The business model of eMusic |
woensdag 11 april 2007 |
eMusic is one of the largest retailers of independent music and is currently the second largest download service after iTunes. The organisation offers digital music in a compatible format and has chosen a “long tail” approach.
eMusic differs from other well-known subscription music services (such as Napster and Rhapsody) in that the files available for download are in the MP3 format, making them fully iPod-compatible and free from digital rights management software restrictions (such as expiration, copying or CD-burning limitations). By partnering with independent labels overlooked by other retailers, eMusic is able to offer low priced digital music. The audience, that is attracted to eMusic is in the age range of 25 to 55, with high income and precious time. To date, this group has been ignored by the major labels and their needs have been ill met.
Three years ago eMusic was owned by Vivendi Universal. At that time the organisation was in serious financial trouble. eMusic offered unlimited downloads to users who paid the monthly subscription fee, but each downloads lost the company $ 0,08. Anyone who downloaded more than 125 tracks actually cost the company money. And plenty of people were doing so. In 2003 Vivendi sold the company to a private equity firm. The new management adjusted the revenue model and rebuilt the site in order to enhance the quality and the attractiveness of the site.
The revenue model is still based on a monthly subscription, but the number of free downloads has been limited. The subscription starts at $12.99 a month for 40 downloads. That works out to less than $ 0,32c per song, which is very cheap compared to other sites like iTunes, which charges $ 0,99. The site works well, downloads are quick, and it has a lot of tools with which to discover new music. Amongst the eMusic staff are several music critics, who are responsible for the content of the site, which is a guide for consumers to explore new music.
For the full size graphic click here.
As a private firm eMusic publish its financial information, but analysts agree on the success of its subscription model. The organisation claims a market share of 12% (compared to Apple’s 61%), and it has sold more than 60 million songs. The subscriber base has grown to 175.000 with an average age of 39, which is relatively high as the digital music industry generally caters to a young audience.
The average downloads per customer at eMusic is 20 songs a month, whilst an iTune customer downloads only one song a month.
Fact & figures
eMusic differs from other well-known subscription music services (such as Napster and Rhapsody) in that the files available for download are in the MP3 format, making them fully iPod-compatible and free from digital rights management software restrictions (such as expiration, copying or CD-burning limitations). By partnering with independent labels overlooked by other retailers, eMusic is able to offer low priced digital music. The audience, that is attracted to eMusic is in the age range of 25 to 55, with high income and precious time. To date, this group has been ignored by the major labels and their needs have been ill met.
Three years ago eMusic was owned by Vivendi Universal. At that time the organisation was in serious financial trouble. eMusic offered unlimited downloads to users who paid the monthly subscription fee, but each downloads lost the company $ 0,08. Anyone who downloaded more than 125 tracks actually cost the company money. And plenty of people were doing so. In 2003 Vivendi sold the company to a private equity firm. The new management adjusted the revenue model and rebuilt the site in order to enhance the quality and the attractiveness of the site.
The revenue model is still based on a monthly subscription, but the number of free downloads has been limited. The subscription starts at $12.99 a month for 40 downloads. That works out to less than $ 0,32c per song, which is very cheap compared to other sites like iTunes, which charges $ 0,99. The site works well, downloads are quick, and it has a lot of tools with which to discover new music. Amongst the eMusic staff are several music critics, who are responsible for the content of the site, which is a guide for consumers to explore new music.
For the full size graphic click here.
As a private firm eMusic publish its financial information, but analysts agree on the success of its subscription model. The organisation claims a market share of 12% (compared to Apple’s 61%), and it has sold more than 60 million songs. The subscriber base has grown to 175.000 with an average age of 39, which is relatively high as the digital music industry generally caters to a young audience.
The average downloads per customer at eMusic is 20 songs a month, whilst an iTune customer downloads only one song a month.
Fact & figures
- More than 2 milion tracks
- More than 13.000 independent labels
- 175.000 subscribers, average age 39
- Market share of 12% against Apple’s 61% market share
- Owned by Dimensional Associates (a private equity company)
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