7.31.2006

eMusic's model proves lucrative

Either the hubbub surrounding The Long Tail has naturally brought tangential news stories to the fore, or perhaps I'm just seeing things through that new lens as I work my way through the book, but a story in today's USA Today again points up a shift in industry toward niche markets thanks to technology.

In this case, eMusic is the subject. The company offers subscribers the opportunity to download mp3s of songs with no DRM attached. That's usually the focus of stories about the company, and this one is no different. But as usual, if you read beyond the first few paragraphs, the real story is told.

eMusic has carved out an 11 percent market share in the digital music sales business, second to iTunes' massive 67 percent share, according to the article. But eMusic has done so with no major label offerings. Instead, the company offers more than 1 million songs from independent labels, essentially leaving the big hits to iTunes and other services. Far from being a losing proposition, the company sells about 5 million downloads each month. That's a healthy long tail.

Still, according to USA Today, CEO David Pakman does hope to lure major labels, but not necessarily with the idea of offering another place to sell their hits. Instead, he has proposed giving eMusic access to labels' back catalogs that aren't otherwise available so they can be marketed to eMusic's older, more passionate music fan base.

"The results would be dramatic," Koch Records head Bob Frank tells USA Today. "eMusic would market the hell out of those songs."

Of course, the answer has been "no." It's frustrating to see the labels essentially turn down free money with the misguided notion that they would lose something in the process. The future is based on choice, and the more people have, the better it will be, particularly for entertainment companies.

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