EMusic vs. Napster
The Panasonic portable hand-pump 8-track tape player has been haunting me in my dreams. These brightly colored 70s relics were the most popular audio accessory with all my friends?half the novelty was slamming down on the pump on top to switch between the four programs. God, 8-tracks sucked. Half the time you could hear songs from the other programs bleeding through the one playing. Songs were cut in half between programs; prog-rock 8-tracks were a real hassle to listen to, man. I was glad to see them go by the early 80s.
Why am I haunted by 8-tracks? Possibly because I've been catching glimpses of the future: downloadable music. Just pure sound. No liner notes. No CD covers. No physical images of the artists. Simply MP3 files I download to my computer then burn onto a CD-R. There's something egalitarian about the process. The artists stand or fall on the strength of their songs. As MP3 players become more affordable, I won't even have to burn them onto a CD-R. The real reason I'm dreaming of 8-tracks is because I'm catching whiffs of the bullshit that accompanies any impending technological shift in music, and this time around it's destined to be piled higher than ever before.
The following press release appeared on Jan. 12:
EMusic.com Inc., the Internet's leading seller of downloadable music, today announced a corporate restructuring aimed at reducing expenses and focusing the company on its two core sources of revenue?advertising and promotional revenue through RollingStone.com, and downloadable music sales through EMusic.com... As part of the restructuring, EMusic announced that its staff is being reduced by 66 persons, or approximately 36%. Staff is being reduced in all of the company's departments. EMusic will also consolidate its two New York offices into one.
Stories like this regarding dotcoms' financial troubles are now the norm; even companies like EMusic offering a profit-driven service are finding that investors want those profits right now, as opposed to them having faith in a company's long-term growth.
EMusic was founded in January 1998 by Gene Hoffman Jr. and Robert Kohn. They had worked together at an encryption/software design company called Pretty Good Privacy (PGP).
In an e-mail interview I conducted with Hoffman, he described how he and Kohn started EMusic:
"While I was at PGP, one of the major music companies approached us and asked if we could help them develop a secure music distribution system. The MP3 format was just starting to get popular, and this company wanted us to make sure that consumers couldn't freely copy and trade music digitally. At PGP, we decided it couldn't be done. A basic tenet of encryption is that you have to trust the people at both ends of the wire. Once a music file is unencrypted by the consumer to listen to it, they'd be able to make a copy of it if they so wished. People are used to having open, easy access to their music; they will not stand for music that 'times out' or cannot be copied between computers, CDs or portable players. That is how Bob Kohn and I got the idea for GoodNoise. (We later changed the name to EMusic.) We wanted to create a company that focused on all the good features of the 'MP3 revolution.' One that made things easier and cheaper for music fans, while compensating labels and artists."
And this is exactly what they've done. EMusic represents a diverse cross-section of indie music (rock, pop, punk, hiphop, country?name the genre, they have it), with more than 600 labels and 150,000 tracks. They also have forged downloadable deals with individual artists (like Elvis Costello, They Might Be Giants and John Hiatt) that will serve as business models for future disgruntled/talented artists getting short shrift from their major labels. The service it offers is impeccable: for $9.99 per month for a year's subscription, users can download all the songs they want from the website. Non-subscribers can download entire albums for $8.99, or individual songs for 99 cents.
As someone who writes about music, I know dozens of hardcore indie music fans, and I've told them all about EMusic. Most of those people own computers and are Web savvy. I only know one other person who uses EMusic. Why is this?
There are a few answers. The main one is Napster, which will be undergoing major changes now that it has forged a deal with Bertelsmann, owner of BMG, one of the five major record companies in the world, to form a subscription-based service that is certain to be similar to EMusic's highly efficient model. As it stands now, Napster is wide open in terms of free downloadable music. Artists and labels don't make a dime from this, and their chagrin is understandable. While dorm-room Che Guevaras flood Internet message boards with their armchair revolutionary rhetoric about music being free, most recording artists are not enjoying the concept of fans screwing them, as this has traditionally been the domain of the record company. Pointing this out is to invite verbose, pseudo-populist sentiment from irate fans who most likely have never been populists in even the most remote sense and never will be.
What will happen when the newly merged site opens and the current form of Napster shuts down? That's open to debate. The only certainty is that one would be wise to get out that wish list of b-sides and rarities and start banging Napster now, as the changeover is bound to resemble the Web equivalent of the fall of Saigon. And I'm willing to bet this new union's subscription rates will not be as reasonable as EMusic's. Naturally, there will be a heavily reported Napster backlash, with the more vocal users pissing off to other lesser-known P2P (person-to-person) download sites, none of which will succeed to anywhere near the wild levels Napster has reached.
What few seem to realize is that Napster isn't some revolutionary storefront operation pledging undying power to the people. It's a multimillion-dollar corporation that received massive financial backing before lucking out and having Bertelsmann legitimize its existence. That, along with the incredible media blitz that accompanied Metallica suing it, has made Napster a cultural phenomenon, drawing in millions of users who otherwise may have never heard about or understood it.
Napster was the first, and most likely will be the last, of its kind. Which is to say there will always be websites with fans trading music for free, but none will reach that across-the-board popularity and user base that Napster now has. And the user base is key: without millions of users offering their various caches of MP3s on their hard drives, the smaller sites that are certain to take up Napster's cheapskate slack are going to find themselves with nowhere near the volume Napster has.
These sites will also find themselves the objects of major recording industry lawsuits once all the big labels catch the Bertelsmann bug and decide downloadable music is in their immediate futures. As Napster would have discovered had Bertelsmann not bailed it out, lawsuits from major corporations are wars of financial attrition that will leave the smaller companies, even if they win, so monetarily drained that their survival will be threatened by this legal bloodletting alone. This is assuming these smaller P2P companies will become visible enough to be sued; most won't, unless the recording industry adopts a scorched-earth policy regarding this issue, which isn't inconceivable.
Where does all this leave EMusic? In a precarious position: stuck in a sluggish, Web-unfriendly economy, in a sort of calm before the storm that is bound to change when the revamped Napster arrives. When I asked Hoffman who his competition was, he replied, "Everyone and no one. On one side, there is no other company offering convenient and inexpensive downloadable music for sale in MP3. There is also no other company offering a compelling digital music-subscription service like EMusic Unlimited. On the other hand, you could say that every dotcom and record store is our competitor for mind-share and customers."
There is still much that is uncertain about the long-term future of downloadable music. Let's say the Napster/Bertelsmann model is successful. There are five major labels and a few dozen strong indies. What fan would be willing to pay each of them a subscription rate so he could have the option of downloading their music? The final fee would be a three-figure sum per month?much more than the average fan, and most serious fans, spend on CDs. It's highly unlikely that all of these powerful corporate entities will agree on one website with a fixed fee to sell downloadable music. This issue may take years to work itself out, as the only unifying efforts the major record companies seem to have engaged in recently, barring typical self-aggrandizing awards shows, have been their disdain for Napster and a penchant for price fixing.
With as much trouble as EMusic has had with Napster (Hoffman sent out a letter to subscribers last year outlining the problem of Napster users distributing EMusic tracks), EMusic's future, for better or worse, will be tied in with how well the new Napster performs. If EMusic can weather the dotcom backlash and catch a few good breaks, it could position itself as the website for downloadable indie music, which would be a more significant achievement than an individual major label succeeding with its own site.
For his part, Hoffman claims he sees nothing but good in his immediate future:
"I welcome the Bertelsmann/Napster partnership because it will help legitimize paid-for, downloadable music. I believe that we'll be able to compete very well against a pay-for Napster because it will no longer be free apples vs. paid-for oranges. I am also confident in the head start we have in paying customers, the label catalog we've signed up, and the enhancements we have planned for our service."
Hoffman recognizes the vital difference between a record company selling CDs in a store and a fan downloading music in his home. "The major labels' biggest problem is that they're not experienced in touching consumers directly," he writes. "They're used to having all the control in their relationship with both artists and consumers. The Internet is changing that... In the digital world, there's no inventory, no warehouses, no packaging, no running out of stock. It's much more efficient."
Not just the selling of music, but how we listen to it will change as downloadable music slowly works its way into the cultural mainstream. Again, this may take years to fully flower, as many fans either do not have access to or refuse to acknowledge digital music?but the roots of this nascent media form are growing rapidly.
Hoffman foresees a more wide-open future for recording artists: "Two of the more interesting changes will be transformation of the focus from 'album' to 'playlist.' For the past 35 years, we've been trained to expect our music prepackaged for us as a collection of 10-15 songs, either as a vinyl record or CD. Downloadable music will give artists the ability to go back to the days of the single if they wish. A musician could literally produce a song today and offer it to their fans tomorrow. That's unthinkable in today's music business. This will open up a lot of exciting possibilities by tightening the relationship between the artists and their fans. The concept of the playlist is kind of like a mixed tape but it's much easier to create and share. There are no boundaries. It's the way that avid music fans have always talked and thought about music."
And, going back to that shitty hand-pump 8-track in my dreams, the technology is going to change. We're still living in the age of CDs, and most likely will be for quite some time. But MP3 technology is already working its way into the mainstream. Phillips is selling a portable CD/MP3 player called the Expanium that plays regular audio CDs and CD-Rs (and CD-RWs) containing MP3 files; an 800 MB CD-R will generally hold 10-12 hours of music. A piece of technology like this is destined to serve as a bridge to the vast majority of music fans who have substantial CD collections but find themselves enticed by the storage possibilities of MP3 files. Many higher-end DVD players are now being manufactured with the capability of playing MP3 compact discs, too.
Stand-alone MP3 players are also starting to appear on the market. Much is made of the Rio portable MP3 player, but its largest model only holds 64 MB of space, expandable to 400 MB. The Nomad Jukebox is an even better development: a portable MP3 player with a 6 GB hard drive, but prohibitively priced right now at around $500.
These all pale in comparison to the Attila the Hun of portable MP3 players: the NEO 25 , with its 20 GB hard drive model listing for $469. What's a 20 GB hard drive in layman's terms? Anyone buying this fine product will be capable of holding the approximate equivalent of 600 CDs (or 8000 songs) in the palm of his hand.
Could this mean there will be one day no physical product associated with music? Just a computer file? That day is coming, although it's anyone's guess how long it will take to arrive, as major-label inertia has already slowed and/or ignored much of the progress made in this area. It's conceivable that "record stores" (why are they still called this?) will one day serve as way-stations for consumers to simply have a physical place to go to mull over their downloadable options. Visual media like MTV will also have to figure out a way to deal with this, as music fans will slowly, perhaps imperceptibly, pull away from the deeply manipulative images they are regularly sold now with music.
These sweeping changes will not happen overnight; if the recording industry resists as forcefully as it has, they may take years. But it's nice to imagine a world where just the sound of a song, the timbre of an artist's voice or the tone of a guitar will be all that matters, as opposed to the stifling cultural clutter that bogs down every type of music these days.
While downloadable music has represented a false sense of freedom over the past few years, the future, as represented by what a company like EMusic is doing right now, gives the hope of a real freedom that's scaring the shit out of every corporate entity associated with the selling of music. But I'm sure once they overcome their understandable fears and realize there will be even larger profits to be made in the digital age, they'll find a way to make that freedom feel tawdry and exploited. It's always been the nature of the business.