Did No One At eMusic Think About PR Impact Of Raising Prices At The Same Time Sony Signed?

from the braindead-PR dept

eMusic is a rather successful indie music e-commerce player (reports put it at the 2nd largest music store), that has focused on charging people a subscription that lets them download a limited number of songs each month. It also supported DRM-free MP3 files long before others finally came around. I have many friends who love the convenience that eMusic provides (I tried it, and didn't find enough of the music I liked to stick around) and are willing to pay for the convenience alone. However, it's almost hard to believe that no one on the PR/marketing side of eMusic failed to predict what would happen this week when the company made two announcements: that it had signed its first major label, Sony, and that it was raising prices. The reaction was quick and almost universally negative.

The complaints hit on a number of points, but the two big ones (obviously) are the price increase and the fact that many people signed up with eMusic because of its indie music focus, and related to that: their dislike of major record labels. What's stunning is that eMusic couldn't foresee what a negative reaction this would bring. The company has raised prices in the past, which also created some level of anger -- but people had to know that announcing both the Sony deal and the price raise at the same time, was going to be a PR nightmare. What I can't understand is why they didn't separate out the announcements. They may have felt it was a "pulling the bandaid off quickly" sort of moment, where they could take flak for both announcements at the same time, but they didn't seem to consider the fact that the two issues are completely linked in users' minds. It's not "eMusic had to raise prices" and "eMusic added Sony music." It's become: "eMusic had to raise prices to get Sony Music's catalog into the system."

That makes both eMusic and Sony Music look dreadful -- because here's a major record label, whose music many eMusic subscribers didn't want in the first place, now being seen as having made life worse (and more expensive) for everyone. By connecting the two issues, it seems like both eMusic and Sony Music are getting hit a lot harder than if the announcements had been separated.

Filed Under: major labels, music, subscriptions
Companies: emusic, sony

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  1. identicon
    Anonymous Coward, 4 Jun 2009 @ 12:35am

    Connected but not in quite that way...

    Emusic is struggling. Amazon and the rest of the DRM-free stores have been hurting them. Alot. So it's all well and good to say that signing Sony or raising prices a bit makes them less attractive to you, their hardcore indie fans...but it turns out there aren't enough of you for them to succeed as a business. So they need the major label catalogs to draw new users to get to profitability, if they have any hope of doing so.

    The price increase may have been forced by Sony, or maybe not. The problem is that more catalog means less money paid to the content owner for each track. Given fixed monthly subscription income, if they add alot more tracks and suddenly people are using their entire allotment instead of 2/3 or 3/4 of it (or less) then the $/track going back to the content owner (primarily indie labels) goes down. And it's already *way* below what iTunes or Amazon pay out to content owners, as it has to be since the tracks are so much cheaper for the end user (if you download your full allotment every month). So to keep all of the indie labels from leaving as a result of this deal, they had to raise the prices. Or maybe Sony made them raise the prices, who knows. I say chances are 50/50 it was Sony vs Emusic being concerned about other labels leaving due to lower $/track going forward.

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