For a while there, eMusic was notable as the online music retailer that didn’t have DRM, but that differentiator is pretty much gone. During a panel on the ‘long tail’ at the Needham Internet and Digital Media Conference, eMusic CEO David Pakman argued that his site appealed to adults, and that adults still spend money on music, unlike kids. He noted that 73 percent of music is bought by people 25 and older (thought not totally clear if that money is being spent by adults for adults or for their tweenage children): “In most cases it’s the adults who are going deeper into the tail.” While the panel was kind of all over the map (the CEO of as-seen-on-TV Cash4Gold was there as well), I chatted with Pakman afterwards about trends specifically affecting his business:
— The end of DRM: So now that you can find DRM-free tracks on iTunes and Amazon (NSDQ: AMZN), how does eMusic view the market: “It’s good for the music business… that’s what customers want.” But is eMusic losing its competitive advantage? Pakman claims that’s not eMusic’s advantage: “For some time, we enjoyed a format differentiation, but nobody assumed that would last very long.” Instead, he insisted, it’s the adult, long-tail focus that sets eMusic apart. More after the jump…
— Major labels: And the end of DRM doesn’t mean major label music will come to the service: “We don’t carry them today… we focus on this tail that customers are most interested in.” If there is an opportunity, it’s in the back catalog: “Their catalogs are very interesting to us… the classical, the jazz.” This could also be some spin; hard to imagine the decline of DRM isn’t a bit of a negative, especially if it hasn’t meant more content from major labels yet.
— Sale?: You wouldn’t expect him to say otherwise, I suppose, but officially, the plan is to stay independent: “(Sale rumors) obviously proved not to be true; it’s an incredibly healthy business.” Healthy, but does that mean eMusic is profitable? “Well we don’t have to talk about it, fortunately, as a private company.” Judge for yourself whether that means they’re not profitable. Overall, the company would like to grow towards 5 million subscribers from its current base of 400,000
— Music blogs: eMusic employs its own army of 250 (mostly on contract) writers to wrap interesting content around its music. I was curious about any effects they’re seeing from the rise of music blogs and the interest in that area (Buzznet’s recent buys, for instance): “(Music blogs have) really helped illuminate the long tail, but you have to fulfill that demand somewhere.” And ideally, eMusic is the logical place for that.