The label fallout from the eMusic ordeal from last week shows how the current conditions in the economy are affecting everyone right down the line, from music labels to online stores to customers.
eMusic announced a new pricing system last week, in which songs are priced in dollars and cents, rather than subscription-based credits. This allows for songs to now have different prices based on the popularity of the song (often called variable pricing), rather than a fixed price. The songs now move at 69¢, 79¢ or 89¢ for major labels songs, while most indie labels will go for 49¢. eMusic subscribers will get a set dollar amount each month to spend at will.
The other big eMusic news was that major labels Sony Music and Warner Music Group are now part of the eMusic offering, while Universal Music Group licensed more music to the eMusic catalog. Domino Records, Merge Records and Beggars Group all said they could no longer stay on with eMusic. Price change + addition of major labels + exit of indie labels and boom! You've got an online conspiracy mob on you hands, pointing fingers and accusing eMusic of selling out.
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A lot of independent labels have fought the good fight against variable pricing in the past, while major labels supported it, and it quickly became an Us vs. Them litmus test to prove your indie cred. It might be very fashionable to slam the majors and support the indies, and use the litmus test to prove indie cred, but the shift by eMusic reflects the kind of change we see as "The New Normal" plays out in all of our lives.
The New Normal is the name given to the new economic situation we find the world in right now, and the fact that the paradigm of where we are and where we're headed is completely different than it was five years ago. As such, the move by eMusic doesn't seem surprising. It's simply a matter of survival.
Or put in the opposite light, what good is indie cred if you're not around to sell music? Online music stores have a very thin margin of profit these days, so before anybody accuses them of selling out they should consider the fact that the "fat cats" over at eMusic might not be lighting their cigars with burning $100 bills.
That said, it's hard to tell why Domino Records, Merge Records and Beggars Group actually dropped out, but I'm sure they have good reasons. The popular theory of what actually happened is that eMusic wanted the labels to accept lower wholesale rates in payment for their music, although at this point, that's completely unconfirmed. The pricing shift might be one they could not realistically support and still stay in business. It might be an ideological stance based on principal, in which case, more power to you.