I don't think music should be free (well, mine is free, but that's because I care more that you hear it than that you pay for it). I like to pay for music when I feel the price is fair. David has rightly been banking on there being a lot of people like me out there, and eMusic's success to date is a testament to the growing numbers of people willing to pay for a service that treats its customers with dignity and respect, and doesn't punish people who acquire music legally.
A few months back I went to an eMusic customer focus group and met this guy. He's about as down-to-earth as you can imagine a CEO to be. Essentially, he and some of the other eMusic brass stood in front of 30 or so customers that responded to the email invitation and talked to us about how we consume media for 90 minutes or so. If more people in the music business took the time to understand their customers...well, let's not get carried away. Pigs might fly sooner.
Anyway, here are some highlights:
"According to data we analyzed from the RIAA and Ipsos, last year, more than 30% fewer people bought music than did in 2000. This is an enormous decrease. Many have offered theories to explain it -- piracy, music quality, you name it -- but informed people will tell you that a very big reason is that consumers, inundated with well-priced entertainment choices, think most music is too expensive."I'm one of the customers he talks about that spends a bunch of money every year with eMusic. If you haven't ever tried it and think you want to, leave a comment here and I'll send you a referral email. You could just sign up for it on your own and do the free trial, but if you let me refer you, you'd be helping me dig through the incredible backlog of songs I want from there that I haven't been able to get to yet. Just sayin'.
"Most of you know about price elasticity. It's the basic economic concept that says, for certain goods, when you raise the price, sales will fall disproportionately, and so the increased revenue doesn't make up for the lack of sales. And if you lower the price, sales will rise disproportionately. Music is an elastic good, and we have now seen that by raising prices, the industry in fact did not make up the revenue, and, in the end, only slowed sales."
"So, eMusic is all about trying to satisfy two concerns that most former music buyers have: a) they aren't sure what to buy anymore because they don't hear anything good on the radio, and b) they think music is relatively expensive compared to DVDs, etc. eMusic makes a splendid bargain with our customers: get a better deal on music from us than what you get at iTunes, and we'll work really hard at helping you discover great music. But in return, you spend more money on music than you normally would. And that's good for everyone: artists, labels and customers. And here's the bottom line: the average customer only spends about $12 per year on iTunes; by contrast, the average eMusic customer spends about $168 per year with us. Imagine how different our industry would look if more retailers could serve their customers so fully."
Again, read his whole post here.