well. eMusic’s appeal to customers has very little to do with the subscription model per se; rather people are attracted to eMusic because:

• eMusic sells music that’s playable on iPods (unlike every other major music service other than the iTunes store).
• eMusic sells music that’s cheap (four or more times less expensive than Apple on a per-track basis).
• eMusic sells music that doesn’t go away if you cancel the service (unlike Napster To Go and others).
• eMusic sells music that isn’t hobbled by technical restrictions on what you can do with it (unlike all other major music services).

eMusic customers accept eMusic’s subscription model simply as part of the price of getting the above advantages. If there were another service that offered everything that eMusic does now, but on a pure a la carte basis, eMusic customers would no doubt rapidly abandon eMusic in favor of such a competitor.

Back to Zune: Will the Zune subscription service be more like eMusic, or more like Napster To Go? While Microsoft hasn’t provided complete information, it has provided some hints; in particular we know that Zune will use some sort of DRM and that Zune will offer an “all you can eat” unlimited download subscription service (as noted in the press release, “You can . . . buy a Zune Pass subscription to download as many songs as you want for a flat fee”). My bet is therefore that Zune Pass will simply be Microsoft’s version of Napster To Go: as much music as you want, but only as long as your Zune Pass subscription is active.

If this is the case, the logic of the article fails: the Zune Pass subscription service will be nothing like eMusic, and you can’t extrapolate from eMusic’s success to that of Zune. On the contrary, unless Microsoft’s marketing prowess can make a difference and/or Zune turns out to have truly compelling features (whether the WiFi sharing or something else as yet unannounced) we’d expect Zune’s subscription service to be about as successful as Napster To Go and similar services, which is to say not very successful at all.

musicmoggy (pmillsom@aol.com) - 2006-09-17 04:10

Entirely agree with everything you wrote above. Another perspective to add is the iTunes customer is younger than eMusics. Given that the older generation are [generally] a little slower on the take up of technology adoption (you and I are leaders but sadly most of our peers are laggers) then a bow wave user adoption is close behind us (5 to 10 years). Thus eMusic will enjoy this significant growth. Looking around the at comments on the web it is suggested that mircosoft new DRM solution for zune will even apply if you were to share unprotected music with a friend. So Microsoft becomes the criminal by virtue of breaking Creative Commons licenses. A class action looks certain or a last minute change of design. Also of interest.. “Microsoft’s Zune will not play protected Windows Media Audio and Video purchased or “rented” from Napster 2.0, Rhapsody, Yahoo! Unlimited, Movielink, Cinemanow, or any other online media service.” This will really put the Commercial user’s of PlayforSure in a spin. If new generations of DRM are incompatible chaos ensues. But don’t blame Microsoft. Microsoft wants DRM. It’s a great revenue opportunity to licence out DRM software in all shapes and forms. Micrsoft is simply reacting to the music industry demands and for the large wads of dollars. It is the mainstream music industry that is pushing this ‘innovation’. The overpaid guys at the top have lost touch with reality and have no foresight. The next couple of years will be very interesting. Sit back and watch the entertainment and the massive consumer backlog. And the winnder out of all of this will be… eMusic for one.

Frank Hecker - 2006-09-17 05:09

I agree with your comments as well, especially about the major labels losing touch with reality. I’ve seen other comments suggesting that Microsoft, Apple, and other DRM providers are the labels’ dream come true: a new way to force people to continually re-purchase their music libraries as newer and cooler devices come to market, each with its own unique and proprietary DRM scheme – basically replicating past format changes from vinyl to cassette to CD, etc. Frankly I think this is idiocy. People, especially, of the iPod generation, know perfectly well that a) DRM adds no value in terms of increased fidelity, convenience, etc. (as for example CDs did relative to vinyl), and b) they can get perfectly good MP3 files from a variety of source, legal or otherwise. All the labels are doing is giving more momentum to P2P networks and DRM-cracking software.

Evan (reykjavik@gmail.com) - 2006-09-17 14:34

You forgot to mention the niche aspect of eMusic. People subscribe because its their only reliable source of indie music. Its not the other way around. Brittany Spears fans aren’t using eMusic because they like the subscription based model better then outright ownership of iTunes. You’re getting people who don’t have much of an option AND the 4 reasons posted above. American ethic, law and culture is all about property ownership. Are more cars leased per year or bought? The answer to that question will always be the same answer to the mp3 question.

Frank Hecker - 2006-09-17 15:46

You’re right, I forgot to mention the indie focus in this answer. (I did address it in my previous post “Off with its head: eMusic and the Long Tail”.) Your point reinforces my point, namely that music consumers are selecting online music services based on other attributes than whether they’re subscription-based or not.

ex libris » libraries, music, tech » Blog Archive » zune? - 2006-09-22 18:13

[…] Interesting article in the Register on Friday ostensibly about Microsoft’s Zune DAP and Itunes’ market weaknesses. A significant amount of space on page 2 is devoted to Emusic’s subscription model. The writer even echoes thoughts I expressed previously regarding Emusic, Itunes and the Long Tail:In his desire to make the “Long Tail” a one-shape-fits-all buzzword/religious cult, author Chris Anderson wrongly lumps iTunes and eMusic together as examples of “Long Tail”, although one is, and one emphatically isn’t.For such a short article, it flies all over the place like a child that lost its ritalin. Still, well worth a read. Hecker has also posted an excellent commentary on the article over on Swindleeeee. […]

One of the interesting things about eMusic is how it illustrates how the reality of Long Tail marketing differs from the ideal theory. As presented in Chris Anderson’s original Wired article and in subsequent discussions, the theoretical treatment of the Long Tail makes two simplifying assumptions (whether explicitly or implicitly):

• The cost of offering items for sale is negligible, and does not vary from item to item.
• Consumers vary in their tastes (i.e., in which items they might be inclined to purchase), but not in other relevant ways.

Together these assumptions and others lead to the conclusion that in order to maximize revenue and profits retailers should offer as many items as possible, from the most popular to the most obscure, and should find ways to induce consumers of the most popular items to purchase additional less-popular items that might also be of interest (“drive demand down the Long Tail”). As Anderson puts it, in contrast to MP3.com (“only Long Tail”) or Movielink (“Offering only hits is no better”),

The success of Netflix, Amazon, and the commercial music services shows that you need both ends of the curve. Their huge libraries of less-mainstream fare set them apart, but hits still matter in attracting consumers in the first place.

However in the real world the ideal assumptions above do not necessarily hold, and the ways in which they break are directly relevant to eMusic.

First, the cost to offer items for sale is not necessarily negligible and may vary significantly from item to item, perhaps in systematic ways. For example, in the case of eMusic and other services there are both upfront and ongoing administrative costs to offer a particular label’s releases for sale: Label agreements need to be negotiated and re-negotiated as appropriate, each label’s sales need to be tracked over time and licenses paid as needed, and so on. More importantly, the major labels impose a major “cost” in the form of requiring that DRM measures be put in place for their releases.

Together these real-world costs mean that eMusic does not in fact offer as many releases as it could (or, according to Anderson, should), and in effect truncates both the “head” and the “tail” of the full spectrum of releases: At the tail end of the spectrum there are releases that eMusic could in theory license but in fact is not motivated to do so based on the potential benefits in sales vs. the costs of licensing the material and dealing with the labels or artists. As David Pakman noted in an interview with MP3.com:

Together Europe and the US put us at about a million and a half [independent label] tracks. Then you go to the rest of the world and, you know, there are millions more tracks. . . . Are there a few more million tracks out there that we should get over time? Yeah. But they’re not as essential.

And of course at the head end of the spectrum eMusic (unlike most digital music services) avoids the “cost” of DRM simply by not offering major label releases. Again it’s a simple cost/benefit analysis: The cost to eMusic of not having major label releases available for sale is outweighed by the benefit of being able to sell to users of the dominant digital music device, namely Apple’s iPod.

Second, real world consumers differ in ways beyond their taste, ways that are quite relevant to retailers like eMusic. In particular, people who are primarily interested in downloading chart hits are qualitatively very different than people who are primarily interested in indie music and in “non-mainstream” genres like jazz, blues, and classical music. The former group is dominated by teenagers and twenty-somethings who make up the bulk of people downloading music “for free” using P2P networks, while the latter group skews much older and is both more willing and more able to pay for legal music downloads. As David Pakman has commented regarding eMusic customers (in the same MP3.com interview referenced above):

They’re a much more pleasant consumer to deal with because they are far less fickle. They are interested in value but they’re not starving for dollars. They have credit cards that are valid and don’t max out all the time and they can afford to buy both a $400 hardware device and spend, you know, 100 bucks a year on music. So, we like that consumer a lot better.

By forgoing sales of major label hits and thus “chopping off the head” of the overall spectrum of music releases, eMusic has in effect changed the composition of its customer base in a way that is financially beneficial to it, leading to lower rates of credit card fraud, higher subscriber retention rates, higher overall revenue per customer, and so on.

Having said that, eMusic does in fact have its own equivalent of “hits.” The Decemberists, the Gin Blossoms, and other “eMusic Top 10” artists mentioned in the Guardian article are certainly not mainstream acts, but within the context of independent label music they are well known quantities. (I’m sure David Harrell wouldn’t mind at all if the Layaways had a significant fraction of their popularity.) In his post David notes that (depending on genre) roughly half to two thirds of eMusic albums have tracks downloaded in a given month; according to the Guardian article “70% of eMusic’s catalogue sells more than once every quarter.” This is reasonable evidence of the Long Tail at work, but (as David notes) doesn’t come up to the expectations raised by Chris Anderson and other Long Tail evangelists.

I suspect that in many respects eMusic is “hit driven” as well, it’s just that the “hits” are in the context of particular non-mainstream genres. Certainly from my own perspective I disproportionately download albums from eMusic based on their promotion on the eMusic front page, by the columnists for eMusic Magazine, and in the various “eMusic Dozens” lists. By contrast I rarely use the “so-and-so also likes” recommendations on individual album pages, and have never downloaded anything based on what my supposed “eMusic neighbors” are listening to.

Thus I’d conclude that eMusic is far from being an examplar of the Long Tail model, at least in its pure form. Instead it’s something less trendy but (in my opinion) more interesting: a good example of a traditional specialty retailing strategy adapted to the realities of today’s music business and executed well.

A final note: I had some fun finding the image for this post. A special prize (well, not really, but it sounds good) goes to the reader who can identify the connection of this image to alternative music (but not, unfortunately, alternative music available on eMusic).

Avant Music News » Blog Archive » Newsbits: September 15th, 2006 - 2006-09-16 11:33

[…] Swindleeeee!!!!! has an analysis of whether or not eMusic fits into the “Long Tail” media hyptothesis. Kayo Dot has an ipcoming show. One month from today, Birdsongs of the Mesozoic play the Boston area. The NOW Ensemble plays chamber music in New York on September 28th. On October 3rd, Northwestern University will hold an evening of Steve Reich music honoring the composer’s 70th birthday.   [link] […]

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. . . .

EMusic is also planning to launch local-language download services in Germany, France, Italy and Spain in 2007. . . .

EMusic worked with Dutch author society Buma/Stemra to create the first pan-European licensing agreement, enabling it to launch in 25 countries simultaneously.

Under the deal, eMusic will track country-by-country sales and pay publishing royalties to Buma/Stemra, which will then distribute them to author societies in other EU nations.

Maybe it’s just the way it’s phrased, but I found this statement amusing as well:

[David Pakman] said eMusic continues to hold talks with [the four major labels], but until they agree to distribute in the MP3 format, it will not carry their songs.

In other words, “Hey major labels, you’ll adapt to our business model, we don’t need to adapt to yours!”

There’s also (finally) an official eMusic press release on the European launch with more information, including a list of eMusic’s marketing partners in Europe.

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.

In other words, MPkey represents classical music as a “lifestyle product,” as opposed to putting it on a pedestal (highest achievements of Western civilization, precious relics of solitary genius, etc., etc.). In fact, Jim Sturgeon, CEO of Naxos of America, seemingly goes out of his way to (literally!) rub the noses of Stereophile readers in this fact:

[Sturgeon] has already discussed including Naxos’ lullabies collection in gift packages of disposable diapers, and delivering floral bouquets along with MPkey collections of Music for Mother’s Day, Music for Lovemaking, and Christmas Music You Love.

“MPkey can provide added value to an existing product,” he exults. “The card doesn’t even have to come in a CD box. You could find an MPkey card inside a Christmas card. You can get a gift of flowers that die along with music that lives. You can throw away the diaper and the shit, but keep the music.”

As the article concludes, “The mind boggles”—or at least the minds of “classical aficionados” do so. But really, I think this is exactly the right strategy not just for Naxos but for classical music in general: If such music becomes part of people’s everyday lives then it will have a hope of attracting more devoted listeners; otherwise it will be confined to an ever shrinking coterie of aging aficionados.

In fact, I think Naxos should consider adopting the same strategy with “contemporary classical” music. There are lots of “post-minimalist” and similar works that work quite well as “lifestyle music” for relatively casual listening and in my opinion would be natural fits for themed MPkey collections. (For example, recently I’ve been listening to the album Cover of works by Belinda Reynolds in exactly this way.) Given that Naxos has an active program of recording contemporary works I’m sure that they have a number of existing releases that could be mined for suitable material. If they need additional ideas for new releases they can also select from such sources as Kyle Gann’s PostClassic Radio playlist, which contains lots of accessible works in this general vein. In my opinion it would be a great way to bring some excellent music to new listeners who would appreciate it.

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.

Mark Berry - 2006-09-06 12:59

Thanks for mentioning MPkey and the article in the Wall Street Journal. Just to address your first point, these are download bundles organized by theme. The customer will automatically get the complete set with, more or less, the touch of a button. One won’t have to do any point-and-clicking, really. The MPkey releases are in most Borders stores now, although some have been slow to stock them. If you don’t see them, ask at the information desk. They’ll know about them.

• Manager of business development. This is pretty much a classic “BD” position, responsible for recruiting business partners that can help drive new eMusic business. The most interesting part is the very first item: “Drive subscriber growth by developing new domestic and global partnerships with OEM hardware, software, video game and mobile companies.” This might encompass everything from bundling an eMusic trial subscription with MP3 players (hardware or software) to allowing people to purchase and download tracks from eMusic from their mobile phones or even in a video game environment. Assuming partners can get past the fact that their customers won’t be able to get OutKast’s latest, the MP3-based DRM-free nature of eMusic’s tracks could be a major plus in making it easier to incorporate eMusic-supplied music into their products.
• Data analyst. Only hard-core statistics nerds need apply for this position. Two key tasks: “analyzing downloading trends and making merchandising recommendations” and “ongoing download price-point analysis.” In other words, figure out what’s selling and how to sell more of it, all within the context of eMusic’s (somewhat complicated) pricing models. Also on this person’s plate: “Work with Marketing to analyze and implement acquisition and retention test plans.” In other words, how can eMusic attract more subscribers and keep the ones it has?
• Senior licensing coordinator. This is an unsexy position but one that’s very critical to eMusic’s business. Key task: ”manage the day to day administration tasks of eMusic licensing,” basically ensuring that all the legal niceties are satisfied and data generated to enable everyone to get paid who needs to be paid. A whole blog post (or more) could be devoted to the byzantine world of music licensing, where the relevant rights (and hence the necessary licenses) are split among multiple players. For a taste of the complexities involved, check out the FAQ produced by the Harry Fox Agency, one of the main licensing players; for information specifically about “digital permanent download” (DPD) licenses see the digital license FAQ.
• Creative Director. Key task: “own and develop the growth of the eMusic Visual Brand.” I put this position last because it doesn’t have much to do with the unique nature of eMusic’s business; it’s just the same sort of position you’d find at any company doing brand-based marketing. Maybe the result will be a nicer eMusic logo, a better-looking web site, and more attractive ads, but I doubt any of these are truly key to eMusic’s core business.

That’s all for now; when I have time I’ll try to find some more eMusic job postings in other places. . . .

Rental, and make no mistake, SpiralFrog is rental, it’s just that you pay for it with your eyeballs/time as opposed to cash, has been proven to be a failure. . . .

Ignore ridiculous pronouncements of well-endowed vaporware and get down in the pit with the proletariat. . . .

A lot of unprotected music for a low price that you own permanently. This is the only solution. To think otherwise is to be ignorant.

And who offers “unprotected music for a low price that you own permanently”? Hint: it’s a swindleeeee!!!!!

Chad - 2006-09-01 03:20

In the scheme SpiralFrog is planning, the music is just a host to spread the advertising virus. Instead of offering a good product at a fair price, they are creating a fake “attention” economy. I don’t see how anyone at Apple, eMusic, or anywhere else, could see this service as a threat.

As every eMusic US subscriber knows (or should know), the three subscription plans offered by eMusic in the US are $9.99 for 40 tracks, $14.99 for 65 tracks, and $19.99 for 90 tracks. I suspect that eMusic first chose $9.99 and $19.99 as psychologically attractive price points, and then interpolated $14.99 as the “Goldilocks price” halfway in between. I also presume that eMusic first selected the number of tracks for the $9.99 price point to achieve the magic figure of 25 cents per track, and then chose the number of tracks for the $14.99 and $19.99 price points to show a clear discount from the base plan.

In particular it’s worth noting that the marginal pricing of tracks doesn’t change from the $14.99 plan to the $19.99 plan. In both cases paying $5 more per month gets you 25 additional downloads relative to the next lower plan, for a marginal price of 20 cents per track—a nice round figure that’s probably not a coincidence, and makes the pricing easy to understand: In effect you get an initial 40 tracks at 25 cents per track, and then can opt for either 25 or 50 additional tracks at 20 cents per track. However this means that you get “only” 90 tracks for the $19.99 price plan as opposed to 100 tracks, a psychologically more satisfying number.

The pricing picture for eMusic UK and eMusic Europe is less straightforward, but preserves key features of the US plans. In particular, it appears that the Basic price was set first, presumably to reflect the different cost structures for eMusic UK and eMusic Europe. (As I previously noted, the Basic plan prices for the UK and Europe are over 40% higher than the US price, even before adding VAT.) The prices for the other plans were then set in relation to the Basic price:

• For eMusic UK the plan prices increase in increments of £3 (£8.99 for Basic, £11.99 for Plus, and £14.99 for Premium) for a marginal price of £0.12 per track.
• For eMusic Europe the plan prices increase in increments of €4 (€12.99 for Basic, €16.99 for Plus, and €12.99 for Premium) for a marginal price of €0.16 per track.

Pricing of booster packs is more complicated, both in the US and outside it. Like monthly plan pricing, US booster pack pricing features a low initial price ($4.99) that then increases in increments of $5 for the higher-priced offerings (to $9.99 and $14.99 respectively). However the marginal per-track pricing changes: Starting from an initial price of 50 cents per track for 10 tracks, the next booster pack offers an additional 15 tracks at a marginal price of approximately 33 cents per track, and then the highest-priced pack offers 25 more tracks at a marginal price of 20 cents per track.

Note that unlike eMusic US, eMusic UK and Europe don’t maintain identical increments in pricing for booster packs:

• For eMusic UK booster pack prices start at £4.99 (£0.50 per track), increase by £4 to £8.99 (marginal price of £0.27 per track), and then by £5 (not £4) to £13.99 (marginal price of £0.20 per track).
• For eMusic Europe booster pack prices start at €6.99 (€0.70 per track), increase by €6 to €12.99 (marginal price of €0.40 per track), and then by €7 (not €6) to €19.99 (marginal price of €0.28 per track).

Finally, why the “.99” prices? “Everybody knows” that companies set prices one cent or five cents below an even dollar as a psychological measure, because it makes people think the prices are lower than they actually are. However just because this is conventional wisdom doesn’t necessarily mean that it’s true. For a more rigorous look at the question, see the article Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition by Manoj Thomas and Vicki Morwitz in the June 2005 issue of the Journal of Consumer Research. (If you find the full article tough going, check out Science Daily’s summary of the results.)

Thomas and Morwitz discovered that people do in fact perceive a “.99” price to be significantly less than an even dollar price, but they also found that (contrary to the title of this post) the fact that the last digits were 9s was not in and of itself the cause of the effect. Instead the effect seems more related to the fact that the leftmost digit changes when comparing a price like $4.99 to a price like $5.00. The essential idea is that humans compare prices by mapping them to a mental analog scale (think of a ruler with somewhat fuzzy markings), with the prices ending as points on that scale. In order to perform this mapping operation the individual digits of the price are processed in left to right order, and apparently the magnitude of the first digit can bias the mapping, by causing the price to appear lower on the mental analog scale than it otherwise would.

This explanation implies that a price like $4.95 or $4.90 or even $4.82 would show the same effects as $4.99 against a price of $5.00. However given that a company would like to charge the highest price possible, it would be better off using a “.99” price rather than a “.95,” “.90,” or other price; eMusic is no different.

Note that strictly speaking Thomas and Morwitz’s research applies only to situations where the leftmost digit changes, and in that case only when it changes to the next higher digit. Thus, for example, their “left-digit effect” clearly applies to the £8.99 price for the eMusic UK Basic plan, since consumers would be comparing £8.99 to £9.00. However it’s not exactly clear whether the effect would be present with the $9.99 price for the eMusic US Basic plan, since in going to the comparison price of $10.00 the leftmost digit actually becomes a ‘1’; Thomas and Morwitz’s studies didn’t look at this case. In the case of eMusic Europe Basic the effect may or may not be present, since in comparing the actual price of €12.99 with the comparison price of €13.00 the leftmost digit does not change. Similar considerations apply to the eMusic US Plus price of $14.99 (comparable to the case of eMusic Europe Basic) and the eMusic US Premium price of $19.99 (where there is a change in leftmost digit compared to the comparison price of $20.00).

In practice there is other research that generally supports the idea of using .99 prices; see for example the list of citations in the Thomas and Morwitz article. Thus eMusic is not just blindly following the retail equivalent of an old wives’ tale.

That concludes part 2 in my series on eMusic pricing. Next up: everyone has his price.

I emailed Tzadik to ask if they had a preferred way that fans buy their music. I was told their preference was “definitely the purchase through our own web site.” In regards to eMusic, I was told that they offer downloads as an “alternative.”

What Tzadik didn’t tell him is that the label deliberately makes eMusic a less palatable alternative, by not offering for download tracks that are over 15 minutes in length. (See the eMusic message board threads “Tzadik tracks gone in a flash = no subscribing” and “Long Tzadik tracks gone.”) Speculation is that Tzadik didn’t believe they were compensated adequately for long tracks sold through eMusic, and thus decided to withdraw them from the service. Tzadik does offer longer tracks through the iTunes Music Store, although on iTMS they are available only when buying the complete album. If I recall correctly Tzadik also used to offer longer tracks through Audio Lunchbox, which has a “points” system that enables variable pricing of tracks; however Tzadik releases now seem to have disappeared entirely from ALB.

Tzadik has a perfect right to run its business as it pleases, but I can’t help thinking that they’re missing the point of eMusic and digital downloads in general. The point of eMusic is to support music discovery through low-priced access to a wide selection of independent music, to encourage people to listen more music and (as a result) buy more music. Prior to subscribing to eMusic I never bought a Tzadik-released CD, and likely would have gone to my grave without so doing. However as a result of compiling my “PostClassic Picks” list (based on the playlist from Kyle Gann’s Internet radio station “PostClassic Radio”) I ended up buying two albums by Peter Garland. It wasn’t until I clicked the “Download ALL” button for the second album that I noticed that it was missing two tracks. Needless to say this did not put me in a good mood, and it rather soured me on buying further Tzadik releases.

Now my purchases didn’t represent much revenue to Tzadik, but it was incremental revenue they wouldn’t have had otherwise (at basically zero marginal cost to them), and it might have led to additional incremental revenue as I further explored the Tzadik catalog on eMusic. Instead they basically pissed off a potential buyer in an attempt to protect their CD sales. If they were that concerned about protecting the business, why’d they do a deal with eMusic in the first place?

Tzadik’s attitude contrasts with that of BIS Records, whose albums on eMusic were at one point missing tracks over 8 minutes in length—not by design but rather through the actions of their distributor IODA. The head of the label, Robert von Bahr, responded to complaints by saying “I’d rather they pull the whole lot from eMusic than serving up truncated albums/work like this” and noted that “You can go buy the CD/SACD, download from eMu or vomit, whatever you feel like. Do spread the word, that’s why we went to the trouble of offering this service.” In other words, there are different types of customers with differing desires and differing ideas about what price they’d like to pay, and BIS is trying to offer all of them a product that serves their particular needs.

To reward BIS for this attitude, I decided just now to download one of their releases, Mats Bergstrom’s SubString Bridge, which looked interesting to me (especially given that I’m a fan of Steve Reich’s music). (Either eMusic or IODA got the title of the album wrong, as often happens with classical releases on eMusic, but that’s a post for another day.) SubString Bridge was an eMusic “Editor’s Pick,” however the one review I could find of the album characterizes it as uneven. But hey, at 25 cents a track why not download the whole thing and see if I agree? That sort of impulse buying of potentially interesting music is what eMusic is all about, and I wish Tzadik would wake up and realize it.

At the time I thought that this differential meant that the eMusic US Basic plan was under-priced (at least in the eyes of eMusic management) and that eMusic would correct the “problem” at some point by raising the price of the eMusic US Basic plan. For various reasons I now think I was mistaken, but this mistake got me thinking about how eMusic prices its various plans; hence this first in what I hope will be a series of blog posts on eMusic’s pricing strategies.

As I see it, there are several features of eMusic pricing that are worth discussing:

• Why are there three monthly price plans, as opposed to just one or two (or for that matter, four, five, or more)?
• Why is the Basic plan price set where it is?
• What accounts for the exact price differentials between the Basic plan and the Plus and Premium plans?
• What accounts for the pricing of booster packs?
• How does eMusic’s subscription model interact with its pricing plans?

In this post I address the first question, which as it happens is quite straightforward to answer: In offering three subscription plans eMusic is deploying a differential pricing strategy consisent with the advice given in Carl Shapiro and Hal Varian’s book Information Rules: A Strategic Guide to the Network Economy; in particular, Shapiro and Varian recommend Goldilocks pricing based on the principle of extremeness aversion:

Consumers normally try to avoid extreme choices—it leaves them out on a limb. It’s perceived as risky to go for the top or the bottom of the product line for most consumers, and much safer to choose something in the middle. Positioning a product so that it represents a compromise will end up getting you extra purchasers. Just like Goldilocks, most consumers don’t want to choose between too big and too small. They want a product that is just right.¹

Varian and Shapiro go on to point out that moving from two price levels to three can significantly increase overall revenues (using as an example soft drink sizes at a fast food restaurant):

By adding a jumbo size that almost no one consumes, the producer can end up selling more than he would with only two choices, in part because the median product looks attractive in comparison with the expensive, jumbo version.²

Under this theory, eMusic’s expectation would be that most people would opt for the Plus plan (65 downloads per month). Whether this expectation is borne out in practice I can’t say, since eMusic doesn’t release information on the relative number of people on the various plans. However it’s worth noting that when eMusic introduced a “retail digital starter kit” for sale in brick and mortar stores it was priced at $14.99 and in essence was a first month’s payment toward a Plus subscription—more evidence of eMusic’s desire to promote the Plus plan as the default.

Note that eMusic follows the same three-level pricing strategy with regard to booster pack, offering packs for 10 downloads, 25 downloads, and 50 downloads. Again, according to the Goldilocks theory the 25-track booster pack should be the most popular.

Finally, note that eMusic subtly biases users’ choices by the manner in which it presents the various options: On the eMusic signup page the Premium plan is pre-selected (i.e., via the web form’s radio button control) and is also highlighted as the best Value. However on the page to purchase booster packs the 10-track booster pack (the lowest-price option) is pre-selected (although the highest-priced booster pack is still highlighted as the best value). Why the difference? My best guess is as follows:

Because subscription plan downloads expire at the end of each 30-day period, and because most users don’t use their full quota of downloads (as has been emphasized in many eMusic-related stories), it’s in eMusic’s interest to encourage users to sign up to the most expensive plan, since that presumably maximizes the number of unused downloads per user, and that in turn maximizes eMusic’s average revenue per track (defined as total monthly revenue divided by the actual number of downloaded tracks for that month).

On the other hand, booster pack downloads do not expire and by their nature are purchased by people who’ve exhausted their monthly quotas and are eager to download more tracks. Thus it’s much more likely that purchased booster pack downloads will in fact be used. Given that, it’s in eMusic’s interest to encourage users to purchase the booster pack that has the highest revenue per track, namely the cheapest one ($4.99 for 10 downloads or about $0.50 per track).

That concludes part 1 of my discussion of eMusic pricing; next up: powers of nine.

For example, assume a current UK subscriber at the Basic level who took advantage of eMusic’s offer to sign up for an annual subscription at 20% off. Prior to the creation of the new services they were paying $95.90 per year (20% discount off $119.88) or £50.33, equivalent to a monthly price of $7.99 or £4.19 per month (using an exchange rate of 1.90530 dollars per pound as in my previous posts). Their effective per-track price was thus about £0.10 per track. Under eMusic’s offer, when their current plan expires they could switch to a Basic monthly plan at a discounted price of $9.99 (the current US rate) or approximately £5.24 pre-VAT, for a final price of approximately £6.13 with VAT. This corresponds to a per-track price of £0.13 exclusive of VAT (£0.15 including VAT), and as such is a bit more attractive than signing up for a 2-year Basic plan at the new UK rates (£0.14 per track exclusive of VAT). They could also switch to discounted Plus or Premium monthly plans instead.

The following table presents the options for existing annual and 2-year subscribers in the UK; we assume an exchange rate of 1.90530 dollars per pound:

The following table presents the options for existing annual and 2-year subscribers in the rest of Europe; we assume an exchange rate of 1.2841 dollars per euro:

(Note that I didn’t include the UK and Europe annual plans in the comparisons since in the published eMusic pricing materials the annual plans don’t appear to offer any discount relative to the monthly plans.)

Assuming I’ve done the math right, the key points from the above tables are as follows:

• If you’re currently on a Basic plan and don’t want to upgrade to Plus or Premium, you’re better off taking advantage of the eMusic offer for a Basic monthly plan at a discounted price at the point where your current subscription expires. It’s cheaper than taking advantage of the new UK and Europe Basic 2-year plans, and you don’t have to pay in advance.
• If you’re currently on a Plus and Premium plan and you don’t mind making an upfront commitment, you would be nominally better off switching to a standard UK or Europe Plus or Premium two year plan when your current subscription expires.

Note that this analysis is complicated by two factors:

• There may be exchange rate risks in electing for the discounted monthly plan. In particular, suppose that the discounted monthly price is fixed in terms of dollars (e.g., $9.99 plus VAT for the discounted Basic monthly plan) but is converted into pounds or euros each month at the then-current exchange rate. If the pound or euro depreciate relative to the dollar then you’ll effectively end up paying higher prices than originally anticipated.
• Paying up-front for a 2-year plan may get you a better per-month price, but it also prevents you from using that extra money for other purposes; in particular, depending on the returns available to you (e.g., interest rates on savings deposit) it may be better to stay with a monthly plan and invest the money you would have spent buying a 2-year plan.

Of course, the differences we’re talking about are relatively small: typically less than a pound or euro per month between switching to a discounted monthly plan per eMusic’s offer or electing for a new 2-year plan at standard UK or Europe prices. That makes me wonder why eMusic even bothered to make this discount offer, especially considering that it was made to subscribers who were already on long-term plans and presumably would not have minded continuing on such plans if the price were perceived as fair. Given that eMusic didn’t seem to have given any thought to long-term subscribers in their original announcement of the UK and Europe services, it’s possible that the eMusic sales and marketing people just threw together a last-minute proposal that at least appeared to be a concession to long-term subscribers. Then once the long-term subscribers took advantage of the discount offer they’d come to realize it wasn’t that great a deal, and would just switch back to a long-term plan at standard pricing.

Why the silence? It’s possible that from eMusic’s point of view the services really are in a beta period (as advertised), and it’s waiting to do a major press push until the service is officially out of beta. What remains to be done? Well, certainly there are still some outstanding customer issues, for example relating to existing customers on annual plans and whether they can take advantage of eMusic’s offer to continue at the previous (US) pricing when renewing their subscription. There may also be additional UK and European labels that eMusic would like to sign up prior to launch. Finally, eMusic may wish to tie the official announcement to a UK- and Europe-targeted marketing campaign that’s not quite ready to go live.

It will be interesting to see if pricing gets tweaked prior to the official launch. My personal opinion is that pricing will stay as it is, and the most that will happen is that eMusic will tweak the discounts being offered to existing subscribers being moved over to the new services.

In the following table I list the pre-track prices for the UK and the rest of Europe both inclusive and exclusive of VAT; I included the pre-tax figures to give an “apples to apples” comparison to the US prices. The exchange rates are the same as in the previous post: 1.9053 dollars per pound, and 1.2841 dollars per euro (average interbank rates for August 10, 2006).

Some obvious conclusions from the above table:

• Assuming that these prices are the official ones, and that the “20% off” annual subscription is not being offered to new subscribers, there’s no point in signing up for an annual plan; you get no discount off the monthly prices and have to pay up front.
• If you like eMusic and think you’ll stay with it, but don’t do a lot of downloading, then consider going for the 2-year Basic plan; you get pricing comparable to the Premium monthly plan but don’t have to worry about finding 90 tracks per month that you might like. This might be especially worthwhile for US users if eMusic decides to increase the cost of the Basic monthly plan (as I’ve speculated they might); you can lock the current price in for two years.
• Don’t ever get booster packs in any size less than 50 tracks, especially for the UK and Europe. Booster pack downloads don’t expire, so there’s no disadvantage to buying more than you need right now.

The first table shows prices for all eMusic products in the UK (priced in pounds), together with comparisons with current eMusic US prices; the exchange rate used is 1.90530 dollars per pound, the average interbank rate for August 10, 2006:

The second table shows prices for all eMusic products in the rest of Europe (priced in euros), together with comparisons with current eMusic US prices; the exchange rate used is 1.2841 dollars per euro, the average interbank rate for August 10, 2006:

In summary, if you exclude the effect of VAT then the net effect of the new pricing schemes is as follows:

• Prices for all Basic plans were increased 46% in the UK and 42% in the rest of Europe.
• Prices for all Plus plans were increased 30% in the UK and 24% in the rest of Europe.
• Prices for all Premium plans were increased 22% in the UK and 15% in the rest of Europe.
• Booster pack prices increased from 42% to 62% depending on region and the type of booster pack. As with the subscription plans, the highest increases occurred with the lowest-priced packs.

Clearly if you’re a new subscriber in the UK or the rest of Europe then your best deal relative to US pricing is to choose a Premium plan.

musicmoggy (pmillsom@csc.con) - 2006-08-12 09:12

A full analysis. I noticed that the lowest increase is “Premium annual $239.88 £179.88 ($342.73) £153.09 ($291.68) 22%”. eMusic is more deeply discounting this option that any of the others. However this may be because of forex futures anticipate a strengthening of sterling (and Euro) against the dollar (as UK/Euro interest rates hike up in Autumn). So it’s not necessarily a marketng driven discount. But that option looks good value. Hey I didn’t know they did a two year option ! How about they go public and we customers get first refusal to buy shares and get shareholder pricing discounts. I’d invest $10k or so.

dhaith (dhaith@telenet.be) - 2006-08-12 09:48

“[H]ow that offer actually translates into practice”? Not so well for me, as an annual subscriber: I subscribed to “eMusic Premium Annual with 20% Discount” at $191,90 a year ago (156.28 EUR at that time). This month, this plan expires and if I don’t choose a specific plan myself, my account will automatically roll over to the “eMusic Premium” plan at €20,99/month. So at the full European rate. All the other plans I can (optionally) change to are also at the new Euro rates, including the Annual Premium subscription I already held. Coming from my Annual Premium plan I would expect to be offered the US price when (automatically!) rolling over to the monthly Premium plan, considering that having payed up front for one year I kept my “subscription active and in good standing”. I would also expect to be given the option to renew my Annual Premium plan at the ‘old’ rate as well.

Harald Walker - 2006-08-12 19:30

@dhaith Same for me. $191.90 Premium Annual, which expires in September. I just downloaded my last 90 songs and canceled the subscription.

Sonic Walker » eMusic goes European and increases prices for European customers - 2006-08-12 19:57

[…] More details: eMusic prices for the US, UK, and rest of Europe […]

Jay (Jay@tmbg.org) - 2006-08-12 20:48

For dhaith and Harald Walker, and others in their situation, I’d recommend contacting emusic’s customer support. I’s likely that they’d correct the mistake.

Harald Walker - 2006-08-12 22:53

@Jay The point is this from the eMusic email: “eMusic will continue to honor this special pricing as long as you keep your subscription active and in good standing” So even if I get the old rate, it still means, that I can not stop deactivate the subscription for a while and continue it later as it has been until now without having to pay the higher rates. This is the 2nd time, that eMusic just goes ahead and changes its terms and conditions.

Frank Hecker - 2006-08-13 04:57

Harald: Regarding deactivating your subscription, when someone cancels their eMusic subscription they are in essence saying they no longer want to be an eMusic customer (for whatever reason). If they later rejoin eMusic then it’s nice if eMusic offers them an opportunity to rejoin at the price they were formerly paying, but I don’t think eMusic is (or even should be) under any obligation to do so.

Sean (tshoulihane@hotmail.com) - 2006-08-13 08:29

eMusic have a subscription policy for a good reason, it allows them to quote a good per track rate compared with itunes, and gives them better predictability of revenues. It may also mean they can get away with paying less for their music, since we’re more likely to download random stuff at the end of a month!

dhaith (dhaith@telenet.be) - 2006-08-16 18:38

I got the following answer from eMusic Customer Service on the matter of annual subscribers being charged the original (US) rates after their plan expires: “[…] You are correct that the email you received should have been more clear. We are making the appropriate changes. Annual subscribers in the UK and Europe will be able to take advantage of the discounted monthly plans at the end of their annual subscription period. Unfortunately, we are unable to update your subscription to automatically convert into a discounted monthly plan so we will need you to email us at the end of your annual subscription with the request and we will convert your plan at that time.” Now, this says annual subscribers will be able to change into *any monthly* plan at the original rate + VAT. If I read between the lines correctly one *cannot* continue the (bi-)annual plans at the original rate. Will ask for futher clarification…

dhaith (dhaith@telenet.be) - 2006-08-19 12:09

Keeping your annual subscription at the orginal US rates is *not an option* for European customers according to eMusic Customer Support. My Question: “I understand from the [above] that I can change into /any/ monthly plan (40, 65 or 90 downloads) at the discounted price. Renewing my annual subscription (or going to the 2-year plan, as I was even considering) seems not to be an option at the discounted rate. Is this correct?” eMusic Answer: “Yes, that is correct. At this time, we do not have any special discounted rates for any of the annual or 2 year plans. We apologize for the inconvenience.”

grinsend (ruppenstein@sbcglobal.net) - 2006-08-19 17:38

Just a thought: Some of the price, from eMusic’s perspective, may be justified. One thing we’re seeing now is that with the splitting of eMusic into regional parts, the different parts may have different cost structures. Contracts with the music distributors/labels for electronic distribution rights seem to have been renegotiated in many cases (as we are seeing evidence of in the new arrivals lists). It wouldn’t be surprising if the labels/distributors in Europe charged more for their distribution rights, given that they may have, for whatever reasons, higher cost structures than American labels/distributors.

Helen Price - 2006-08-23 12:16

yes the prices may differ and that’s fair policy.

patchwork (patchwork.mail@virgin.net) - 2006-08-24 00:08

I suspect that the lack of a continuing (bi)annual sub at the old rate means that the whole ‘monthly subs at old rates’ deal may end in a very few months…

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):

(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.)

arne (arnebittig@web.de) - 2006-08-11 07:25

“eMusic is allowing current European subscribers to continue indefinitely at the current US price” - where is this information from? I’m seeing the “eMusic Europe” logo when I log in and I also see the increased prices for booster packs (6.99, 12.99 and 19.99€, btw) and such, but I did not get any information whatsoever from eMusic. Damn their information policy (or lack thereof). It should also be worth noting that there is a difference between “eMusic UK” and “eMusic Europe” - some music now available in the UK (e.g. Domino Records) is not available in Europe (yet?). Furthermore, I would like to know why eMusic Europe is run from the UK (17.5% VAT) then and not from, say, Luxemburg (15% VAT - Swindleeeee!!!!! indeed). Actually, the obligation to charge VAT to customers inside the EU might be one of the reasons for eMusic making this step. In the forum, someone from Switzerland (in Europe but not inside the EU) reported still being shown the “old” ($) prices.

musicmoggy (pmillsom@aol.com) - 2006-08-11 07:59

Music is allowing current European subscribers to continue indefinitely at the current US price” - where is this information from? Can we validate this statement. They’ve already hiked the booster pack price to us. Admitedly those of us on annual pricing get the benefit of our remaining annual subscription.

Frank Hecker - 2006-08-11 10:35

Regarding contining at the current subscription prices, I’m relying on statements made in the message board thread to which I linked, in particular the one where Mmarsupilami quoted an email sent to him from eMusic: “As a charter eMusic Europe subscriber you’ll continue to get the same low price you received when you joined our US-based service, which is a significant savings over the standard European membership price. The only difference you’ll notice is the inclusion of VAT, which we’re required to collect now that we’ve launched our service locally in Europe. Because we value your membership, eMusic will continue to honor this special pricing as long as you keep your subscription active and in good standing.”

CCRGMac (CCRGMac@comcast.net) - 2006-08-11 16:07

Hey! As far as I can see I’m the first member to get a name check here (though I’m sure MrCat will come up as I surf around). Nice work, Farnk. Thanks.

Sonic Walker » eMusic goes European and increases prices for European customers - 2006-08-12 19:51

[…] But there is more going on. Not only did they open eMusic Europe, they also increased prices for their European customers as Frank Hecker points out in his blog entry. (…) 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%. (…) […]

He has a juicy pitch: Give him out-of-print material that consumers can’t get their hands on and let him promote the material heavily on eMusic, minus DRM. . . . The proposal has been accepted at all the major labels by lower-level digital executives, but gets stuck when it goes up to the executive suite, Pakman says. It’s a fun idea to consider, he says, but he assumes it will never happen.

Well, at least it won’t happen until the “executive suite” runs the major label music business into the ground, and “lower-level digital executives” take over. And Pakman is talking about out-of-print material, so any revenue would be pure profit for the labels, with no risk of lost revenue due to displacement of CD sales. This reminds me of the quote I saw once, that if you offered record companies a choice between making more money and having more control over their customers, they’d go for more control 100% of the time.

As it happens, this particular news doesn’t seem to have any particular implication for eMusic subscribers, except perhaps to demonstrate eMusic’s investment in creating a reliable high-volume web service. Day’s Content Repository Extreme (CRX) product is a true backend product: As explained in the CRX FAQ, its function is to present a standard interface between the underlying content repository (in eMusic’s case, where all the album and track information is stored) and the front-end content management system (which provides the actual end user interface to the eMusic content). At least in theory this will enable eMusic to change its web front-end (perhaps even migrating to a different CMS) with minimal change to the back-end.

In short, this is really of interest only to the eMusic IT staff. So why the press release? The answer is that enterprise software companies love to have “reference customers” that they can point to when selling to others, so Day was motivated to have eMusic lend their name to a press release. Why would eMusic do this? Probably in exchange for some type of software discount or other concession made by Day. For example, eMusic staff size and revenue would qualify them for the CRX “Standard Edition” pricing, but their number of extranet users and repository items would push them into buying the CRX “Enterprise Edition.” It’s possible that they were able to get the Enterprise Edition for Standard Edition pricing (or close to it) in return for agreeing to do a press release.

A final note: When enterprise software companies use the term “Extreme” in their product names you know that it’s all over in terms of any “cool” factor associated with the term. This is doubly true when it’s a Swiss enterprise software company.

My best guess is that eMusic is planning to develop a Firefox-compatible version of the eMusic toolbar for IE; such a toolbar would be developed as a Firefox extension using the technologies (XUL, XPCOM, etc.) mentioned in the job listing. (Note that an eMusic toolbar for Firefox already is available from a third party, but is not officially supported by eMusic.) A more remote possibility is that eMusic is planning to develop a standalone Mozilla-based application, e.g., a replacement for the current eMusic download manager or an eMusic equivalent to iTunes. A twist on the latter possibility is that eMusic could piggyback on the Mozilla-based Songbird media player currently in development, either adding eMusic-specific extensions to Songbird or doing an eMusic-specific version.

In the end although an eMusic/Songbird combination would be quite interesting, I think a Firefox version of the eMusic toolbar is more likely, both because it’s a natural extension of the current eMusic toolbar concept, and also because it could leverage the large Firefox user base. However whatever is developed it’s clear that it will support all three major platforms: Windows, Mac OS X, and Linux. That’s great news for all eMusic users.

Televiper - 2006-08-12 17:41

I seem to remember the Emusic had originally designed it’s own mediea player which embedded the download manager. I don’t remember it’s name, but it was later carried on as an open source player called Zinf. Zinf broke out of the ridiculous concept that the media player should be a tiny cassette deck like image in the corner of the monitor and actually broke the play list out into a column separated spread sheet. It also organized the music into a tree like database along the side, and you would drop stuff from the tree into a play list. I absolutely loved this player, and was dissapointed when the halted windows developement since it was cantanquerously buggy, and the shuffle was horrible. When I heard about Foobar I moved over to that media player. But, when I load up iTunes I think of Zinf.

Based on a report by the research group iSuppli, “The inability of several industries to resolve their differences over DRM could stunt the evolution of future digital markets, while potentially putting ‘hundreds of billions of dollars’ at risk.” Essentially attempts by record labels, equipment makers, and others to over-control consumer use of digital music, video, etc., poisons the overall market by making digital media offering much more complex and hence much less attractive. The winners in all this: companies like Apple that can potentially offer an integrated “one-stop shopping” experience. The losers: record labels, equipment makers other than Apple, the rest of us.

Despite the helpful replies of various eMusic customers mrcat’s problems continued unabated, and he soon resorted to repetition to add urgency to his pleas: “I still Cannot Download Music, WHYYYYY???? . . . Bring BAck my Money,E Music is SWindle. Bring Back my moneyyyyyyyyyyyyyyyyyyyyyyyyyyyy.” After a final message from mrcat (“Emusic Swindle, just swindle. I am not happpyyyyy.”), Buddha-Of-Siberia was moved to reply, “hey mr.cat who cries swindleeeeee. . . . . . Stop Your Subscription and log out. . . and stay outeeeeee.” And thus a new word entered the world, and every subsequent user complaint or pseudo-complaint regarding eMusic was heralded with the ironic cry “eMusic is swindleeeee!!!!!!”

The Swindleeeee!!!!! FAQ

I just know you still have some questions . . .

• How do you pronounce “swindleeeee”? Like the question of which end to open an egg or whether the sign of the cross should be made with two fingers or three, this is a matter of bitter controversy; wars have been fought over less. Some (including myself) believe that it should be pronounced like “swindle,” but prolonging the final ‘l’ sound: “swin-duhhhhhl”. Others believe that it should be pronounced it as “swind-leeeee,” i.e., converting the normally silent ‘e’ into a long ‘e’ on the second syllable. Still others compromise on a hybrid pronounciation: “swin-duh-leeeee.” Feel free to choose whichever side you please, but be prepared to accept the consequences. For more information check out the eMusic message board thread “Poll - do you prefer SwindULLLLL or SwindLEEEEE?.”
• How many ‘e’s are in “swindleeeee”? This varies from person to person. As noted above, the original coinage had six ‘e’s, but in my opinion five are sufficient to get the point across, unless you happen to be feeling especially feisty.
• How many exclamation points should I use? In general I think it’s good practice to have as many exclamation points as there are ‘e’s.
• Can I use “swindleeeee!!!!!” in referring to digital music services other than eMusic? Yes, but know that the correct use of the term is in the ironic sense (real irony, that is, not the Alanis Morissette kind#Linguistic_controversy)); thus you should not use the term with respect to a competing service unless you feel that it is not in fact a swindle.

ex libris » libraries, music, tech » Blog Archive » swindleeeee!!! - 2006-09-22 18:13

[…] Big happenings over at Emusic:European subscribers have been shifted onto a new “Emusic Europe”. The main benefits seem to be higher prices and collection of local sales taxes for their already overfed governments.hecker has created a new blog entitled “Swindleeeee!!!!!” in honour of the third anniversary of the coinage of that term. The fellow has done his research and his “origin of swindleeeee!!!!!” post is well worth reading. I’ll forgive his usage of 5 exclamation marks over my preferred 3…at least he got the number of e’s right. Long live mrcat! […]

After a while I thought I really should be posting my comments to a blog rather than to someone else’s message board. At the same time I wanted to try out the WordPress blogging software as an alternative to my current somewhat-juryrigged setup for my personal blog. Thus “Swindleeeee!!!!!” was born. (For why I chose this name, please see “The story of ‘swindleeeee’.”)

I hope to post on a regular basis about my eMusic experiences, as well as my experiences with other digital music services like last.fm, Pandora, and others I’ve used off and on over the years.

I found out about this album from a story in the Washington Post, and was intrigued enough to check it out. As it happens I’d never bought or heard the original version of The Who Sell Out, so except for “I Can See for Miles and Miles” I was hearing every song for the first time. And there are some excellent songs on the album, of which my favorite at the moment is “I Can’t Reach You.”

As an a cappella work I thought this was superior to Björk’s Medulla; I’m pretty fond of Björk’s work, and have almost all of her albums, but to be honest I thought Medulla was too much of a muchness—Björk’s singing and songwriting are idiosyncratic enough already, and using conventional instrumentation (and I’d count even the music boxes and “glitch” of Vespertine as conventional in this context) gives listeners some familarity to smooth their path into the songs.

I also disagree with the customer reviews on Amazon that complain about the lack of polish in Haden’s interpretation, as if vocal perfection and seamless production were the goal. That’s not the goal at all—quite the opposite. As Dave Hickey notes in his book Air Guitar, contrasting jazz and rock, “Both . . . make art that succeeds by failing, but each exploits failure in different ways.” Jazz ensembles strive for improvisation but ultimately have to come back to the underlying song, with someone always having to “hold onto the wire.” Rock bands strive to play together (“just this once, in tune and on the beat”) but can’t quite manage it.

What I like about Petra Haden’s album is its informality and occasional outright goofiness, and its general air of having been recorded as a lark (which indeed it was), all of which make the album’s many moments of spontaneous joy and beauty stand out all the more strongly.