Axehole

eMusic recently announced that they’ve reached a milestone, having sold 100 million songs as unencrypted (DRM-free) MP3s.

Tech bloggers are freaking out about the news:

• Digital Music News asks “So, uh, Mr. Major Label executive guy; How many million DRM free tracks does eMusic have to sell before you join the party? No, really.. how many?”
• Techdirt says that DRM-free music is the way to go, and that the major music labels are pretending that the jury is still out.
• MacWorld says that the labels are mulling life without DRM.
• WebProNews warns that they are going to keep slamming on Apple’s “rotten to the core” DRM in response to the “ever-growing consumer backlash revolving around Digital Rights Management.”

These guys need a reality check. Like it or not, sales of non-DRM’d music are trivial in the context of music industry sales, they are insignificant compared to the sales of DRM’d tracks at iTunes, and they don’t offer artists a serious new option for making money.

Here are a few reasons why it would be a mistake to bet on DRM-free music anytime soon:

• Most music fans don’t care about DRM. Ask a typical music fan what DRM is, and most are going to shrug their shoulders. While copy protection may be a big pet peeve for the Linux crowd, most people have know idea what it is, and if they do, they don’t care.
• eMusic doesn’t really sell songs, they sell subscriptions. eMusic doesn’t really sell individual songs, like iTunes does. They sell subscriptions. Until recently, they charged $10 for 40 downloads/month, about a quarter per song.
• Labels aren’t going to get rich from eMusic. At $.25/song, 100 million songs, sold in three years is about $8 million/year. The RIAA’s figures for 2005 music industry sales are 12.27 billion dollars.
• eMusic’s sales are less than 1% Apple’s. Apple’s sales of DRM’d tracks are about 1 billion/year.
• eMusic’s traffic has flatlined over the last year, according to Alexa traffic charts (below), except for a spike when eMusic offered 50 free tracks as a promotion.
  
• Musicians aren’t going to get rich at eMusic, either. eMusic claims a catalog of 2 million tracks. With about 50 million downloads last year, that averages out to be 25 downloads per track. And at $.25 per download, eMusic is making about $6.25 a song. Take eMusic’s cut off the top, split the rest with the record label and you can see why eMusic sales aren’t going to help artists quit their day jobs.

Tech blogger’s anti-DRM screeds may play to the choir, but, even a decade into the Internet digital music revolution, DRM’d tracks are still where the money is at.

Update: Gareth Stack posts a well reasoned counter-argument to this post at his blog, Hummingbird Mentality. It’s an interesting read, though we’re not convinced.

One note - he takes issue with my characterization of eMusic’s service as a subscription, saying you get to keep the songs. I think he may have misunderstood my point - that you’re not buying songs with eMusic, you’re buying a subscription.

Here’s eMusic’s info:

Q: What subscription programs does eMusic offer?A: eMusic offers three low priced subscription plans.

eMusic Basic

• 30 Song Downloads per month
• $9.99 per month

eMusic Plus

• 50 Song Downloads per month
• $14.99 per month

eMusic Premium

• 75 Song Downloads per month
• $19.99 per month

You don’t buy a song at eMusic, you buy a subscription that gives you X “free” songs/months. This affects purchasing behavior - people are going to download a lot of songs from eMusic in order to use up their monthly count that they wouldn’t necessarily purchase otherwise.