Making money selling music without DRM: the rise of eMusic

The Holy Grail of online music sales is the ability to offer iPod-compatible tracks. Like the quest for the mythical cup itself, the search for iPod compatibility has been largely fruitless for Apple's competitors, whose DRM schemes are incompatible with the iconic music player. For a music store that wants to succeed, reaching the iPod audience is all but a necessity in the the US market, where Apple products account for 78 percent of the total players sold. Perhaps that's why eMusic CEO David Pakman sounds downright gleeful when he points out that "there's only two companies in the world that can sell to them—Apple and eMusic."

It's rather a startling point—given the worldwide success that Apple has had selling iPods, one would think that music stores would do whatever it takes to make their offerings iPod-compatible. Attempts at bypassing or emulating Apple's FairPlay have not been successful, however, and FairPlay is (famously) unavailable for licensing. So what's a music store to do? To eMusic, the answer was simple: you offer songs as high quality, variable bit rate MP3 files instead. DRM is removed, consumers are happy, and the vast white fields of the iPod are ready for harvest.

It sounds like such a simple idea, but in the context of the music business, this is radical, French Revolution-type stuff. What's perhaps even more interesting is the fact that eMusic's decision to offer unprotected MP3 files was not an ideological one; the idea made great business sense, and has established eMusic as the #2 retailer of downloadable music behind the iTunes Music Store. The fact that it opened the way for iPod compatibility was really just a bonus, since a couple of years back, it was much less clear that Apple would come to dominate the market in the way that it does today.

"It's really not a philosophical decision; it's a practical one," says Pakman. "Early on, the belief was that we had to sell music in the only universally compatible format that existed. TiVo was just about to come out with MP3 playback on their machine and we didn't know if that was going to be big. There were a bunch of MP3 players on the market, including the iPod, and that market was growing. There were MP3 car stereos happening. There weren't any phones, but you can see that's where it was going. Everyone was putting MP3 in their device, so why not sell in a format that works in all those places?"

Indeed, when put this way, it sounds amazing that no one else (apart from some dubious Russians) has released music that will play on the widest possible array of devices. There's a reason this doesn't happen, of course: the music labels won't allow it. Actually, the major music labels won't allow it—but there's a whole ecosystem of independent music labels that want nothing more than wide exposure and fair compensation. What eMusic has done is to construct a business model built around indie music—and they're now selling 5 million tracks a month doing it.

That's because indie music doesn't (necessarily) mean bands with a fan club of six. A good chunk of the best work being done today comes from indie musicians like Bloc Party, the Drive-By Truckers, Gomez, Interpol, Belle & Sebastian, Tom Waits, Nick Cave, Pedro the Lion, Dolorean, Calexico, Arcade Fire, Spoon, Dar Williams, Ron Sexsmith, Modern Skirts, and Ryan Adams, all of whom are carried by eMusic. The company has built itself into an indie music powerhouse that now offers more than a million tracks and 175,000 subscribers, and it sells its songs for about a quarter each. Though in no danger of eclipsing Apple's one billion track sales, the company looks well-placed to cater to the over-25 music lover, a group not always well-served by the major labels.

But things haven't always gone so well for the company...

[Via - Making money selling music without DRM: the rise of eMusic]

MySpace music store unveiled today?

MySpace's frequently rumored music download store could launch as early as today, according to a rumor put forward by CNET. The publication claims to know sources who say that an initial announcement is planned that will expand the site's currently hands-off music section into a service that offers a combination of downloads and streams. Mirroring past stories, the feature would allegedly let users either pay to download full MP3 songs and ringtones or else stream songs for free on the web. Users could also buy their concert tickets directly from the site.

The social network is also said to have overcome licensing barriers, having already signed music catalogs from Sony BMG, Universal, and Warner; EMI is not yet onboard but is in the late stages of completing an agreement. Also repeating past rumors, the new report claims that each label would have a minority stake in the venture and therefore share revenue independent of their specific sales.

The Universal deal would represent a key breakthrough, as the label recently sued MySpace for copyright infringement but is now said to be receiving a large settlement.

A launch for the store would not come right away and is instead planned for coming months.

MySpace's store is already being positioned as a likely competitor to iTunes, which the major labels have sought to undermine in recent months by offering DRM-free tracks to initially smaller but promising digital stores such as Amazon MP3 and Wal-Mart. A MySpace service is seen as a way of gaining immediate, widespread exposure for a music service to its core audience. A Facebook store has also purportedly been in development but may not be as close to launch as the MySpace feature.

[Via - MySpace music store unveiled today?]

Amarok adds built-in music store

Free software and DRM-free music met this week when the Amarok music player added a built-in "iTunes-like" music store in its latest release -- making it the first open source music application to include such a service.

Version 1.4.4 of the KDE audio player integrates a front end to the Magnatune record label, through which users can preview songs and purchase DRM-free tracks and albums in MP3 format.

Magnatune offers free track downloads for all of its artists through its Web site, so -- strictly speaking -- the Amarok feature brings no new functionality, just convenience.

Apple's iTunes Store offers songs from multiple, major record labels, and thus far more artists and artists of wider popularity. Magnatune, however, offers a direct-to-artist royalty scheme that it would claim is more fair to performers, and its commitment to the standard MP3 format, with no digital rights management, is more fair to consumers. As to the relative merits of indie versus major label artists, there is no accounting for taste.

The Amarok development team says that the Magnatune deal was not a planned partnership. Nikolaj Hald Nielsen told the Amarok mailing list "Magnatune just made their entire catalogue available as an XML file on their site (which was what gave me the idea for this feature) and proved responsive to my request for an API to purchase music directly from within other programs."

For its part Magnatune is receptive to the possibility of working with other third-party application developers to bring its music to a wider audience. The site already publishes information about using Magnatune XML feeds, including demos and instructions for embedding a music mini-browser in Web sites and applications. Using the service to enable music purchases requires an API key, which must be requested and approved by Magnatune.

[Via - Amarok adds built-in music store]

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Merge Launches Digital Music Store

One of the most reliable names in quality indie rock has taken the plunge into the 00s. Merge Records-- home of releases from Arcade Fire, Spoon, Magnetic Fields, Neutral Milk Hotel, M. Ward, Caribou, the Clientele, Camera Obscura, Destroyer, and label founders Superchunk, among so many others-- launched its very own digital music store this week.

Releases available from the Merge digital store will come in high quality MP3 and CD-quality FLAC file formats, and soon, the label will offer full album art and liner notes as well.

In addition to its recent, classic, and readily available physical releases in digital form, Merge will be littering the store with new, exclusive, and out-of-print material.

The first such goodie is Superchunk's out-of-print 2002 live compilation The Clambakes Series Vol. 1: Acoustic In-Stores East & West, which hit the store this week. Then in April, the store will play exclusive host to a free Rosebuds remix album, featuring remixes of every tune on last year's Night of the Furies.

[Via - Merge Launches Digital Music Store ]

A Real Music Store Sprouts Online

A stranger once stopped me on a street in London to comment on my Other Music T-shirt, saying something like, "That's the best record shop in the world" -- pretty impressive for a little store in Manhattan, even one that has become a local institution of sorts.

That guy will soon be able to shop there himself, all the way from England, after Other Music takes its handpicked approach to music sales online with the launch of its own digital music store. Located at digital.othermusic.com, the site will stock high-quality MP3s from Pitchfork-friendly bands, without using digital rights management of any kind. Hallelujah.

I interviewed Other Music co-owner Josh Madell to see what music fans can expect from the store after it goes up in late February. (This interview has been edited for length and clarity.)

Wired News: Other Music has been a strong presence in New York's East Village for years, but the thing that always amazed me was that you guys set up shop right across the street from a massive Tower Records store. Talk about cojones. Were you guys happy when you found out Tower was shutting down? Did Other Music "win"?

Josh Madell: Funny, a friend of mine said that to me last night, how it gave him hope for the little guy with our triumph over Tower. Sadly, I think Tower's passing is more accurately a sign of how tough record retailing has become. It was always a difficult business, but all stores are suffering these days, and while Tower had definitely fallen off in quality over the past several years, they were once a really good store, a good chain overall, and I don't take any hope from their going bankrupt. There will be a lot more closings to follow, I'm certain.

WN: Why is Other Music launching a digital music store next month?

Madell: We are trying to stay current, and to continue our "mission" of spreading great music. I personally prefer vinyl to CDs and CDs to MP3s, but in the end I'm just glad people are listening to music, and the convenience factor of MP3s is undeniable. Our weekly e-mail update, where we review the week's interesting new releases, has been one of the most popular aspects of the store. Our new site will be an extension of that, with recommendations and reviews of great music and a simple click-to-buy option.

WN: I read an article from late last year that included a quote from you about the notorious "Pitchfork effect," in which albums recommended by that site start flying off the shelves. Have you noticed a "MySpace effect," or is that something you'll be going after with Other Music's digital music store?

Madell: Sure, it's undeniable that these days the influence of traditional print magazines has been overshadowed by websites and blogs; they're quick and convenient, and have their ears a bit closer to the ground than traditional media. As for MySpace and the like, I guess I feel like the biggest drawback of these types of social-networking sites is that there is just too much information. If you don't have the time or energy to listen to every band in existence, but you love interesting new music, a place like Other Music can be great, because our staff is paid to sort through all the crap. We can feature the best stuff out there, and hopefully present a convenient, well-maintained site where you can listen, learn and buy.

[Via - A Real Music Store Sprouts Online]

Smithsonian Folkways to Open MP3 Music Store

The Smithsonian Institution is entering the highly competitive world of music downloads by offering the Smithsonian Folkways collection of ethnic and traditional music in an online music store.

Smithsonian Global Sound, the new project, will be formally launched during the Smithsonian Folklife Festival in June. The enterprise is in the same vein as Microsoft's MSNmusic, Apple's iTunes Music Store and Sony's Connect.

"This is a museum of sound," says Richard Kurin, director of the Smithsonian Center for Folklife and Cultural Heritage. Folkways will offer music that ranges from the earliest American folk songs to contemporary groups doing traditional music from Europe, Africa, Asia and South America. The music includes the songs of Woody Guthrie; the music of Mwenda Jean Bosco, the late guitar pioneer from Congo; the sound of the Turkish saz, a stringed instrument similar to a lute; playground songs by Suni Paz of Argentina; and the rich North Indian music of Kamalesh Maitra.

Global Sound will charge 99 cents a song, which are available in MP3 format. The Smithsonian will pay royalties to the artists, as its recording label has done with records and CDs.

The potential broad exposure pleases many Folkways artists.

"I'm all for it," says Mike Seeger, a member of the New Lost City Ramblers. The son of musicologist Charles Seeger and half-brother of Pete Seeger, Seeger has spent much of his life promoting southern and folk music. "I have a feeling of mission that I would like to have people get to know this realm of music better. This is a way to afford it," Seeger says.

"When we saw the blossoming of the Internet, we thought, what if we could use this as a device for opening up the archives?," says Kurin, who is in charge of the Folkways archives. "People who don't usually have a voice can have a voice in a democratic, central way."

With monetary returns to the artists, Kurin hopes the payments establish the ownership of the music. Over the years Folkways has fought to give the original voices their due. "There are world music stars who mine the traditional music, and the question is, what is the ownership, what is the moral commitment and how much is going back? When we give them the money, that establishes the intellectual property rights," Kurin says.

The pay to artists is a percentage of each download, but the formula varies according to contracts, he explains. If the Smithsonian or its archives' partners can't locate an artist, the money is put in escrow.

Since this is new territory for the Smithsonian, the staff needed to create the Global Sound unit. They recruited Jon Kertzer, an ethnomusicologist and Microsoft executive, and Anthony Seeger, an anthropologist, former director of Smithsonian Folkways and nephew of Pete Seeger, to assemble a development team in Seattle.

The start-up money came from the Rockefeller Foundation, the Aga Khan Trust for Culture, Allen Foundation for Music and Folkways Alive! at the University of Alberta. Rockefeller provided $850,000, part of which would be paid back if Global Sound makes money.

The Web site, www.smithsonianglobalsound.org, will allow searches by artist, geographic location, language, cultural group or instrument. All of the Folkways archives, including photographs, can be downloaded onto a screen. Also in development are scrolling translations of some of the music for use on a personal computer. Right now the Haya Heroic Ballads, a form of storytelling found in northwest Tanzania, is being translated into English on the Web site.

To help people navigate the site, Kurin hopes to add contemporary personalities, like Mary Youngblood, the award-winning Native American flute player, and Mickey Hart, former drummer for the Grateful Dead, to guide people to their genre of world music, or their favorites.

The service also includes music from the International Library of African Music in Grahamstown, South Africa, and the Archives and Research Center for Ethnomusicology outside New Delhi, not only to expand the Smithsonian's holdings but also to "give them a marketplace," Kurin says.

As the Smithsonian fine-tunes this new service, the promoters hope new audiences for underappreciated artists of traditional music will develop.

"There's a guy in Punjab who is doing wonderful, meaningful work and it is never going to be heard," says Kurin. "Here is a way."

[Via - Smithsonian Folkways to Open MP3 Music Store]

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