EMUSIC'S PLAN COULD HURT INDIES
UPDATE: Be sure to read the comments section including an eMusic rebuttal and join the discussion.
While retaining 89 to 99 cent pricing on most tracks, Amazon is experimenting with lower prices on short term special album downloads. Taking a page from Wal-Mart's blue light specials which kept shoppers roaming the store to see where the flashing light would land, on Wednesday morning Amazon MP3's "Daily Deal" offered a download of Coldplay's X&Y for $1.99 and Stevie Wonder's #1's album at $2.99. "Friday's Five" will offer five albums at $5 each.
eMusic, on the other hand, announced a price increase. Effective July 17th, eMusic's monthly Basic Plan will increase $2 for all subscribers from $9.99 to $11.99. UK rates go to 10.99 GBP and EU prices jump to 13.99 Euros. Canadian pricing which was already higher will not change. In a move to keep existing subscribers, they will recieve 40 instead of 30 downloads each month and a one time 10 track thank-you bonus.
ANALYSIS: eMusic's price increase comes at a time of slowing subscriber growth for the service and could be part of an attempt to boost the balance sheets in preparation for the IPO or sale that its venture capital owners...
have sought for so long.
It is doubtful that many existing subscribers will leave over a $2 increase particularly with a 10 track monthly bonus. It will be interesting to see, however, if jumping 20% above the $9.99 sweet spot will hurt new subscriber growth further.
Either way, once again, eMusic's move to satisfy customers and clean up the balance sheet comes at the expense of indie record labels and artists. The new pricing effectively lowers per track prices from $33.3 cents to 30 cents for 400,000+ existing subscribers which will probably lead to lower track payouts to labels. And since the one time 10 free track bonus can come from anywhere within eMusic;s catalog, how will the effected artists compensated?
Large indies Epitaph and PIAS showed their concern recently by pulling from eMusic and joining a slowly growing group of labels unhappy with the service's much lower than industry average payouts.
Amazon, on the other hand, appears to be giving both labels and customers what they want - variable pricing. Offering an older Coldplay and Wonder title at deep discount just as the former launches an album and tour and the later makes a rare EU jaunt can only drive sales of their entire catalogs and music lovers to Amazon to check what's on sale each day.
