eMusic and Sony: a rocky start, a risky move?June 2, 2009
As you may have heard, eMusic inked a contract with Sony to make the label’s back catalog available for download (with a moving wall of two years), including albums by Bruce Springsteen, Modest Mouse and, um, Michael Jackson. I don’t have an MBA from Harvard, and I’m not a self-described ‘Internet (insert buzzword) guru’. But I can’t imagine that any business strategy that starts by alienating your most loyal customers is the way to go, and that’s exactly what eMusic did. Not in the nebulous, ‘the cool kids won’t like it’ way (which they may also have done), but in the real, live ‘hits you in the wallet’ way, as long-term subscribers are losing their grandfathered-in plans at the end of July and getting fewer tracks for the same price; in my own case, dropping from 50 downloads a month to 30. Needless to say, people are unhappy.
So after that fairly shaky start, what’s going to happen? At this point, eMusic is the place to go to easily find obscure indie songs; it’s always my first stop when I hear about a band for the first time. While the pricing structure facilitates this – it’s easy to give new bands a chance – I’ve mostly just been happy that they have ever-increasing amounts of cool stuff (like my most recent find, the Haligonian band Plumtree, who wrote the song that was the inspiration for Scott Pilgrim). But if the idea is to attract a vast new audience by adding Sony’s back catalog, they are differentiating themself not on what they sell, but how much they sell it for; Amazon currently lists over 500 Bruce Springsteen MP3s, for example, which surely includes most of his releases. eMusic only makes economic sense if you are a very consistent downloader. If you are just an occasional purchaser, it makes more sense to just buy MP3s à la carte. This suggests that their shiny new subscriber base would be sensitive to anything that closes the gap between eMusic pricing and ‘regular’ pricing, such as iTunes dropping their prices further. As well, if streaming services continue to improve, casual listeners will have less incentive to download. I guess that’s a risk that eMusic decided was worth taking, and I hope it pays off, especially since they are probably going to start by losing customers.