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January 30, 2006
eMusic - Scrappiness pays in volume
Below are excerpts of eMusic CEO David Pakman's interview with mp3.com. Full interview here.
David Pakman on:
customers:
They're a much more pleasant consumer to deal with because they are far less fickle. They are are interested in value but they're not starving for dollars. They have credit cards that are valid and don't max out all the time and they can afford to buy both a $400 hardware device and spend, you know, 100 bucks a year on music. So, we like that consumer a lot better.
DRM:
We'll continue to be no-DRM, not for philosophical reasons but only for practical, compatibility reasons. And if that whole practical, compatibility thing got sorted out, if you could sell DRM-protected music that was interoperable everywhere and that wasn't sort of penalizing customers for buying music digitally, we would do that.
- - -
We certainly do believe that the lack of interoperability is holding the digital music market back. There's no question that Napster and Yahoo and AOL's MusicNow would all sell more music if they worked on the iPod. So definitely DRM as it relates to lack of interoperability is a problem for the industry. In terms of DRM's limitations on consumer behavior, I think you can strike a balance with the consumer that says, "You can still do some things with this, but not everything that you might be expecting to do." You just have to disclose that up front to them.
eMusic's business model:
It's the same way that health clubs exist. If 1,000 people sign up on January 1st with their New Year's resolution and all 1,000 people went every day, the gym would be way too crowded and you would quit.But, of course 1,000 people don't go every day and some people go for the first couple of months and then don't ever go again for the rest of the year. That's the same model for us and Napster and Rhapsody, where a label might get less on a per-song basis but the consumption tends to go up.
The iTunes customer buys about three or four songs per customer per month on average. The eMusic customer buys 20 songs per month on average. So, the consumption is much higher when a user prepays for music. They want to get their money's worth. That also means that a highly casual user probably won't subscribe to a service because it's too much of a commitment. So, the difference between the models is that labels might get less on a per-song basis in a subscription service but will sell more of their music.
Yes sir! Pragmatic straight shooter, I like this dude. eMusic is a sweet service, check them out here.
Tags: eMusic, David Pakman, DRM, Digital Distribution
Posted by Merry Swankster at January 30, 2006 08:35 AM
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