When eMusic announced a deal on June 1 to start selling back catalog material from Sony Music Entertainment later this year, it also raises the prices of its monthly plans, upsetting some of its customers.
On the surface, this looked to be yet another major-label money grab; in return for their favorite indie-oriented music service being flooded with music from the same label that released Mariah Carey and Ricky Martin, eMusic's approximately-400,000 subscribers are being asked to pay more. Some seem to fear that participation in eMusic could represents support for Sony (and perhaps, by extension, the RIAA).
But the real story is more nuanced and not as dire. Insiders have long known that some of eMusic's independent label partners to didn't like what they received from eMusic's lump-sum subscriptions, which pay less per song than iTunes does. As eMusic users trade quips on Twitter's #emusicfail hash tag (585 tweets as of Sunday night), share eMusic alternatives on Facebook, and comment on 17dots, an unofficial blog by eMusic employees (1473 responses), the company's indie-label partners are likely celebrating. Music fans always seem to want lower music prices, but labels -- even the independent ones these complaining users support -- beg to differ.
In the below interview (edited for length and clarity) eMusic CEO Danny Stein addressed the confusion surrounding the controversial deal Sony and the associated pricing change.
The long and the short of it: "This move was inevitable, with or without Sony."
Wired.com: Why did eMusic raise its prices? Was the increase tied to the Sony deal, or did pressure to raise prices came from indie labels, or from eMusic itself?
Danny Stein, eMusic CEO: Our existing labels, for the most part, have been asking us to raise prices for a long time. What I told the New York Times is that we were looking for a "catalyzing event" to do it. And really, the catalyzing event is adding catalog, adding more content. We used this as an opportunity to do it, but we didn't do it because of Sony. We did it because in order to sustain the economics for our label suppliers and their artists, we needed to do it.
Wired.com: How have the indie labels reacted? I imagine them quietly celebrating this development without wanting to get involved in the online discussions. Without naming names, do you have any indies that are going to come back to eMusic or stay with eMusic because of this?
Stein: Definitely, there are a couple of positive reactions. The first one, and the most positive one, is that the price increase is very good for the price per download. We're a revenue share with the labels, so the higher the price per download, the better off our labels are. When we bought the company, our price-per-download was very low and many independent labels didn't sell through eMusic. [JDS Capital bought eMusic in 2003 from Vivendi, which acquired it from Goodnoise in 2001.] That changed dramatically as our price per download has risen and as we've attracted more customers to the site. We've become a much more sizable account -- generally the second largest account for the independent labels that we serve, after iTunes. Many independent labels have come to rely on and appreciate us, so the fact that they'll be paid more is a great thing.
The second piece is that a really large business with more customers who stay longer will be great for the independent label community that we support and will always support, because they will make more money, but also because they'll have a larger platform on which to expose customers to their great music. I've gotten phone calls from big labels and small labels that had questions about what it means and I think they're excited about the prospect of a larger, more successful eMusic.
Wired.com: To those users who are saying "now I have to pay more and I'm not going to download the Sony stuff anyway," is there a way to quantify how much more indie music will be on there as a result of the new pricing?
Stein: Everybody, I hope. We genuinely hope that every label that is not currently selling through eMusic will begin to sell at eMusic, those that have left will come back, and those that have never come at all will join us. And I think the pricing will play a role in that.
Wired.com: Everybody's describing the Sony catalog as "Billy Joel." I know that the majors distribute a lot of music that people imagine as indie, but how indie is Sony? Is there music that eMusic customers might think of as indie that they will now get?
Stein: Definitely. The reality is that eMusic's customers love music of all flavors and genres, and there are a lot of less mainstream names [artists with albums soon to be sold on eMusic as part of the deal include Captain Beefheart, Black Rebel Motorcycle Club, Kate Bush, Miles Davis, The Clash, Miles Davis, Franz Ferdinand, Robert Johnson, Kings of Leon, Modest Mouse, Psychedelic Furs, Lou Reed, Patti Smith, Spiritualized and the Stone Roses], and this catalog is rich in jazz and classical. In addition, there are more mainstream artists who will benefit the less mainstream artists dramatically by allowing us to use our editorial expertise to compare and contextualize the lesser-known artists with the better-known artists so that the lesser-known artists have more exposure. We have a feature called "Six Degrees"...
Cathy Halgas Nevins, vice president of eMusic corporate communications: Yes, that's going to be a new editorial feature where we're going to take an album that might be really well known and show you some independent artists that were influenced by that record who you should know about [examples below].
Wired.com: What do you have to say to longtime subscribers who are so upset about prices going up?
Stein: We knew it was going to be tough breaking the news about the price increase, so we've been listening to all the reactions. We appreciate that our users have such a strong connection to eMusic and are very passionate and vigorous music fans. As I said at the top of this call, the price change is something that all of our labels have been asking for, for a long time, and it's really a necessary move for us to maintain a viable business. Not only that, but to support the independent label community and their artists, through royalties. We still offer one of the best values for digital music. We're about 50 percent cheaper than iTunes and Amazon. And we hope those people will stick with us and see what we do with the Sony catalog and all the other labels that we may get in the future. We hope that they'll give it a shot and stay. [Annual subscribers will get the chance to renew at a "similar" rate -- more below.]
Wired.com: Was it ever considered to offer two different price points -- I guess not, because the indies were asking for this too.
Stein: Yeah. In 2008, we paid about $3 million a month in royalty revenue to the independent label community, and the last thing we want to do is to create product confusion and dysfunction around too many kinds of offering. First and foremost, we're about a quality customer experience. That's job number one, but you have to live within the reality of your suppliers, and they have businesses to run and artist royalties to pay. So this move was inevitable, with or without Sony.
Wired.com: Are you in talks with any other major labels and do you have any predictions about a deal getting signed, or can you characterize how those are going?
Stein: We are talking to all the other major labels and any other label that we don't have that's not a major label. We've been talking to all of them, literally, since 2004. And with respect to the major labels, it's really a just function of the labels looking at new revenue opportunities for their content. We hope they'll consider us a partner in the future. It's a great opportunity for us to do what we think we do very well, which is provide a more deeply curated experience for music fans. Just because we offer content from any label doesn't mean that that's going to sit on our home page and that's what we're going to promote. We're not a site that focuses on Top 40 artists. We have a different kind of experience than Amazon or iTunes. We're going to bring the eMusic sensibility to the curation process with the Sony deal, and we expect that we'll do that not only with Sony but all the other music that we currently have and the music we get in the future, whether it's major or indie.
Wired.com: Can you address the confusion about the new album pricing plan?
Stein: We've never had album pricing before and at times that has hurt the service and the user experience. We've heard from our customers that for albums that may have 20 tracks, you get charged for 20 tracks. Our new pricing is simple. It's 12 credits per album, and that's if the album has 11 12 songs or more. Below that, it's by track, so an album with eight regular tracks will cost eight credits [each credit costs 42, 45, or 50 cents depending on which plan you have; credits expire after 30 days]. We'll eventually roll out some other price points for albums to give our labels more options.
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EMusic told us customers on annual plans will continue to pay the same rate they signed up with (as low as 20 cents per song). When their plans expire, they can renew at a similar rate, which could vary based on how long they've subscribed (Update: After renewal, these plans will offer fewer downloads per month.) EMusic's FAQ should be updated later this week with more information about the situation.
Here are some examples of the "Six Degrees" lists, featuring independent artists eMusic says were influenced by some well-known albums. These occasionally unlikely juxtapositions could help music fans find new candidates for their monthly credits:
__
The Clash, London Calling__
Culture, Two Sevens Clash
Rage Against the Machine, Rage Against the Machine
MIA, Arular
Lou Reed, Transformer
Jay Reatard, Blood Visions
__ Arcade Fire, Funeral__
Journey, Escape
Springsteen, Born to Run
Okkervil River, The Stage Names
Mahler, No 2. (apparently, the influences can go both ways)
Stars, Set Yourself on Fire
Carole King, Tapestry
Bon Iver, For Emma
Elliott Smith XO
James Taylor
Adele 19
Fionna Apple, When the Pawn
Jeff Buckley, Grace
Leonard Cohen, Songs of Leonard Cohen
Laura Nyro, Eli & the 13th…
Kate Bush, The Sensual World
Antony & the Johnsons
Nusrat Fata Ali Khan
Sly, There's A Riot…
Radiohead, In Rainbows
OutKast, Stankonia
Neutral Milk Hotel, In the Aeroplane
Funkadelic, Maggot Brain
Sun Ra, Nuclear War
Bruce Springsteen, Nebraska
Johnny Cash, American
Woody Guthrie, Sacco & Venzetti
Kurt Vile, Constant Hitmaker
Suicide, Suicide
M. Ward, Transfiguration of Vincent
Spoon, Kill the Moonlight
ELO, Eldorado
Vampire Weekend
The Strokes
Billy Joel, The Stranger
Franz Ferdinand
