Why eMusic doesn’t suck

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I try to stay in touch with the quirky world of American indie music via the excellent Brooklyn Vegan blog, normally it’s dishes of Alt Country, New American Weird, Post Punk and other musical gumbo are served just the way I like them. However, a recent post has left a bad taste in my mouth.

Brooklyn Vegan links to an article on Axehole (another music blog) entitled “Why Bloggers Don’t Run Record Companies“. The article is itself a response to the excitement surrounding the announcement that eMusic (a DRM free digital music store) have reached 100 million songs sold; and suggests that this figure is irrelevant next to the awe and majesty of music sales through the iTunes music store.

I feel it’s important to tackle many of the points made in this article, because they represent the same misconceptions that are held around online music by the mainstream media. Before I begin, I’d like to point out that I have no affiliation with eMusic.

Axehole’s main points (and my rebuttals) are as follows..

1. Most music fans don’t care about DRM – only Linux geeks do.

DRM is currently not a political issue, because consumers aren’t currently banging their heads against its limitations. As Joe Sixpack migrates to his new MP3 player (e.g.: Zune), which fails to play tracks from his old online marketplace (e.g.: iTunes store / Plays for sure) it becomes a problem. The apparent consumer acceptance of DRM is primarily based in ignorance. With even Bill Gates this week admitting that DRM is essentially borked and recommending people rip CD’s instead, and the major labels and movie studies attempting to reduce end user privileges and increase prices in their renegotiations with Apple, DRM is appearing increasingly cumbersome.

2. eMusic doesn’t really sell songs, they sell subscriptions

Only they don’t; Because unlike every major label backed subscription service, if you stop subscribing to eMusic, you keep your music.

3. Labels aren’t going to get rich from eMusic

The majors are only important for their back catalogs, and their ability to promote artists. Artists get a smaller cut from iTunes sales than from CD sales, so it’s in their interests to divest themselves from the majors unless they’ve successfully transitioned to being large enough to renegotiate their cut. Indeed much of Canada’s recording artist community, have just <a href=”severed their ties to the international recording industry. Of course artists still need promotion, but thats creating market pressure toward the development of leaner ‘middleware’ style deal brokers, focused on the provision of services from recording, to promotion, to tour booking, rather than the acquisition of a stable of artists.

4. eMusic’s sales are less than 1% Apple’s

Just as iTunes downloads dwarf eMusic downloads, they are themselves dwarfed by P2P downloads (impossible to calculate specificially, but with 10 million concurrent connections to P2P networks, discounting Bittorrent, likely enormous), and *drumroll* CD album sales. True CD album sales figures are difficult to estimate, as the recording industry counts units shipped rather than units sold, and releases only a limited amounts of sales data to the press. None the less, according the US data from the RIAA’s own figures [PDF] CD albums made up 87% of consumer music purchases in 2005, pretty constant as far back as 2000, as compared to 5.7% for digital music sales; in terms of units shipped [PDF], CD albums are still selling double (705 million units, 10.5 billion dollar value) digital singles (367 million units, at a 363 million dollar value, or 498 million dollars including digital albums), at 14 songs approx per album, thats 28 times more songs sold on CD album than digitally.

Conclusion: The market for digital music is far from mature, and has not yet replaced the high street. It’s perfectly possible that the majors could in future cripple iTunes with wireless music distribution points in shops, vending songs to Zune 2’s and 6th Gen Wifi iPods. Alternately, simple open DRM free music stores run by smaller labels and artists themselves may overtake the iTunes model – which owes much of its success to the ubiquity of the iPod, which certainly won’t remain in vogue forever.

5. eMusic’s traffic has flatlined over the last year
(with attendant Alexia stats)

Alexia rankings are a joke, no one clued in enough to be an opinion leader runs the Alexia toolbar on which the rankings are based. Alexia is both easily gamed and subject to systematic biases. Of course as both Apple, and eMusic, primarily sell their songs through client software, their popularity cannot be tracked by Alexia’s antique metrics.

According to Forrester Research, iTunes sales growth is slowing. Forrester are currently trying to distance themselves from that reports implications – but the figures still stand. Here’s the diamond quote “The ability to obtain pirated music is now so widespread the DRM looks to consumers more like a problem than a benefit.”

6. Musicians aren’t going to get rich at eMusic

This is a direct result of broad flat music sales on the long tail, and is one of the reasons music is increasingly a service rather than a product – it’s not really possible to make money from CD sales as an artist, unless you have a major following – if you do, they’ll buy your music from wherever its available; which will like as not be at your website or concerts, or direct from your band to iTunes / eMusic etc.

Let me conclude by quoting the Register on Forester Research’s iTunes figures again..

“Some 3.2 per cent of online households (around 60 per cent of the wider population) bought at least one download, and these dabblers made on average 5.6 transactions, with the median household making just three a year. The median transaction was slightly under $3.

No one in music gets rich from a stampede of interest like this.”

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