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My Problem Wth eMusic


I've written a lot over the last couple of years that has been critical of eMusic. Some Hypebot readers and of course eMusic's have taken me to task for my comments.

Let me be clear. I think eMusic is a great concept. Indie music needs a place where it's king. Lower track prices often lead to music discovery and eMusic does a better job than most of encouraging discovery with reviews, recommendations and more.

My problem with eMusic is not from the consumer's perspective. It's the artist and the labels that I'm worried about. To keep the math simple:

eMusic collects 30 or 40 cents per track downloaded. Because some subscribers don't download their monthly allotment, eMusic pays 30-35 cents per download. From that 35 cents most labels pay 10-20% to a distributor. Using 15%, that means the distributor pays that label 29.75 cents per track. The current statutory rate that songwriters receive is .091 cents per song, leaving just over 20 cents to be divided between the label and artist. That's less than half the net payout from a similar iTunes transaction.

To be fair, some contracts reduce the statutory rate paid by 25% or more. But most of the labels that left eMusic do so because they couldn't meet their contractual obligations to artists and songwriters. And if some labels say it; I have to wonder if it isn't true for others.

Then there's the free goods. The 50 tracks they give away to new subscribers and the 10 tracks they just gave to keep loyal customers. These are select freebies pre-arranged with the labels. These are tracks from anywhere in eMusic's substantial catalog.

I've seen eMusic statements and as far as I can determine, eMusic does not account for free goods to the labels. And they certainly do not compensate the songwriter or the artist for the giveaways.

My problem with eMusic is that its business model exploits indie music.

All product – new and old, hit and obscure – is sold at a price so cheap that many labels (and thus artists) can't pay their bills. And if cheap isn't enough enticement, eMusic will throw in free tracks without compensating the artist. Can this be good for indie music?

TOMMORROW: How eMusic Can Save It's Soul…and Help Indie Music.