Is eMusic moving away from the health club model? « Frank Hecker. As all long-time eMusic watchers are aware, eMusic’s business model has always been based on the health club model, i.e., the assumption that a certain percentage of customers will pay for but not use the service.
In eMusic’s case that corresponds to subscribers who download fewer tracks per month than they’re paying for. The result of these unused tracks or digital breakage (as Digital Audio Insider refers to the phenomenon) is that the per-track payout from eMusic to labels was somewhat higher than it would be otherwise. That in turn made distribution through eMusic somewhat more attractive to labels that the nominal per-track pricing might otherwise indicate. 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.
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. EMusic signs Universal, aims for the mainstream. The subscription-music struggles that I wrote about last week aren't confined to the digital services selling access to millions of tracks on an online jukebox.
The ones selling bundles of CDsor MP3s for a monthly fee have also struggled to catch on with the masses. The last one standing, as far as I can tell, is EMusic, which launched in 1998 -- a year before Shawn Fanning released the original Napster song-swapping software. But EMusic is in the midst of an overhaul, trying to change itself from a niche service for lovers of indie-label bands to a more broadly focused service for music lovers in general. As part of that transformation, it announced Tuesday that it has a deal with Universal Music Group, the largest of the major record companies, to add content from its labels and artists (e.g. Interscope, Decca and Island DefJam). At least as significant is the news that EMusic is changing its pricing, moving even further away from the bulk-discount model of yore. -- Jon Healey.
EMusic Inks Warner Deal; Plans For Streaming. The deal will make 10,000 catalog albums from artists like REM, Depeche Mode and Aretha Franklin available for downloading.
But the deal does not include newer hit records. The new deal is just one of the steps in a concerted plan by eMusic to expand its 400,000 subscriber base. Chief Executive Danny Stein said the company is in talks with label partners for new licensing deals to allow the website to stream songs to its subscribers similar to services like Last.fm and LaLa. “We have a bunch of things in store for 2010 that will allow us to grow again and that includes streaming,” Stein said in an interview. “The biggest issue comes with the rights holders being able to take on new business models.
Apple Inc bought LaLa for an undisclosed fee late last year in a sign that the iPod maker has become the latest company to bet on streaming being the future of the digital music business. “There is no impending sale,” said Stein. (Reporting by Yinka Adegoke; Editing by Richard Chang)