Music

Now that I’ve done a lengthy eMusic-related post I feel less guilty about doing yet another post on Amazon and its rumored plans to enter the digital music market; in particular I wanted to highlight two (relatively) recent articles on the topic. 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 ...

Reading a post by Clay Shirkey concerning Scott McCloud’s abandoning the use of micropayments, I (re)discovered a 10-year-old article by Nick Szabo on mental accounting costs (a topic I touched on briefly in my previous post). It’s a bit dense, but the key paragraph is worth quoting: 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. ...

It’s unseemly to gloat that “I told you so,” but I’m not being paid for this gig so I’ll take my satisfaction where I can find it: According to a Digital Music News report on Amazon’s plans (free registration required), Amazon will be integrating its much-rumored digital music offering into its existing CD-centric online store: 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. ...

In a previous post I offered some pretty snarky advice for indie labels complaining about eMusic per-track payouts. For this post I ’ll try to look at things in a more objective manner and consider why eMusic does business the way it does, and why eMusic’s approach is arguably better for labels than various alternatives. In particular I’ll address the business case for eMusic offering its new Connoisseur plans, since that was apparently one major bone of contention between eMusic and Victory Records. As Tony Brummel of Victory famously said with regard to the Connoisseur plans, “I just don’t believe in what they’re doing.” He may have lost his own faith in eMusic, but perhaps I can justify it to others. ...

I love that people at eMusic are posting at 17 dots; as I mentioned previously, it’s integrating eMusic itself into the eMusic user community. But. . . I do almost all my blog reading using a feed reader (NetNewsWire in my case), and it’s driving me up a wall that 17 dots doesn’t have a full text feed. Given the rate that they’re posting at, there are a lots of posts to read, and it really interrupts my flow when I see something I find interesting only to be stopped by the inevitable “(more…).” ...

Hypebot seems to engaging in a mild form of eMusic deathwatch lately, this time questioning eMusic’s apparent success in adding new subscribers and labels. At the moment the discussion seems to center around the issue of per-track payouts from eMusic vs. payouts from the iTunes Store and other digital music stores. In particular, the article quotes one label owner complaining that he gets only $0.17 per track from eMusic vs. $0.69 per track or more from other stores. Previously we heard similar complaints from Tony Brummel of Victory Records, questioning why eMusic would want to introduce new subscriber plans offering tracks at $0.25 per download. Hypebot seems to share these concerns: ...

Courtesy of Hypebot’s New Music Business Briefing this week: The mainstream music industry press (in the form of Billboard) talks about the possibility of Amazon entering the digital music market. Some quick points, for those keeping score at home: 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. ...

Today Hypebot posted the promised article discussing how Amazon can succeed in the digital music business. Also as promised, I will now comment on Hypebot’s advice and how it compares to [my own][] on an Amazon digital music service"): 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]. ...

After exhausting myself making predictions about Amazon and its possible entry into the digital music market, I’m now prompted to return to the topic, prompted by Hypebot’s latest article on why Amazon doesn’t seem to be doing anything yet. I might quibble with some of Hypebot’s stated reasons (e.g., how likely is it really that Microsoft can make a success out of Zune?), but after thinking about it I do agree that an Amazon/eMusic deal doesn’t necessarily make sense, both because of the difficulty in bringing over the eMusic subscription model into the Amazon environment and because Amazon is probably perfectly capable of matching eMusic’s other features on its own (as I noted in my first post on the subject). ...

This is the fourth and final in a series of posts (following parts 1, 2, and 3) speculating on Amazon’s rumored entry into the digital music market. In this post I discuss two additional music-related services Amazon might offer, particularly to customers already signed up to a subscription plan. The standard disclaimer applies: 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. Here follows my final attempt to play foolish prognosticator: ...