eMusic: growth vs credibility (Part Two)

Part One of the story is here and offers some background and thoughts on the site itself.

In a nutshell, the deal is this: a popular and seemingly well-run online music store finds itself with a lot of angry customers and a bit of a PR nightmare on its hands.

How did this happen?

The trouble started around May 31 when eMusic announced that they would be adding to their selection a range of music from the Sony back catalog.

On their staff-run blog, they told their customers about it in these terms:

eMusic’s customers are rabid, smart and adventurous consumers of music. For 10 years, we’ve been proud to help you explore the best music from independent labels throughout the world and present it with the curatorial excellence that you value. We’ve worked hard to create a corner music store experience where you can get knowledgeable recommendations on the latest releases as well as dig through the stacks to find hidden gems you didn’t know about.

Today, we want to let our U.S. subscribers know that soon we’ll be adding even more of the music you want from the catalogues of labels like Arista, Columbia, Epic and RCA – that means artists including the Strokes, Bruce Springsteen, Leonard Cohen and The Clash to name a few. True to eMusic’s standards, we’ll put this body of work in the right context with helpful insight and recommendations from our expert editorial staff with a pronounced emphasis on the places where the legends and our favorite indie artists intersect.

The addition of these bold-face names doesn’t change our mission. eMusic will always be an alternative to mass market digital music stores — a deeper, richer music shopping experience. Over the past year, we’ve added a host of new features to re-create the experience of the corner music store using the technological advantages of the web to supplement our tried and true human touch.

If that sounds a little defensive to you, it does to me too. The initial issue here is the problem the company sensed with adding a major label to a store that had prided and marketed itself on the basis of its commitment to independent music.

A backlash against that seems to be what is being hedged against in this post. In fact, they go on to say: “Independent labels and artists will continue to be eMusic’s core. But now more than ever, the distinction between indie and mainstream music simply does not matter – people love all sorts of music and our goal is to present all of it in a way that creates a community not only of music buyers, but of music lovers.”

There is a sense that they are trying to throw the whole thing back on their customers: you wanted more choice; we are providing it; you have no reason to complain. This tactic is most evident in the final paragraph:

We do have a question though for our customers. We’ve been requested to carry major label titles for years, but we always have gone back and forth on whether it would change the fabric of eMusic. We don’t think it makes sense to exclude great artists simply because their label partner is one of four specific companies. We look to some of our favorite music — The Sex Pistols, The Clash — and we certainly never think to ourselves “Major Label.” What do you think? Do “major” and “indie” mean anything to you or is this just industry jargon?

As it turned out, the announcement went down like a cup of cold sick.

Although the fact of introducing a major label into the mix was an issue, the real problem for eMusic arose when they also announced a price rise for their subsription plans at the same time as the Sony announcement. Whether the link between the two changes was causal or coincidental, many people, not surprisingly, presumed the two matters were linked. Even press reports made it sound like one was the result of the other. For instance, this report in Arstechnia:

And, while offering the best of a major label’s back catalog is great news to many fans, it also means that indie lovers will have to pay more for their music.

So, many customers assumed that the price rise was linked to the introduction of the Sony back catalog; it was presumed that Sony’s licensing fees — higher than what the independent labels could demand — were what was “forcing” eMusic to hike their prices.

For many customers, this was a double whammy: not only was a major label infiltrating a site that was marketed around the idea of being the home of small, indie labels, but the infiltration was bringing a price rise with it.

When I spoke to company representative, Cathy Nevins, about the link between the two changes, she was quite clear that the price rise and the introduction of the Sony back catalog weren’t linked.  I’ll come to that, but first, let’s look at how the pricing structure at eMusic changed.

How much did eMusic prices go up?

Over at Swindleeee they offer a complete breakdown of the changes to the pricing plans of the US store of eMusic and it is worth a look.  (There are follow-up pieces, here, here and here.) To give you some idea of how much the pricing has changed, consider these three examples:

• The eMusic Basic plan is still $11.99 per month, but has been reduced to 24 downloads ($0.50 per song) from the previous 30 downloads ($0.40 per song), or a 25% per-track price increase.
• The eMusic Plus plan is now 35 downloads for $15.89 per month ($0.45 per song) vs. $14.99 per month for 50 downloads ($0.30 per song) under the previous plan, or a 50% per-track price increase.
• The eMusic Premium plan is now 50 downloads for $20.79 per month ($0.42 per song) vs. $19.99 per month for 75 downloads ($0.27 per song) under the previous plan, or a 56% per-track price increase.

(As I say, these are US prices.  It is worth noting that only new customers in the UK, EU and Canada will be charged increased rates.)

They are pretty hefty rises. That they might be necessary is a case you could make, but eMusic either didn’t make the case or did so so badly that they left a lot people unhappy.  Evidence of this is the negative comments that started piling up on their staff blog and on blogs and discussion boards around the world.

Not surprisingly in this day and age, one irate customer started a Facebook protest page.  It is fair to say this protest hasn’t been hugely successful in its own right (with 131 members listed), but it has to be seen in the context of all the other online protesting that has been going on.

I spoke to James Martin, the guy who started the page, and asked him why he was so unhappy.  Essentially it came down to two things: the fact that, for him, the inclusion of Sony product violated the site’s commitment to independent music, and that he felt like eMusic had treated him with contempt.  As was becoming increasingly obvious, price was often the least of people’s concerns.

“Taken by itself, I could have and would have swallowed the price increase with a modicum of complaint; but for them to cite the Sony deal as the reason that they are raising prices is insulting and absurd,” James Martin told me.

He said that he already had most of the Sony back catalog he wanted and that therefore, if that product was the reason, or part of the reason, for the price hike, he thought he was being ripped off.

When he took the matter up with eMusic, via message boards, he was less than impressed with some of what he was told.

“I actually reached out through their Chat/Help line to express my frustration with one of their agents.  She kept repeating the same tired lines that appear on the 17dots blog.  She tried to tell me that Billy Joel was exciting.  It was the same kind of corporate happy talk that makes me retch; I didn’t expect it from eMusic.”

The company response

I asked Cathy Nevins from eMusic for some clarification on the matter, specifically, the link between the price rise and the deal with Sony.  Was it fair to say that the price rise would’ve happened regardless?

“Our independent labels have also been requesting we change our prices for some time,” she said. “The price change would have happened at some point in the future.”

Then she added, somewhat disingenuously, I thought,  “I don’t have knowledge about what would have happened without Sony content, so I can’t answer that question.”

I then asked her if the price rises were being rethought in light of the bad reaction the company had had.  Despite here wisecrack above, she basically confirms (or re-confirms) that the price rise would have happened anyway.

“We have been listening and continue to listen to our members’ reactions on the subject,” she said.

“We also continue to post updates on our FAQ. The price change is being made because some of the older plans that our longest-tenured members had simply could not be operated at a loss any longer.

“We are doing this to help attract new labels, bring back some of the ones that left and grow eMusic as a business.

“Otherwise, we will still be the same store, dedicated to helping members discover new music, that we have always been.”

So where are we?

You can’t help but get the feeling that critics like Swindleeeee are right, that if eMusic had just thought the announcements through a bit more carefully, a lot of the bad blood could’ve been avoided.  Swindleeee even offers an example of a press release the company CEO might have written.

If wishes were horses.

It seems to me that eMusic had done a pretty brilliant job of making their business model align with their corporate image.  The tag line they use in a lot of their communication with customers — for example, in their Twitter profile — is clever in the extreme: “The Internet’s Corner Music Store.”

As I said in part one, I don’t think their customers saw this approach as other than a marketing device, but it was clever precisely because it not only reflected the sort of experience their likely clientele was looking for, but it was backed up by the way they conducted their business, as a site for music nuts looking to immerse themselves in a music nut’s paradise.  I relate.

The introduction of the Sony catalog put that at risk — and the company was obviously aware of this — but the problem was confounded by the way they made their announcement.

As the owner of the Facebook protest page said to me, “eMusic was a refuge for me and for like minded music fans.  Have you ever tried to read a user supplied review on iTunes?  They read like a ten year old wrote them, then passed them through an automated translator about 15 times before translating them back into English.  I want more than that.  I want a sense of community. Sony ruins that.”

Of course, there are plenty of customers who aren’t as concerned about the presence of Sony, but even they are peed off.  Amanda from Flop Eared Mule:

I don’t know what the strategic vision here in the eMusic boardroom. “iTunes Lite”? Looks like it, but that runs the risk of pleasing no one. Music nerds are squeezed out, but more casual consumers still won’t find the last top 40 hits there. I’m no marketing guru but when you have a distinct brand, I know you have to be very careful about diluting it. I also know you have to make money, but surely part of business growth is finding new markets while not casually sloughing off your old ones, the ones who gave you the market position to be able to make a play for the golden ring in the first place.

Spot on, I reckon. Almost no-one begrudges a company trying to grow its business; they just need to remember how they got to be successful in the first place.

End of Part Two

I’m going to pop up a brief Part 3 later to deal with some the questions arising for Australian customers.  I was going to include it in Part 2, but thought better of it.

Also: Here’s a cluster of most of the links in this story, for your convenience: