From the NY Times: eMusic is launching a revamped music download service that carries only music from independent labels.
A Music Download Site for Artists Less Known
By LAURIE J. FLYNN
Published: September 20, 2004
The Internet has long carried the promise of being an outlet for new writers, artists and independent musicians. But to David Pakman, chief operating officer of eMusic, an online music service, that promise has not yet panned out.
Indeed, for many musicians not affiliated with one of the major record labels, Mr. Pakman says, it has become increasingly hard to get noticed on online music stores, which tend to sell the same music as the megastores.
EMusic hopes to change that. On Wednesday, it plans to start an online music service that will give independent musicians a place of their own.
The site will sell only music from 3,700 independent labels, a total of a half-million tracks. The aim is to help fans locate the small, the obscure and the eccentric; help musicians find their fans; and grab a chunk of the more than $2 billion in revenues generated annually by independent music labels.
“What has been missing for indie music, until now, is a service completely devoted to the discovery of new or established independent artists,” Mr. Pakman said. He added that while “many indie labels and artists feel strongly that the Web, in general, has provided many advantages in communication, marketing, promotion, and even sales,” it has not leveled the playing field.
Still, with the demise of independent radio stations, many musicians have had to depend on word-of-mouth on the Internet to gain an audience.
In 1999, the eMusic site began charging for each song downloaded, but it switched to a subscription plan the next year. In 2001, Robert Kohn and Gene Hoffman, the founders, sold eMusic to Vivendi Universal, which sold it last year to Dimensional Associates, the private equity arm of JDS Capital Management. Danny Stein, chief executive of Dimensional Associates, also is chief executive of eMusic.
Mr. Pakman, who is Dimensional Associates’ managing director and chief operating officer of eMusic, said that eMusic was losing money when his company bought it, even though it had a strong following among independent music fans.
When the new service starts this week, eMusic will look as much like a magazine as an online music service, Mr. Pakman said, with an assortment of reviews, recommendations and columns.
A new editorial staff led by Michael Azerrad, a rock writer and leading advocate of independent music, will cover all niches, including jazz, folk and rap.
The emphasis will be on helping users find music they like, and connecting them with other fans who like the same thing. On other sites, Mr. Pakman said, “you can only finding it if you’re looking for it.”
The site has 70,000 paying subscribers, a number Mr. Pakman said he hopes to expand. Rather than charging per song, eMusic charges monthly subscription fees ranging from $10 to $20, for 40 to 90 downloads. Most major sites, including iTunes from Apple and the new music service from Microsoft, charge 99 cents a song; eMusic customers end up paying about 25 cents a song.
Because eMusic’s audience tends to include very active collectors of independent artists, the subscription model makes sense, Mr. Pakman said.
“Our users consume a disproportionately larger number of downloads,” he said. “They’re die-hards.”
A major difference between eMusic’s service and other online music stores is that the tracks are delivered in the unprotected MP3 format, which means the number of copies that can be made after a song is downloaded is not restricted. For many new bands, the exposure they gain by allowing their music to be shared makes up for the fact that they may not get paid for every copy of their songs.
The unprotected format also means that the songs will play on all portable music players, including the Apple’s iPod. To enhance its appeal, eMusic also records live performances around the country, making the tracks available immediate after a show.
The subscription model for music services is small but growing, and many industry analysts predict that most online music will eventually be sold this way.
RealNetworks already has 550,000 subscribers to its music services; America Online has 260,000 subscribers to MusicNet; and Musicmatch, which was just acquired by Yahoo, has about 225,000 paying subscribers.
As it is, eMusic faces stiff competition. All the major online services offer catalogs of independent music, with their more mainstream fare. For example, iTunes offers songs from more than 600 independent labels, and RealNetworks says that more than half the tracks on its site are from independent labels. But in nearly all cases, the bulk of the songs customers actually buy come from the major labels, and it is the big names that are promoted most heavily.
On the eMusic site, however, the independent labels do not have to fight the major labels for the attention of consumers. “If you’re an independent band, it’s more likely you’ll get exposure than you would otherwise,” said Josh Bernoff, an analyst at Forrester Research, a market research company.
Skirl | Dan Dickinson 