eMusic, SonyBMG and how not to roll out a service change

Those of you who have followed this blog for a while know I've been a huge fan of eMusic. The service, for those who don't know, is a subscription based music service that offers very low rates and a fiercely independent catalog. Earlier this week, eMusic causally announced changes to both of these core features.

From the official statements, the most heralded change is the addition of SonyBMG back catalog. This is a fairly major coup for the service. In the past, the major labels have avoided eMusic due to their low label payouts so for SonyBMG to join up is a pretty radical change of thought on their part.

Or is it? The second announcement was an across the board (a New Your Times article called it "slight") rate increase. Technically, rates are staying the same, but the number of downloads that same money buys is going down. And here's where the story gets really interesting.

The way this was rolled out could be a text book example of how not to handle service changes or how to piss off nearly all your loyal customers. Rather than sending an eMail to subscribers, users would have to log into the site and notice the link on the homepage announcing important changes to your account. For a company that has tried to build a large sense of community, this came as quite an affront to many subscribers.

The SonyBMG announcement, a blog post ironically titled "More of the good stuff" is rather ambiguous and worded heavily with corporate speak. The addition of a major label is certain to change the face of a service that has always been a feisty independent, a fact downplayed in the official word. And one would have to do a bit of leg work to see that this deal is for "selected" SonyBMG back catalog without mentioning what or when it's coming. Neither of the official statements to subscribers mention this, but this LA times blog post fills in some gaps.

Most importantly are the rate changes, which were rather casually tossed in near the end of the statement. A while back, eMusic raised it's rates and sent out an eMail assuring current subscribers they'd have their current rates as long as they remained members in good standing. Two years later, these most loyal, longest subscribing members are seeing their rates more than double without even a proper eMail alerting them to the changes.

Needless to say there's been a healthy sense of outrage at eMusic over these changes and the way they were handled. On eMusic's message boards, the consensus is overwhelmingly negative mostly for the rate changes but the way this was handled and SonyBMG itself isn't exactly popular either. While I think this was really carried out in the worst manner possible, especially for a company that needs customer loyalty in the form of long term subscribers to survive, after the shock has worn off, I'm cautiously optimistic about what lies ahead.

Let's get this out of the way first; I'm not happy my rates are going up. I was grandfathered in on a plan and I'm now paying about double what I was per track. One of the major things I liked about eMusic was the low cost that made experimenting with music rather painless. the new rates are going to make me, and seemingly all other users, a bit more cautious about what I'm downloading.

But, I'm also a musician with music on the service. Our per track take from eMusic is less than half what it is from iTunes or Amazon. In the last couple of years, eMusic has lost major indies like Epitaph and Drag City over these lower per track payments. As an artist without a label selling through TuneCore, the lower payments aren't as big a deal as they may be to a real label with overhead.

I've had arguments with other eMusic users on this point, but I just don't see how the service could have continued to keep the labels they have, let alone attract new ones, with the rates they were charging. There was an unofficial statement now buried on the message board from the site's editor, and public face of eMusic to many of it's subscribers, Yancy Strickler which sounds to me like eMusic was looking at the potential of a mass exodus of labels if they didn't find a way to increase the payouts.

The problem is, they tied this in with the SonyBMG announcement, which was a huge mistake. While the arrival of SonyBMG is certainly related to the rate increase, I don't think it's the only reason for the increase. I can understand why many users feel it is. I did too for a while. But, knowing what little I know about the behind the scenes and label side stuff, I really don't think it was just luring SonyBMG that was the reason for the hike.

But the bigger problem is the way this whole thing has been handled. Most of what I've written is speculation as both a subscriber and a music provider, I know very little other than rates are going up and some SonyBMG back catalog is coming. I'm not trying to suggest my situation entitles me a seat at the board meetings or anything like that. I do think I, and every other subscriber, am entitled to better communication than we've been given.

I find myself very conflicted about everything right now. As an artist, I'm cautiously optimistic that the new rates will mean better payouts. The big question is, will users be as adventurous with fewer and more expensive credits? (This is an issue I addressed a few years ago when Epitaph left.) This may end up going much like iTunes new $1.29 price point where the increase in per track rates doesn't make up the shortfall from users choosing not to download things they would have at the older rates.

As a subscriber of the service, I'm really hoping my hunches are correct and the increased rates mean keeping the quality labels they have as well as adding new ones. Many users feel that Sony is the entire reason for the hike, which, if true, would be a pretty drastic swing in what eMusic is all about. I don't think that's the case, but the rate increase will be much easier to take knowing the money is going towards courting more labels I care about than attracting the back catalog of one I don't.

Whatever the case, the way this was handled has given me some serious doubts about the future of eMusic. Hopefully this was just poorly planned and isn't a sign of the way changes to the service will be handled in the future. But the silence from the top since all this exploded doesn't exactly do much to make me hopeful.