Indie Competitor Fills an iTunes Void
Sept. 14, 2006— -- While iTunes, Apple's online music store juggernaut, made news this week when it expanded its offerings to movies, an upstart, nearly no-name competitor has staked its own claim in the digital music world by giving music fans cheaper selection and "no strings attached" technology.
Although many people have never heard of it, eMusic is the second leading digital music retailer after iTunes, outpacing song sales of better-known providers like Napster, MSN music and Rhapsody. The company has achieved steady growth by catering to indy music fans and offering users the flexibility of sharing or burning music files as many times as they like -- a benefit not available on iTunes, which limits the amount of times a file can be shared.
EMusic's 200,000 subscribers pay $9.99 a month, which allows them to download 40 songs from the nearly 2 million song selections in the eMusic library. If users download all 40 songs, each track costs less than a quarter -- a hefty discount compared with Apple's price of 99 cents a song.
Lagging iTunes, But Making Strides
As a competitor, eMusic has a way to go before challenging iTunes, which in its three years of existence has sold 1.5 billion songs. By comparison, eMusic has sold only 85 million songs in the past three years. But its share of the digital music market has grown from 6 percent to 15 percent in the past five months, and it expanded to Europe just this week.
Fans of independent music have spurred much of eMusic's popularity, as the service offers music only from independent labels rather than major record companies. Alongside classic singers like Nina Simone and Johnny Cash, shoppers can find indie rock darlings like Sufjan Stevens and Drive-By Truckers, the hip-hop of Memphis' Triple 6 Mafia and Sri Lankan rapper MIA..
"There is a market for independent music, and it could be much larger than it is. It doesn't get a lot of physical presence" in music stores, said eMusic CEO David Pakman.
But the most attractive part of eMusic is likely not its barely outside-the-mainstream selection or bargain basement prices but its refusal to use digital rights management, or DRM, on the music files it sells. At many other online music retailers, like iTunes and Rhapsody, DRM tags are attached to downloaded songs to restrict the use of music files -- from the amount of times a file is shared or burned to CD to what devices it can be played on.
DRMs were developed to prevent piracy of copyrighted works -- a serious area of concern for the music industry, which for financial reasons does not want files shared and burned onto CDs for free.
The record labels eMusic partners with tend to be smaller operations looking to spread their products to as many listeners as possible. Pakman said the smaller, independent labels so far haven't expressed concerns about the free sharing of unrestricted tracks.
"There are only four labels that are concerned about that," he said. The major labels "seem to prioritize anti-piracy measures higher than digital sales."
Fans Looking for Diverse, Offbeat Music
EMusic's customers tend to have an appreciation for diversity, from classical and jazz to indie rock and punk, Pakman said. That appreciation, coupled with low prices, encourages subscribers to experiment with music choices.
"That's good for the music industry," he said.
Josh Mogerman, a 35-year-old pop music aficionado in Chicago, has been using eMusic for about six months. Mogerman uses both eMusic and iTunes but prefers eMusic because of the restrictions placed on the iTunes songs.
"The iTunes DRM limits the number of places I can use those purchased songs. EMusic's MP3s are just easier. I can use them on any player, burn them to CD, and I can shift them around far more than the limits imposed by iTunes," Mogerman said.
"In the end, the restrictions for eMusic are a lot easier to live with than those on iTunes," he continued.
Despite the fact that eMusic gears itself toward an "indie group," Mogerman said the slimmer song selection, compared with iTunes selection, can sometimes feel limiting.
"I'd love it if they were able to broaden their reach a bit," he said. "It's a drag to read a great review online, only to hightail it over to eMusic and find it unavailable."
For Smaller Labels, Great Exposure
Many independent record labels appreciate the audience, filled with people like Mogerman, that eMusic reaches.
"We're looking at everyone who's doing this," said Rian Murphy, sales manager of the Chicago label Drag City, which sells songs on iTunes and Musicnet as well as eMusic. "Along the way we're getting e-mail from members of the audience, saying 'this is where your kind of stuff is happening.'"
Drag City boasts indie rock fixtures like Bonnie "Prince" Billy, Pavement and Stereolab. The label began to sell songs on eMusic a few months ago, releasing albums from such artists as Joanna Newsom and Silver Jews.
Murphy said the label is unconcerned about eMusic's lack of digital restrictions.
"We would prefer that if you download something like that it would be able to play any format. … As a consumer myself I would feel ripped off," he said. "When we sell a vinyl record there are not turntables that it can't play on."