eMusic Selects a strategy

I thought I should say a little bit about the new eMusic Selects program. eMusic really wants people to know about this; in addition to a link on the eMusic home page, there’s a press release, an eMusic Magazine article, a 17 Dots blog post, and a message board post. Presumably the folks at eMusic feel that eMusic Selects is strategically important to the future of eMusic, and we should take them at their word. So what’s going on here?

Let’s start with the press release, and focus on two key phrases in the release’s title. The first is A&R program, which refers the work of discovering and developing new acts. This press release is in effect a message to the music industry in general, and to independent labels in particular, that eMusic is now prepared to take on a key label function, at least in a limited way. (eMusic is asking artists only for a 60-day exclusive period for digital release, after which they are free to seek other digital distribution channels.)

From the perspective of indie labels this could be viewed in one of two ways. On the one hand, this may be a way to demonstrate to labels the ability of eMusic to drive new artist sales, and thus the desirability of working with eMusic. It also offers labels an opportunity: with unsigned artists eMusic will do the upfront work of marketing artists and attempting to jump start sales of their digital downloads. Labels will then have the chance to pick up artists who have a proven record of digital sales success and can market those artists through other digital music services, including the iTunes Store and Amazon, where per-track payouts are higher. To the extent that this actually occurs, it’s an example of eMusic providing an extra benefit to labels to offset the lower prices they’re asked to sell at.

At the same time eMusic is perhaps making the same implied threat to indie labels that Apple has been accused of making to major labels: Don’t assume we’ll always need you. That threat (if indeed it is one) will play out over the long term; for now and years to come eMusic is and will remain dependent on indie labels for products to sell.

The second key phrase in the press release title is highly-curated boutique music space, a phrase that strictly speaking refers to eMusic Selects but which can also be seen as an attempt by eMusic to influence the perception of the service as a whole via the halo effect. The message here is directed to music industry analysts and potential eMusic buyers: don’t compare us to Amazon, especially as Amazon moves past eMusic to become the acknowledged number two digital music download service behind the iTunes Store; eMusic wants to be positioned as a boutique service, not as a general-purpose music retailer.

Based on the highly-curated reference, another implied message could be don’t compare us to Last.fm and other music 2.0 companies. Unlike services like Last.fm that are built primarily upon user-generated content (e.g., listening data, track ratings, artist pages, etc.), eMusic wants to emphasize its reliance on knowledgeable music experts. Finally, the word space points to eMusic’s desire to be seen as more than an e-commerce site. (This desire is also apparent in the mention in recent press releases of the message boards—excuse me, vibrant online community—and other non-store aspects of the eMusic web site.)

As I’ve previously pointed out, eMusic really isn’t a Web 2.0 company as that term is normally used; rather it’s just a specialty retailer, the online equivalent of a well-stocked independent record store with a knowledgeable sales staff. So with this highly-curated boutique music space theme eMusic is basically making a virtue of necessity: it can’t compete directly with the likes of Last.fm or Pandora, so it’s trying to do a better job of what it’s already doing. As I’ve also pointed out, the nature of eMusic’s business is such that it’s relatively easy to value (simply look at the current subscriber base, average profit per subscriber, and likely growth in those figures). This means that eMusic is not likely to command an outsized YouTube-style valuation when it is sold; however at the same time managed properly it could be a solid and lucrative business for the right buyer.

Perhaps eMusic is best compared not to the latest trendy music 2.0 companies, but rather to a company like O’Reilly Media. O’Reilly started out in the traditional (and rather boring) business of publishing technical books (as O’Reilly & Associates), caught the Internet wave, moved into digital publishing ventures (most notably the Safari subscription service), acquired a reputation (via Tim O’Reilly’s writings and those of others he brought onboard) as a thought leader in the Internet and web space, and eventually parlayed that reputation into related lines of business, most notably hosting conferences.

O’Reilly consciously tailors and markets its offerings to alpha geeks, looks to them to see what was hot and upcoming, and then uses that knowledge in creating new product offerings. eMusic’s strategy with eMusic Selects seems very similar: begin by serving that subset of music listeners who are dedicated fans of non-mainstream genres, determine what the most knowledgeable and au courant fans (both on eMusic’s staff and otherwise) think might be the next new things in those genres, and then use that knowledge to put together products of interest to the general eMusic subscriber base. It may not be as sexy a strategy as some, but I think it’s one that leverages eMusic’s strengths and minimizes its weaknesses.

One thought on “eMusic Selects a strategy

  1. Pingback: Please eMusic, Select some indie classical « Swindleeeee!!!!!

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