EXCLUSIVE: eMusic CEO Speaks Out On DRM And Consumer Dissatisfaction

HYPEBOT: Incompatible and restrictive DRM is the largest unresolved issue in digital music. Do you believe that it is holding back growth in the sector or are most consumers unaware of the issue?

DAVID PAKMAN: Without question the digital music market’s growth is stymied due to lack of interoperability. Never in the history of recorded music has a popular music format been released that’s incompatible across vendors of playback devices. As for consumer awareness around the issue, you can see evidence of their dissatisfaction with this situation by examining the return rates of MP3 hardware players at retail – sometimes as high as 70%! Clearly, consumers are confused.

HYPEBOT: With artists, labels and publishers afraid of lost revenue, what is the solution?

DAVID PAKMAN: We believe the solution is to sell music in universally-compatible formats. Today, the only such format is MP3, which is why eMusic sells our entire 1.3M track catalog in MP3 without DRM, and as a result, every digital music hardware and software device ever created can play our songs.

HYPEBOT: Has eMusic tried to add major labels to your catalog and if so what was the response?

DAVID PAKMAN: At one point, eMusic was owned by Vivendi Universal and some of Universal’s catalog was made available. Other than that (which was before my time at the company and before Dimensional bought eMusic), eMusic only concentrates on selling music from the top 4000 independent labels around the world. Given eMusic’s focus on selling music beyond the commercial mainstream, most of the major label’s front line catalogs are uninteresting to us or our customer. However, there are considerable titles in the back catalogs of the majors that would interest our subscribers.

HYPEBOT: Do you see anything on the horizon that will break Apple’s dominance in the download market?

DAVID PAKMAN: Well, eMusic has doubled our market share in the months from December to March. We went from just 6% of the market to now 12% of the market, according to the NPD Group. In the same time, Apple lost share from 68% of the market to 61%, so we are having some success at attracting a base of customers who are really looking for a different music service focused on helping people truly discover great music. We cater to an older customer than Apple does. Our focus is on music fans 25 – 54 years old who tend to be hugely underserved and also tend to feel the other services are catering almost exclusively to kids.

HYPEBOT: What new is happening in the music industry including at eMusic that particularly excites you?

DAVID PAKMAN: Well, the music industry is basically all-indie all-the-time now. The independent labels are producing the most interesting music, growing in market share (while the majors continue to shrink), and catering to a diverse set of customers. The majors have really become companies focused only on mainstream pop and rap and selling music to teens, who, by the way, have been buying less and less music every year for the last five years. So there is a disconnect at the majors and the indies are exploiting it. Rock has exploded again, thanks to the indies, and eMusic is the one service that really helps you navigate all the great music to be found.