Digital Music

My Problem With eMusic

Emusic
HELPING INDIE MUSIC BY EXPLOITING IT

PLUS: HOW EMUSIC CAN SAVE ITS’ SOUL, AN INSIDER’S VIEW

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?

MORE: HOW EMUSIC CAN SAVE ITS’ SOUL, AN INDUSTRY INSIDER’S VIEW OF EMUSIC

 

Share on:

36 Comments

  1. I am an artist myself and am actually trying hard to get my catalog onto eMusic via CD Baby. I think it’s a fantastic service from a consumer standpoint, like you say, but I am also fine with it as an independent artist. In an environment where music is free for all those who don’t wish to pay, I am glad that the eMusic community exists. Yeah, they don’t pay a lot, but at least it’s something, and given the effective way in which they cross-reference artists, I am also hopeful more people will discover my music.
    In other words, I like eMusic – as a subscriber, and – I think (time will tell) – also as an artist.
    -Mark (www.theenrighthouse.com)

  2. I’ve always noticed an anti-emusic slant to hypebot, at least you’re coming clean about it.

  3. emusic is run by banks. they don’t care about musicians, or they would pay out more. emusic just wants to build a user base and sell it off.

  4. For my part, I use eMusic nearly exclusively to pick up music that I probably wouldn’t buy otherwise. I suspect that this may be the case with a lot of their users. Given this, and also given the negligent marginal cost of digital distribution, I have a hard time buying the argument that it hurts labels. Either way though, it certainly isn’t hurting artists, who are creating new fans that will spend their money on live shows, merch, etc.

  5. Bruce, it’s hard to argue with you since you’re in the music biz and I’m just a fan. But I’m going to try anyway 🙂
    I think it’s a bit misguided to judge the value of eMusic to artists based solely on a comparison of per-track payouts. Obviously, iTunes and their ilk will pay more per track than eMusic ever will.
    But will iTunes sell as many tracks from indie artists than eMusic? I doubt it. eMusic’s strong editorial, knowledgeable users, free samplers and cheap prices encourage discovery and exploration of new artists.
    Before I joined eMu, I bought far less than one new CD per month. The price of a CD simply didn’t justify taking a risk on a band based on a blog rec or hearing a single.
    With eMusic, I download 65 tracks per month. That’s waaaaaaaaaay more music than I ever purchased before. And most of the music I grab is from artists that I have either never heard of or had little exposure to.
    The recent departure of the ANTI label from eMu works as a good explanation of my point. Since the label’s departure, they’ve released several CDs that I would have downloaded had they still been a part of eMu: Man Man, Devotchka, Joe Henry and Nick Cave. But at $10-$12 a pop, the only one I actually bought was Man Man’s (because I’m a huge fan).
    So, does the $10 I spent with ANTI on one CD justify losing the money they would have gotten had I downloaded all four from eMu?
    Finally, in reference to John’s post: He has no idea what he’s talking about. After subscribing to eMu for several years, and reading hundreds of pages eMu-generated editorial, it’s obvious everyone there loves music and would like nothing more than to see the artists they sell thrive. If they hate musicians so much, how do you explain their recent “eMu Selects” program?

  6. Emusic is owned by bankers, that is correct, and they have been seeking to sell it off for some time, so no, they don’t really care about artist payouts.
    There are new and better alternatives to eMusic out there, for artists: Nimbit, Myxer, Mozes, Digistation, 7Digital and of course Tunecore.
    Like I told the CEO of Sellaband, either you can really pay out the rates that we expect (75% or more for unsigned), make changes to pricing and other areas, or we’ll all go elsewhere.
    We don’t need you for distribution anymore: you need us (content).

  7. I’d have to agree with what anose posted. I buy a lot more music total because of emusic. I buy albums from emusic that I probably would not buy at all from another, more expensive site or store.

  8. Sorry, but $1 for an mp3 is a rip-off, IMO, from a my standpoint as consumer. As is the iTunes standard of $9.99/mp3 album. I’m probably spoiled by emusic’s rates, but honestly, if I didn’t have them, my purchases of music per month would go way down.

  9. My problem with eMusic is how they’ve become extremely marketed and corporate. It feels like a Columbia House for mp3’s. When I open a box of soap (example), I don’t want to see eMusic advertisements slipped into the box. I don’t want to see eMusic logos plastered on The Love Guru DVDs because of some lame partnership with a movie house. And I wonder what bands like Arcade Fire feel about their album images being used for advertisements? (I’ve seen lots of magazine ads and other advertisements with band album tiles.) I just feel like they are about 6 months away from slipping coupons into ValPaks or local grocery store coupon books in the newspaper.

  10. $9.99 for a MP3 album (iTunes) is atrocious. Usually you can buy the entire album for a couple dollars more and have a physical copy to do whatever you want with. Or, just go to Amazon and pay the same and get DRM-free.

  11. The only question labels have to answer for themselves is whether or not their total profits (over some sensible business period) are higher with or without emusic. The answer is the only thing that should guide participation. Per-track payout comparisons, ignoring the spectrum of consumers and valuations for the label’s product, are economically meaningless.

  12. I’m sure that a lot of labels’ thinking is that if they aren’t on eMusic, then the demand for their catalogue will be greater on other sites where they are getting paid more per download. Therefore, people who are downloading will go elsewhere to get an album and the label will get more money. If a label gets, say, 30 cents/song on eMusic, they have to sell an entire album on eMusic to compete with selling 4 or 5 songs on iTunes. Sure, they may technically sell MORE songs on eMusic compared to iTunes… but they still want that “per track” number that iTunes offers. This is why you see a lot of new releases showing up on eMusic several months after release date. They want to capitalize on the demand for the album on higher paying services. It’s not a dumb move.
    And the belief that the artist’s well-being is the forefront of concern in this situation is completely delusional. It’s a nice thought, but simply cute and naive. Just because an indie label might be run by aging hipsters in used clothing doesn’t mean they aren’t out to make a buck just like the suit in the office on the next floor.

  13. I agree with the comments that suggest that eMusic is great for fans. And those who suggest that per track $ should not matter to labels missed my point. If a label can’t meet its contractural obligations to songwriters and artists then “total sales” doesn’t matter.

  14. Bruce — by contractual obligations, do you mean that a label/artist contract specifies that a label guarantees an artist “x” amount of money for an album they release, or something along those lines? Just curious, because I have no idea how those contracts work.

  15. I feel like I mention this anytime this subject comes up, but are we talking hard facts here or speculation? I’ve seen the iTunes breakdown before, but I was never under the impression that was official. I want to say I’ve seen the eMusic breakdown from someone associated with the company, but maybe not.
    Also, I really have to agree with Paul and Vincent above. Especially Paul’s last point. I know several bands who were signed to a label that distributed through iTunes. To my knowledge, none of those bands ever saw a cent from those downloads. In fact, the label folded a few years ago and the tracks are still available for purchase. I’m still not entirely convinced artists get a fair shake from downloading at all, unless they are doing it for themselves or big enough to have lawyers watching things for them.

  16. Paul, yes in some instances a label does pay an act “x” per sale. In many other contracts the split is more arcane. Either way the amount received is far less than iTunes, et al.
    And don;t forget about the free goods.

  17. No one gets paid to make records anymore. It’s all about touring, merchandise, adverts. Flaming Lips in a ranch salad dressing commercial? Sure! And with $4.25/gallon of gas, that touring income is gonna be dwindling fast. Some of your favorite bands might soon be selling new LG phones on your televisions just to make a minimal living.
    It’s an interesting time where the internet has given a lot of artists the ability to market themselves with a minimal amount of middle men. Putting all faith in their ability to reach a consumer, and for that consumer to pick them out of a field of 1200 pages of “new artists” on their favorite mp3 website. How do they stand out? I know, do an iPod commercial! Or, trust that the end user has the taste to be able to pick and choose quality over quantity, therefore, putting the responsibility in the musician’s hand to make a product worth purchasing (or, stealing.)

  18. Bruce: “If a label can’t meet its contractural obligations to songwriters and artists then “total sales” doesn’t matter.”
    I said total profits, not sales. And if they can’t meet their obligations with emusic sales, hm, I guess they leave emusic! Wow, inconceivable, that’s never happened before!
    Bruce, your argument/complaint just doesn’t make sense, in light of the lack of forced transactions between labels and emusic.
    Now, that’s not to say that labels should view the services equivalently. As noted above, it’s a wise strategy to maximize profit with time – I definitely think labels should generally withhold new releases from emusic to maximize their initial ‘hype’ period (if it applies), then go after the consumers using lower valuations with emusic some time after (probably on the order of 6ish months, I’m guessing).

  19. “There are new and better alternatives to eMusic out there, for artists: Nimbit, Myxer, Mozes, Digistation, 7Digital and of course Tunecore.”
    please explain how myxer and mozes (give away music, pay artists nothing) are better alternatives to emusic (sells music, pays artists)

  20. Bruce, you wrote “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.”
    Unless you’re going to argue that digital sales is a zero-sum game, in which a sale at emusic replaces a sale somewhere else, your point doesn’t stand up. You imply that there’s a marginal cost to each emusic sale, so selling songs cheap means that bands can’t pay the bills (for providing those downloads. Actually, the fact that bands have bills to pay has no correlation with how many downloads they sell, or at what price those downloads are sold. The downloads either bring the band cash or they don’t. The bills they have to pay (rent, gas, studio costs, etc) will be there regardless.

  21. So I’m sitting here reading through the entire thread, and it seems like there’s one small, yet critical point, missing:
    eMusic’s marketshare compared to iTunes is still not all that significant. With the skimpy payout given on either side (even if iTunes is double eMusic, 2x skimpy is still skimpy), the best an indie artist hopes for from either service is decent exposure.
    To that end – eMusic loses out not only because it’s smaller, but because it’s narrowcasting its music. The same people that use eMusic are the people that’re stocking its inventory. The “mass” audience is on iTunes ‘cuz they don’t know any other way to make the music jump onto their iPods.
    To reiterate, selling on eMusic is kind of like preaching to the choir. You get the point across, but only to the people who already drank your kool-aid. Man I love mixing metaphors …
    In this day and age, with margins getting smaller and smaller, and buzzwords taking the place of logic, labels and companies simply can’t afford to do business the same way they have been (old news), and artists/musicians needs to be more self-reliant and resourceful (more old news), so is this entire discussion a moot point?
    Bottom line: you’re not gonna make millions on eMusic, and you’re not gonna on iTunes either. So complain all you want, but don’t expect much change.
    Online success (real stadium-shaking success) will forever elude you. Unless of course, you can reach that pesky demographic that loves High School Musical. And if you do that, will you still have a soul? No one ever refers to well-fed musicians, only starving artists…
    My $0.02 …

  22. I love eMusic. I mean, I don’t love it like I used to, but it is a good avenue to pick up new listeners. So it doesn’t pay out as much? That’s fine. It beats people downloading the tracks off of Soulseek. eMusic does function as a good community, and I think that is positive. But I am not extremely profit oriented in regards to music, so my perspective may differ drastically from others.

  23. Charles Powne wrote:
    “Unless you’re going to argue that digital sales is a zero-sum game, in which a sale at emusic replaces a sale somewhere else, your point doesn’t stand up.”
    I agree.
    My purchasing decision works like this:
    – Some CDs I find used or in bargain bins (occasionally, once twice a month)
    – If it’s one of my favorite 2 or 3 bands, I will buy their CD or vinyl new. (once, twice a year maybe)
    – If I want a release that does not fall under the former point, I check eMusic. If it’s there I download it. (once a week or more)
    – If it’s not on eMusic, then in 95% I will try to find it for free on torrent sites, private and encrypted FTP sites, or will simply ask friends if they have it. (constant stream)
    – Only if I cannot find a release anywhere, but I really want it, will I look it up on iTunes.
    – I never buy single track downloads, I never use any service at all other than emusic and itunes, and I never ever order CDs at a store.
    Finally, before I was an eMusic subscriber I bought a whole lot less music. What I didn’t buy on emusic I didn’t buy as CDs or at itunes, but rather I donwloaded illegally. Why do I use eMusic? Not because I feel morally guilty, but because I really like it as a tool to discover new music and I find its prices totally reasonable.

  24. This is a good debate and I’ll try not to re-hash points others have made.
    I can’t say eMusic is bad for labels or artists. There are a few reasons, and I will mix in some comments about increased awareness and big picture revenues.
    First, labels are under no obligation to sell their music at eMusic. I will liken this to the haggling you have to do when you visit a developing or third world country and have to negotiate down the price for just about anything you buy. Some tourists feel like they’re taking advantage of the poorer seller when he negotiates the price way down from the starting price. The truth is the seller would not sell the product at a loss, so feel free to haggle down as far as you can. Likewise, if a label sells music at eMusic, I have to assume money is being made because nobody is going to willingly lose money on each sale.
    The big picture here is the effect eMusic sales have on total revenue. I’d bet many eMusic purchases represent incremental revenues that would not have been otherwise realized. As long as the marginal revenue exceeds the marginal cost, a label is fine. No need to worry about per-track revenue and compare it to what the label “could” make per-track at iTunes. The bottom line is the bottom line. If eMusic makes the bottom line grow, it’s good for the label. The need to get over per-track revenue has never been greater. We’re moving into an age of ad-supported and subscription services for which typical per-track royalties and revenues are very different from the what used to be the norm.
    One consideration is whether or not those eMusic sales are replacing sales at other stores, or replacing CD sales. I don’t think anybody has an answer for that question.
    I’m not going to worry about low eMusic payouts hampering a label’s ability to pay its bills. Unless the release is digital-only, there is revenue being made from CD and vinyl sales. Again, it’s about total revenue, not per-track revenue.
    Second, artists will get whatever share of revenues is stipulated in the contract they signed. To blame eMusic for a small amount of per-track money paid to an artist is to miss the point. The artist is ultimately responsible for whatever terms it has with its label, and the artist is responsible for the fact that it is even signed to a label in the first place. eMusic pays the same amount to labels that are owned by artists. It pays the same amount regardless of the distributor and that distributor’s fees. eMusic cannot and should not concern itself with the ownership of the tracks and the labels’ contractual terms with their artists. eMusic should just sell the music best it can. If artists are getting a raw deal, the market will correct itself…artists will move toward self-release albums and away from deals with labels (especially for for digital distribution).
    Now, it’s very possible that some artist contracts give a lower royalty rate for eMusic, or that labels just use a lower royalty rate. I don’t know if the typical indie contract takes into account different wholesale rates. A major label contract is likely to drop the royalty rate when an album is moved from frontline status to midline or catalog. The artist ends up with a lower share of less per-unit revenue, but it’s done with the belief that a lower price will increase sales.
    I’m no lawyer, but I have never even heard of a contract that stipulates a label will pay an artist a fixed amount per unit sold. Wholesale and suggested list prices change far too often — they need to change — for that to be a sensible way to pay royalties.
    As for “contractual obligations” to songwriters, that’s a statutory amount that labels must pay to the publisher/songwriter. eMusic’s low per-track payout isn’t going to impact the statutory rate (or whatever other rate is set in the contract). In that sense, eMusic is very songwriter-friendly. (High volume of cheap tracks x fixed mechanical rate = more revenue to the songwriter.)
    If each song gets a label $0.30 or $0.25 or whatever, there’s money left over after the publishing royalty is paid. (OK, the song could be 30 minutes long, and the publishing part would be large. I assume the label has capped the publishing for the album, or has a per-track cap.) And unless the label has paid for an advertisement and is charging that back to the artist (I honestly don’t know how eMusic advertising works), there are no other costs associated with the tracks sold at eMusic.
    If a label is losing money on eMusic (Bruce has written about one instance), it needs to either (a) jump from eMusic or (b) negotiate different royalty rates for existing contracts to take into account eMusic’s business model and the lower per-track payout. If a label is losing money on eMusic sales, that is the label’s fault, not the eMusic’s fault. Again, nobody is making these labels sell music at eMusic. There are plenty of other options out there.
    The last point is about awareness. If the artist makes more money through tickets and merch, eMusic is a good outlet because it is probably going to improve those revenue streams. Awareness is hard to get, and cheap music that encourages many impulse purchases is a great way to increase awareness. Same goes for a label. eMusic offers a way to build new relationships with consumers that wouldn’t have otherwise been made.

  25. Scott Feldman: “eMusic’s marketshare compared to iTunes is still not all that significant. With the skimpy payout given on either side (even if iTunes is double eMusic, 2x skimpy is still skimpy), the best an indie artist hopes for from either service is decent exposure.”
    Scott, I’m guessing you have no idea if this is true. First of all, it’s useless to look at “marketshare”, the indie artist/label’s income is what’s relevant to their decision to deal with emusic. There are loads of indie artists whose total cd sales will be < 1000, at probably < $4 profit per unit. Over 10 years, what will itunes and emusic pay to that artist for a given release? I don't know, and I doubt you do either, but it's not obviously negligible, for sure.

  26. the truthful view of this argument probably lies in-between the two main opinions expressed: yes, emusic does create some sales and exposure otherwise not gained; and yes, some of those sales probably would have happened anyway & gotten the artist more $ if bought somewhere other than emusic.
    Without some real research , i don’t think anyone can say if emusic is overall good or bad for the artist

  27. First off, if I am an indie artist then I want my music on as many digital distribution sites as possible. iTunes, eMusic, Napster, all of them. This increases my exposure, some money is better than no money and nothing beats exposure and word of mouth.
    Not everybody is willing to pay a monthly fee to download music, so if your music is only on eMusic then you are losing out on a lot of fans. But to pull out because you’re not getting enough money is short sighted.
    eMusic may have to negotiate better terms with more established artists to draw traffic to their site which in turn could help the smaller up and coming artists. It was a tease to see the Rolling Stones on eMusic for less than a month.
    I use eMusic for discovery and I have bought many CDs from artists that I have discovered on eMusic, so they are getting my money twice. And are newer artists really making that much money from the traditional labels?
    If an artist is putting all their eggs in one basket and expecting to get rich off eMusic then get out, but if they want to build a fan base and sell concert tickets, merch and draw traffic to their sites than eMusic is one tool in their kit.

  28. First of all, you mean to say that the statutory rate is .091 dollars, not cents (ie 9.1 cents). (This is about three times higher than the “fair” rate Apple and other retailers are pushing for, but I digress).
    Second, you seem to be saying that eMusic (and presumably other retailers) just pay the label/performer whatever they feel like paying them. You’ll have to explain how this can be, because it seems you’re just saying that eMusic appears to be less profitable than iTunes.

  29. Bruce my problem with you is that you are not a ‘real’ journalist in the sense of the word. Until you write for a real publication, I think your readers should know that you are most definitely not an expert on such matters and have over the years demonstrated a clear bias against eMusic – leave them alone and go pick on someone else for a change… how about iTunes or Amazon?

  30. Bruce: I’ve noticed you’ve seemed to be on an anti-emusic rampage for quite some time? Why is that? Perhaps if you go onto their site and try what they have to offer (fantastic collection of indie music) your soul will finally be saved 🙂

  31. Thanks for the information about artist royalties.
    The music that I would download from e-music is so obscure that I would never even consider purchasing the music if it were not listed on e-music.
    So, the artist is getting some money from me, instead of none at all.
    The indie artist is getting the benefit of their bargin.
    You might as well argue that a band shouldn’t play in a bar for tips, because they are being exploited.
    Sometimes, the artist is also the song-writer. So, the artist might get that money too.
    Finally, there are few “big” artists on e-music. Once their product is worth enough money, they can stop listing on e-music. That is kind of a problem for e-music. E-music has a business model will encourage popular artists to leave and encourages unknown artists to list their music for cheap. To me, it sounds like a win for the lesser known artists who are waiting to be discovered, and it is a win for the customer who is fed up with popular music.

  32. Any site other than your own will exploit you in some way, by taking a cut of the profits (they need to make money), controlling your fanbase, etc. You need to build and monetize your own fan base with your own site.
    Sell or give away your own music and use these external sites to bring more fans to you. My songs are free. Sell other things related to your music (music lessons, merchandise, etc). I just sold a $129US/yr annual membership to my guitar coaching program. That would be about 200 sales on ITunes after their cut.

  33. These comments are old and music is doing very well..not disappeared at all as some might have predicted back in 2008…emusic is here to stay and at 49 to 69 cents per track is tanfstic

Comments are closed.