Will the music subscription business ever grow beyond its current niche? It looks increasingly doubtful. Today, eMusic announced that since it launched its current music subscription service in 2003, customers have downloaded 250 million songs. Apple’s iTunes, by comparison, has sold more than 5 billion songs since it opened the iTunes Store in April, 2003. That makes eMusic one twentieth the size of iTunes.
The way eMusic works is you pay a subscription of between $12 and $20 a month and then you can download 30 to 75 songs a month and keep them. You can also purchase songs above those limits, starting at $0.25 a track. eMusic has a catalog of 4.5 million songs, and is particularly strong in independent music. It currently has 400,000 subscribers, and the company expects to make $70 million in revenues this year.
That implies the vast majority of subscribers opt in for the basic $12 a month plan, which would net $57.6 million a year if that is what everyone paid. The difference can be accounted for by those people who opt for the more expensive land and additional downloads. And the best part of the business is that eMusic gets paid a guaranteed minimum no mater how few songs a customer actually downloads only pays the labels for the songs its customers download. So if someone doesn’t use up their allotment and only downloads 5 songs during a given month, eMusic pockets the money that would have gone to the and the labels pocket the money for the other 25 songs they could have downloaded. [Correction: The labels are not paid on a per song basis, rather they receive 60 percent of eMusic's total subscription and download revenues]
It’s a nice business because eMusic gets rewarded for customer laziness. And iTunes certainly needs competition, so I hope it keeps chugging along. But these numbers don’t bode well for the subscription music business ever rising up to challenge iTunes in any meaningful way.
eMusic can only succeed when there is no BitTorrent. I would pay for one great song, but not monthly subscription. So yeah iTunes is still strong for now.
You *do* own the music you download from emusic. Your subscription gets you a certain number of tacks per month – if you cancel your subscription you still own the music. Also, you download only the tracks you want – there’s no need to download whole albums unless you want to. Depending on your subscription, expect to pay anywhere from $0.29 to $0.40 per track.
I’ve been a customer of emusic for a good 3+ years and love it. Although I am a huge indie music fan… If you’re not then emusic might not be for you (although I’m sure 90% of people would find enough on there to at least subscribe for a few months).
Supporting independent music is one of the best ways to fight the RIAA IMHO.
I still miss the good old CD days…..but the way e-music (literally in terms of getting it electronically) has changed the world of music and your post proves it
I’m an emusic subscriber. They have some great things, the audio books are awesome.
But this comparisson is misleading. It is not the business model that is the problem for emusic, it’s the content. If the two services had the same content emusic could blow iTunes out of the water.
Yes, you can’t compare sales of back catalog only to itunes. Apples to oranges.
Another emusic subscriber here. And I agree completely, it’s not the business model, it’s the content (unless the business model is what is preventing emusic from signing other labels).
I’m an eMusic subscriber from the old days when it was all-you-can-eat. I have also subscribed to Rhapsody for many years. I have never made an iTunes purchase and don’t imagine ever doing so. Agree with everyone who points out that the different catalogs invalidates the apples-to-apples comparison of this post. I’m amazed the argument was even advanced here, given the obvious content differences of the two services.
You missed out one thing that iTunes has over Emusic which distorts your equation: Major label co-operation. Emusic doesn’t carry much in the way of major label music (if any) and as such it’s quite hard to compare the direct figures, when they aren’t fulfilling the same audience. Emusic woud likely have a lot more subscribers if the users could downloads all the major releases each month.
Subscriptions will never get serious traction IMO. Evidently it is human nature to want to own the music you like. Similarly, I would never be satisfied knowing that a favorite book is in the library for whenever I want to get it. I want that thing on my shelf. I need to possess it!
Obviously you have no idea how Emusic works. Its not like rhapsody or other subscription services where you lose the music when you stop paying. With Emusic you keep the content forever.
Smartass, emusic doesn’t sell mainstream crap, that’s why sells less.
Agreeing with Caleb. With comparable content, I think every household would sign up. A mom or dad buying a subscription and allowing little Joe and little Sue to download 3 albums each every month. That’s a winner!
I agree with caleb. It’s not the business model that’s the problem, it’s the content. I subscribed to emusic for a couple months and that’s all it took to get what I wanted from what they offered. If they had more and better selection I may have stayed longer.
Erick, Why does iTunes ‘certainly’ need competition?
Maybe when you get out of high school you will understand the comment.
@Scott – eMusic is a subscription service that gives you song credits. When you buy, you own the music.
eMusic has had a few good indie labels pull out of the platform, I’m sure because the economics are piss poor, so it’s getting harder to find enough good music. Other labels are using a strategy where they release albums in iTunes and other distribution channels and then use eMusic as a last resort to monetize. That also hurts the users.
If you’re a music aficionado, eMusic is still a great service to find some emerging bands, but also really nice back catalogs of jazz and blues. If you’re looking to grow your music library, I’d always recommend subscribing for a few months.
This is dumb. Sort of like comparing an indie record store to the local Best Buy and concluding that the latter outsells the former because its cashiers don’t have as many visible tattoos…
Some people don’t get subscription services, and they never will.
“You don’t own the music”. Well, yea.. But imagine having a huge jukebox of music that you can listen to anytime you want to without having to be stuck with it?
How many times have you bought a CD or an album on iTunes that you didn’t like? That 30 second sound clip only played the best part of the song, the rest sucked? Well, with the service, I can listen to it as many times as I want.
How many times have you been in the mood to listen to something, but really didn’t care if you owned it? The other day, I was in the mood to listen to some 80’s music. I downloaded, listened and couldn’t care less if it was mine or not. To do that (with legit services at least), you’d have to buy each album, then 90% of them gathering dust on your shelf.
(talking about Rhapsody, etc, not eMusic, which sounds like a good service too, will have to check it out)
I completely agree with you. A lot of people just do not “get” the benefits of a subscription service. I couldn’t give a shit whether I “own” the music or not – I just want to listen to it, and will happily pay a reasonably monthly fee to have millions of songs available to me at any time I wish.
I was a Yahoo Music subscriber for many years and discovered tons of new music with it. The application was kind of crappy but I could deal with it. Then they tanked and made a deal with Rhapsody to transfer your sub over there for no extra money. I thought that was a reasonable offer, but the Rhapsody application sucks 10 times worse than the Yahoo Music one. I hate the silver skin, it’s like they’re trying to look like iTunes, except iTunes actually looks pretty good. Rhapsody just looks terrible. I haven’t used it nearly as much as I used Yahoo because the app is so much worse.
So I’m hoping that iTunes will one day awaken to the fact that there are plenty of people who are happy to pay a subscription instead of per song. Of course, per song pricing would still be available to the majority of people that like that model – but give us choice Apple! I would probabaly pay up to $20 per month for an iTunes subscription, especially since it wouuld work with my iPhone. That was the one bad thing about Yahoo/Rhap for me, I can’t put the music on my iPhone (or iPod back in the day).
Rhapsody app sucks. I only use it to download the music then use the player of my choice to playback. MediaMonkey is my choice, but Media Player works fine too.
WOW! $70 million in revenues this year. Very positive for Indie’s . Rock on emusic!
The main drawback is there are no mainstream songs on eMusic. If they want the masses money then they need to support them. This is a niche operation and if they can make a profit, as my Aussie friends say, “…good on them”.
I get between 15-20 free downloads a month from Avis and after a year+ I have run out of artists that I want to download. I tried to pawn the outstanding credits to my daughter, but she has absolutely no interest in any titles.
Eric check this out, http://tinyurl.com/5kev32
See how many more startups coming in the music field.
David Packman is exiting at a pretty good time. They won’t be able to hold on to the distinction of “2nd biggest online music retailer” very long (if they haven’t lost that distinction already..).
Amazon will be making a serious push for increasing market share over the next few years. Watch it!
As some others have pointed out, content is a big difference. eMusic does not have major label tracks. That alone is a big reason for the difference between eMusic and iTunes.
Another difference is reach. iTunes operates in some big music markets that eMusic is not in — such as Japan and Australia.
And then there is Apple’s marketing budget.
Put them together and you have plenty of reasons why eMusic sells less than iTunes, and it has nothing to do with the business models.
I think subscription models, like eMusic, has a very good chance of taking off. Any ISP-based MP3 subscription model, for example, will have a similar structure. It’ll happen in a European country before it happens here (see UK-based Datz Music Lounge as an example).
I was a subscriber to eMusic since nearly its inception, but I had no idea it had distributed 250,000,000 tracks – that’s phenomenal.
The eMusic business model is fine, the challenges and threats to their subscriber base are the old ones: catalog size and getting rights to distribute songs as MP3 (the content fight with the record companies). eMusic has not had the success with the labels that Apple has in getting the latest and hottest releases. Heard a great new song on the radio? eMusic probably does not have it. They have great stuff, but you may have to have to look around and sample to find things you dig.
eMusic carries some incredible music from the longer tail, a combination of music which is not as pop-popular, from other countries, from newer artists looking for a tipping point, or older stuff. I got my Moby collection (everything he’s done I believe) and ELP via eMusic, for example, and the cost per track was something like $20/75, or about 27 cents each.
The other threat to eMusic, of course, is the macro economic conditions, but whether this is more of a risk for eMusic or iTunes I cannot say. On iTunes people may buy fewer tracks during tough times, on eMusic people may not renew their subscriptions.
I vastly prefer the eMusic interface, delivery, and music format (MP3) compared to iTunes, but they carry different catalogs of music. They usually provide a free trial where you get a bucket of free sings, and the trial is absolutely worth doing: if you find eMusic carries music you want, you’ll probably enjoy a subscription.
Eric
Lot’s of misinformation about eMusic in this post and comments thread.
#1 – Yes, there is a monthly subscription fee – but their product is DRM-free downloads. Your monthly fee buys you a fixed number of downloads each month.
#2 – If you’re not into Hilary Duff and Rihanna, or whoever the mainstream flavor of the month is, eMusic has plenty to find and enjoy. I’ve been a subscriber for over two years, and currently have about 80 albums in download queue. I seem to find more stuff I want to download each month than I can.
#3 – @Erick: “And the best part of the business is that eMusic only pays the labels for the songs its customers download.” Do you have any numbers to support that this is the best part of the business? Do you have any indication that there are significant numbers of unused downloads each month? I know that I typically use all of my downloads in the first day or two of the month.
#4 – A super great bonus feature of eMusic are the continuous DJ mixes. You can often find 70 minute long DJ mixes by the likes of Dave Seaman, Nick Warren, Gui Boratto, Hernan Catteneo, etc. that only count as one of your downloads. So you basically get an entire CD for about a quarter.
@ Greg
#2 – If you’re not into Sprengjuhöllin or Flying Rock Eater, then you probably won’t find much to enjoy about eMusic
#3 – I have personal experience on this one. I wanted eMusic to work, but due to #2, I could never find my alotment of downloads each month. And since you can only carry over a certain amount of unused downloads into the next month (eg 30), then yeah, you end up paying for nothing, which sucks it. I spent hours hunting for music and invariably came up empty.
I’ve moved on to AmazonMP3 with which I am *much* happier.
This article also does not entail that there are songs on eMusic that are NOT available on iTunes. I listen to mostly “independent” music, often times music that is not popular in the US, but is quite popular in Europe. I’ve been an eMusic subscriber for the last 2 years. While I wish I could carry over my downloads from month to month, I can still find music to download. Just today I found three albums that I’ll be getting tonight. The model is not perfect, but great for those of us who want to get legal DRM free music that iTunes just doesn’t offer.
(30 * .25) + 12 < (30 * .99) by a pretty wide margin.
I find it odd that this announcement was mentioned, but the Zune announcement where you can download all you want and keep 10 songs (DRM free) for $15/month was ignored. Techcrunch usually trumpets new music business models, but is quiet on this one.
Am I missing something here?
The zune music subscription service only has 1200 users across the US and Canada, and zune users are few and far between, so that’s probably why…
How many songs have been downloaded on p2p networks since Napster 1.0? I bet it puts iTunes in the shade.
I don’t usually bother to chime in on write-ups like this, but how does being #2 equal failure? I’ve used both services and eMusic has a few key advantages for people who are comfortable outside the big 4: no DRM, since their inception on anything (that’s big, still) , reasonable pricing; why are we still playing Sam Goodie prices on digital media?, DRM-free means portable I download my music and sync with any device I own with no hassle, purchased tracks can be re-downloaded; if you lose your iTunes collection I expect you’ll be buying it again.
But I think the most important issue you choose to side-step is the most telling: the two companies serve different markets and their both leaders in their respective market. To me that just doesn’t smack of failure.
The real story here is, with a little luck and a little savy eMusic has
much more room to grow.
I agree with most of the posts above. EMusic is a great resource if you’re a true music aficionado, and in my humble opinion, there’s a lot more quality in the indie scene for different genres and they’re carving a great niche. 250 million subscribers is huge, alot more than i expected really. Kudos to them!
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another new player in terms of adopting the subscription model is datz, although it’s a one off cost rather than a monthly subscription and unlike the other’s is MP3 and yours to keep. although if you’ve got emusic i suspect the two packages have a lot of the same content?
I thought that the success of a business is determined by it’s growing profit margin, not on how big it is compared to other business. It looks like eMusic is growing nicely for what it does and 70 million in revenues is a very respectable medium-sized business income, so I don’t get why that does not bode well.