NEW YORK (CelebrityAccess MediaWire) — eMusic had a strong start and has built a head of steam but the online music retailer may be faltering. With over 2,000,000 tracks available on its website, a subscriber base of close to 300,000 users and 100,000,000 tracks sold as of December 2006, eMusic, by all appearances, has positioned itself as a strong 2nd place challenger to Apple's iTunes music store.
Seemingly taking a page from Bob Lefsetz' playbook, eMusic has eschewed the path preferred by the majors – offering DRM-free music downloads from an impressive array of indie labels for around 30 cents a track, about a 3rd of the price at iTunes. This model seems to be working too – as reported in music blog HypeBot, the average iTunes user downloads 7-10 tracks a year, the average eMusic user is purchasing 20 tracks a month. Additionally, the low prices contribute to more experimentation with 91% of eMusic's subscribers reporting that they are more willing to try music they haven't heard before and its hard to imagine that these equations would change if a greater variety of music was available to download on the service.
And that's ultimately where eMusic may fall short. With EMI's decision to release DRM-free music on iTunes and with every other major at least privately considering following suit, eMusic will face a challenging future.
"Retailers are defined by what they carry," eMusic VP of Corporate Communications Cathy Halgas Nevis told Hypebot "As the major labels decide to offer their music in the MP3 format and as other competitors come into the market, we will continue to focus on our target customer and provide them with the music that they are most interested, in a well-priced service. To continue our growth, we will continue to seek out and license music from the most remote regions of the world and bring even more diversity to the sales selection of our customers. We are looking at additional markets and product lines – there are other areas, such as video, that are interesting to us."
This may be harder to realize than it sounds though – there is trouble among the rank and file indie labels that make up the mainstay of eMusic's offerings. Victory and Urge have already jumped ship and other labels such as Red House and Tzadik are rumored to be considering following suit. eMusic will also be challenged in attracting offerings from major labels with the steep discounts they offer for music – some existing contractual obligations with the major labels might make it impossible to even consider eMusic's pricing structure.
All of these problems can be overcome, or so hopes eMusic. One possible strategy for the online retailer may be offering expertise. eMusic offers extensive music charts, editorial columns and forums to guide the uninitiated and expert alike in finding music to purchase. If it will be enough to secure their place in the new digital landscape however remains to be seen. – CelebrityAccess Staff Writers