Indie music download subscription service eMusic is getting an overhaul. Individual artist an dalbum pages already have more of an AJaxy feel and incorporate YouTube videos and Flickr photos. On Friday, its homepage switched over to a new design centered around a new recommendation engine powered by MediaUnbound. Now, when you sign in as a member, you are presented with a grid of “Music You’ll Love” made up of personalized recommendations. You can also sort by “New Arrivals,” which tries to give you new music that you will like, as well as standard “Best Sellers” and “New and Noteworthy” albums selected by eMusic’s editorial staff.

Helping members find new music they will love is the key to eMusic’s business, and it needs to do a better job. eMusic has 400,000 paying subscribers who have downloaded 250 million songs since 2003. Members can download anywhere from 30 to 75 tracks a month before they have to start paying on a per track basis. Once people stop finding new music they want, they are more likely to cancel their subscriptions. Better recommendations would reduce that churn.

eMusic wants to be your hipster friend who tells you about the latest, greatest bands before you hear about them anywhere else. “How do we act like that hipster friend or that corner record store?” asks senior vice president Jack Welde. He argues that the new recommendation engine will help them do that.

Music recommendations are a hard nut to crack, especially from a cold start when the music service doesn’t know anything about your tastes. The site’s old recommendation engine provider, ChoiceStream, just wasn’t cutting it. The MediaUnbound recommendation engine combines both algorithmic and human inputs to try to come up with better recommendations right from the get-go. It also is supposed to get better over time, of course.

On the algorithmic side, the recommendation engine looks at every action you take on eMusic, including searches, listening to 30-second previews, saving albums for later, and actually downloading albums. A download is weighted more than a preview. It builds a model for each member that takes into account genre preference, popularity interest, newness interest, experimentalism and expertise. MediaUnbound also takes into consideration global music preference patterns across P2P networks, Web radio, blogs, and other MediaUnbound music customers.

On the human side, MediaUnbound has more than 40 music analysts that actively tweak the recommendation engine, and add in new music recommendations. They act like the independent record store clerks of yore. In fact, some of them used to be record store clerks, as well as DJs and musicians.

How are MediaUnbound’s music analysts different from the ones who classify music at Pandora? MediaUnbound CEO Michael Papish answers me via e-mail:

Pandora has created a feature factory of humans chained to headphones attempting to objectively rate the sonic features of every song ever made (well, ok, only ~200k hand-picked songs). We think this is a horrible use of use of the creative, constructive, opinionated, and (sometimes argumentative) resource called the human music geek.

In fact, he had the following critique for all the competing music recommendation technologies out there from iTunes to iLike:

—Pandora. Purely sonic-based as determined by team of human experts classifying every song into features. Not scalable. One-trick pony only able to determine that one song sounds like another song, not anything about user preference or other personalized recommendations.

—iLike. Purely algorithm-based utilizing only data from other iLike members. Service is meant to be embedded in a widget, not a full-fledged recommendation platform across an entire music service.

—Last.fm. Purely algorithm-based utilizing only data from other members and their scrobbles.

—AmazonMP3. Utilizes the Amazon recommendation platform which is based mainly on collaborative filtering. We assume they use some human tweaking, but they’ve never publicly stated this fact. The AmazonMP3 recommendations are crippled because they are based on regular Amazon recommendations which are very focused on closely related items (i.e. Bob Dylan’s _Blood on the Tracks_ returns Bob Dylan’s _Blonde on Blonde_. duh!)

—iTunes Genius. Sub-standard, algorithm only – developed in-house. Only uses iTunes data. Steve Jobs has creepy man crush on John Mayer and Jack Johnson.

—MySpace Music. Crazy flashing yellow buttons that randomly start playing Buffalo Springfield songs when you visit your friend’s page.

His critiques are more or less valid, but I’m not convinced he’s come up with anything better. With very limited testing, I found the recommendations to be hit or miss. I will reserve judgment until I play with it some more. If it is an improvement from before, then at least that’s progress.

But my big beef with eMusic is twofold: it offers an incomplete catalog (no majors) and you can only listen to a 30-second preview (unless you there is a YouTube music video available, which is embedded on artist pages—go figure). So I find myself toggling back and forth between sites with full streaming and eMusic to figure out whether I wanted to actually download an album. In an era when limitless ad0-supported streaming is now the norm, eMusic will remain a niche music provider. But if it can somehow figure out how to surface new music that no other service can, it will remain a valuable resource for hard-core music enthusiasts.

What is your favorite music recommendation engine and why?

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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.

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The first major label to take the plunge was EMI Music, which teamed up with Apple in May to release its entire online catalog through a DRM-free area of the Apple music store called iTunes Plus. Also in May, Amazon announced that it would launch an MP3-only online music store with songs from major labels by the end of the year.

Just this week, Wal-Mart began selling unprotected MP3s of many Universal Music Group and EMI songs through its website. RealNetworks, MTV, and Verizon have also teamed up to launch Rhapsody America, a music service catered toward mobile phone users that will provide DRM-free downloads, in the near future. Even LimeWare, a P2P software maker, has recently announced that it plans to be part of the DRM-free movement (this time legitimately).

Some of the major music companies have been more tentative than others. EMI has thrown the most weight into the DRM-free movement by unlocking all of its online music. While Universal has agreed to release thousands of unprotected albums and tracks through several online retailers – RealNetworks, Google, Best Buy, Wal-Mart, Amazon, and gBox – it has done so on a trial basis that will extend only until January 2008, at which point the company will decide whether it thinks DRM-free music boosts or hurts sales. Sony BMG Music Entertainment and Warner Music Group are still standing on the sidelines of the DRM-free movement and appear to be waiting to see how EMI and Universal fare by opening up.

While the progression of things suggests that all online music will eventually be DRM-free, there’s no need to wait to get in on the DRM-free action. Check out the DRM-free online music retailers below to get better quality music that plays on virtually any handheld music device, on any computer, and with any music program. The retailers covered provide music from both major and minor labels.

Update: We have been informed by a RealNetworks representative that “there are no current plans for a major overhaul of Rhapsody’s store front when Rhapsody America launches” and “there are no plans to increase the number of DRM-free songs available for sale. The number will only change if Universal Music Group decides to offer more albums.” So don’t hold out for Rhapsody America, because apparently the DRM-free offering of that service will be the same as that of the current version of Rhapsody.

iTunes Plus

Apple is the eight hundred pound gorilla, controlling something like 70 to 80% of the online music retail market. CEO Steve Jobs predicted in May that over half of the songs provided through the iTunes Store would be DRM-free by the end of this year.

While most of us are familiar with the iTunes Store, you may not have noticed the discreet link to the iTunes Plus sub-store under “Quick Links” on the store’s homepage. iTunes Plus provides 256kbps DRM-free AAC files for $1.29 per song or $9.99+ per album. That’s a 30 cent per-song premium over DRM-protected songs sold through the iTunes Store.

Already bought a ton of music from Apple? You can upgrade your DRM-protected collection to DRM-free for 30 cents per song, 30% of the current album price per album, and 60 cents per music video. Of course, you’ll only be able to upgrade those songs and videos in your collection that are offered through iTunes Plus.

Artists available on iTunes Plus include Coldplay, The Rolling Stones, Frank Sinatra, Gorillaz, and The Beastie Boys.

WalMart

Wal-Mart may not be as sexy as Apple but the retail giant does provide DRM-free music from both Universal and EMI. On Tuesday, Wal-Mart began offering 256kbps MP3 versions of much of its music for 94 cents per track or $9.22 per album. These DRM-free offerings are in addition to Wal-Mart’s previous 128kbps DRM-protected WMA files for 88 cents per song or $9.44 per album.

One big downside to Wal-Mart’s online store: you can only download music using a Windows machine. This limitation alone will make it very difficult for Wal-Mart to compete with Apple for mind share.

Artists include Amy Winehouse, Maroon 5, Pink Floyd, Nelly, and Bon Jovi.

gBox

Feeling generous? gBox, which we covered recently, lets you buy DRM-free music not just for yourself but for others as well. gBox users can create music wishlists that can be embedded in other websites and used by friends, family, and lovers to buy music for the list creator.

Universal is the one major label that has agreed to sell music DRM-free through gBox. Songs are 99 cents each and albums are $9.99 each.

Unfortunately, as with Wal-Mart, Mac users who would like to download from gBox are out of luck. This will put a damper on gBox’s otherwise highly viral business strategy of allowing wishlists to be embedded in social networks.

eMusic

You may not have heard of eMusic but the service, with over 2.5 million songs available, is second only to iTunes when it comes to online music sales. Founded in 1998, eMusic was the first company to sell MP3s, which it continues to do on a subscription, rather than per-unit, basis.

Subscriptions come in two flavors: $9.99 per month for up to 30 downloads per month, or $19.99 per month for up to 75 downloads per month. The coolest thing about their subscriptions: once they end, you still get to keep your music, unlike with other subscription services such as Napster. New users also get 25 songs for free.

While eMusic has a long tradition of selling DRM-free music, they still have yet to get in on any major label action. You won’t find any music from Universal, EMI, Sony BMG, or Warner here. But if you eschew popular music anyway, eMusic could be perfect for you.

Audio Lunchbox

If you like eMusic, you’ll probably like Audio Lunchbox as well. The company’s more than 2 million songs are DRM-free and completely indie.

Customers can choose to pay for their music on a subscription or per-unit basis.

Subscriptions range from $9.99 per month to $250 per year. On a per-unit basis, songs are 99 cents each and albums are $9.99 each.

All downloads are 192kbps VBR MP3 files.

AmieStreet

AmieStreet, which we have covered many times, like eMusic and Audio Lunchbox provides DRM-free songs from artists without major label contracts (although, AmieStreet has teamed up with Nettwerk Productions to provide music from big names like Barenaked Ladies and Sarah McLachlan).

The most interesting thing about AmieStreet is its pricing scheme. Tracks individually cost anywhere between 0 and 98 cents. Music offered on the website starts off free but goes up in price as more people download it. Therefore, the price reflects the actual popularity of the track in a similar spirit to an auction.

The tracks sold on AmieStreet are always in MP3 format, but the bit rate can vary as artists contribute songs directly to the website.

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