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EMusic: Win a little, lose a little

November 17, 2010 |  6:13 pm

eMusic, MP3, iTunes, Universal Music Group, Warner Music Group, Sony Music Entertainment, Beggars Group, Merge, 4AD, Matador, XL, Domino Thursday marks another increment in the evolution at eMusic, the online music service that sells discounted MP3s by subscription. CEO Adam Klein announced on the company's blog Wednesday that not only would some 250,000 older titles from Universal Music Group be added to its extensive catalog of indie labels and artists, but also brand-new releases from Warner Music Group and Sony Music Entertainment. Thus, Warner and Sony's thinking about eMusic has come full circle: from shunning the service to letting it sell older tracks to supporting it as a full-fledged competitor to iTunes. Those tracks will start arriving on eMusic on Thursday.

Getting Warner and Sony's releases on the same day they go to iTunes could make eMusic significantly more appealing to mainstream music fans, especially given that the former charges 99 cents to $1.29 for those tracks, while eMusic has said it will charge no more than 89 cents. Granted, Amazon and Walmart charge less than iTunes too, and neither of them has been able to make much of a dent in Apple's dominant market share. But eMusic's subscription approach yields larger discounts.

On the other hand, the changes to eMusic's business model that persuaded Universal, Warner and Sony to sign on have started to drive off some of the site's most important indie allies. According to Billboard, eMusic notified subscribers Tuesday that Merge (home of Arcade Fire, Spoon and Superchunk, among other indie-rock faves), Domino (Animal Collective, Dirty Projectors, Franz Ferdinand) and the Beggars Group labels (The National, Vampire Weekend, Efterklang) were pulling out of the service as of Thursday.

These are important departures ...

... that could weaken eMusic's ability to hold onto the indie-music fans who've been the core of its subscriber base. But then, the indie-music focus took eMusic only so far. Klein said in an interview in September that the service was hovering around 400,000 subscribers -- essentially unchanged from its level two years before, and not quite where it needed to be to sustain its business.

Billboard quoted statements from Merge and Beggars that thanked eMusic for its support over the years, but said the accommodations being made for major labels were harmful to their interests as indies. As the Beggars statement put it, "[A]s eMusic has brought major labels on board, they have changed the terms on which they deal with labels in certain ways, some of which we have found impossible to accept."

Klein was similarly circumspect in his comments. "In the process of expanding our catalog and making the changes necessary to serve our members and ensure the long-term sustainability of our business, a few labels have chosen to exclude themselves from the new comprehensive eMusic offering," he wrote on the eMusic blog. "We are treating all labels equally and therefore we believe fairly" (emphasis in the original).

In an exchange of e-mails Wednesday, eMusic spokeswoman Cathy Halgas Nevins declined to elaborate on the changes in eMusic's business model.

"This is as heartbreaking to us as it is to you," Halgas Nevins wrote in the note to subscribers. "Please know we have done everything we could to keep them from leaving. Forging deals with our label partners can be pretty complex. As many of you know, labels have come and gone over the years, and we hope to see these labels back soon."

Halgas Nevins went on to urge subscribers to "get the music you love from these labels at a great price before November 18." Going, going....

RELATED:

EMusic signs Universal, aims for the mainstream

Is the great eMusic pricing experiment over?

How much should music cost online?

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

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