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eMusic and AT&T Ink Deal: Over–Air Mobile Downloads

emusic at&tWith the iPhone, AT&T may be in bed with Apple for the next five years but that doesn’t mean they can’t have other partners to make music with.  Yesterday, in a joint press release, AT&T and number two digital music retailer, eMusic, announced a new over-the-air (Internet to Mobile) music service for AT&T cellular customers (iPhones, not included).

The service allows AT&T wireless customers to access, preview and buy songs from eMusic directly through their handsets.  In going “over the air,” the offering diverges from AT&T’s earlier music download service deals (with Napster and Yahoo) that allowed customers to buy music online and download it to music playing phones. It also gives them a product to compete with offerings from other wireless providers.

There is plenty of “fine print” to go with the new service.  For starters, the pricing model is unique.  Users participating in the eMusic Mobile service will have to pay a monthly fee of $7.49.  That will entitle them to download any five songs from the service.  If five songs aren’t enough, more songs can be downloaded, but only by buying “booster packs” that come in additional 5 song ($7.49) increments.  Ad hoc, single song, purchases aren’t available, nor are downloads to any customer who doesn’t pay a monthly subscription fee.  (You don’t have to be a subscriber to preview songs, however)

Additionally, though the eMusic catalog is substantial, customers won’t find many of their favorite hits available.  eMusic built its service around offering songs from independent music labels (in contrast to the “Big 4” which represent more than 80% of available titles).   Focusing on Indies allowed eMusic to sell MP3 format songs that are playable on iPods, the dominant player in the market.  (Offering higher quality, DRM-Free songs is something most music services selling Big 4 titles can’t do because of the Digital Rights Management technologies the big labels have required (EMI excepted).  eMusic offerings are DRM-Free and universally playable. )

With 2.7m titles, the catalog is not small but representing Indies-only does limit the available titles.  A customer may not find this weeks Top 40 pop hit or a song from some Rock and Roll Hall of Fame members.  That doesn’t mean there isn’t something for everyone, though.  The catalog does include songs from artists as divergent as Johnny Cash, Bob Marley, Neko Case and Miles Davis.

At a single-song adjusted price of $1.50 a download, the eMusic mobile offering isn’t priced to be cheap either but the pricing (arguably by intent) places it safely, and competitively, in the middle of other over-the-air music services.  Sprint charges 99cents a track for and Verizon charges $1.99 per download. 

Volume-only pricing (e.g. pay in bulk, not per song) and subscription requirements haven’t been terribly successful for PC based downloads.  It’s not clear that mobile customers are different enough to make an offering like this stick.  AT&T and eMusic will find out soon enough.

It’s probably a good thing that AT&T is in bed with a lot of different partners for mobile music.  With all the competition for music download services – from subscriptions to single songs, from iPods and iTunes to the upcoming Slacker player- it’s hard to imagine eMusic Mobile being more than a niche play.  Then again, that’s arguably true for all mobile over-air services. And there’s also an argument from some that if a competitor has something, you need to do it too.

[eMusic is owned and operated by Dimensional Associates the operating company that manages investments made by private equity company JDS Capital.  Dimensional Associates acquired eMusic in 2003 and has several music industry related properties in its portfolio.]

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