DANNY DOES DIGITAL

Entrepreneur may as well be eMusic Chairman/CEO Daniel Stein’s middle name. As President of JDS Capital Management and CEO of Dimensional Associates, the company that acquired eMusic from Vivendi Universal’s VU Net in 2003, he is no stranger to innovation. In 1994, the Cornell University grad founded the Burly Bear Network, which became the largest college cable TV channel in the country before he sold it to Lorne Michaels. Stein was also CEO of a copy-protection technology company bought by Macrovision, and started the Wedding List, an online gift and registry business, which he sold to Martha Stewart/Omnimedia in 2001.

How has the company’s mission evolved since its inception?
Our mission has always been the same—to provide a great experience for our members. That’s why we were the first major music service to offer DRM-free tracks at a better price. Now that other services have caught up to us in those respects, we’re continuing to improve on the service, with the best prices, editorial and programs like Access + Rewards, for example.

How do you see the worlds of digital and physical music product evolving over the next five years?
Ultimately, we do see music moving to the “cloud,” enabling consumers to access their collections on demand from wherever they are. There are business and practical issues to be resolved around rights, but we believe the market is in the process of resolving them.

How do you compete with a monolith like iTunes?
iTunes is a service that appeals to the mainstream and offers a la carte downloads. eMusic is a digital music club that offers a strong value proposition—join and pay less for your music while getting more in return…more music, more context, more community.

You talk about contextualizing your digital offerings with editorial. What are some ways in which you do that?
We have an excellent editorial team that assigns and writes features that dig deep into artists’ catalogs. For example, we recently added the Led Zeppelin catalog to the site along with three editorial features: “Icons: Led Zeppelin,” an overview of the catalog by Lenny Kaye, “Six Degrees of Led Zeppelin III,” connecting the album to its roots and influences; plus a feature on “10 Underrated Led Zeppelin Gems.”

What’s your take on Rhapsody’s recent app deal with Apple?
It’s a smart idea to allow consumers to cache playlists on their phones. We think the mobile phone is an important platform for music in the future and we’re looking at adding a mobile experience that works across the iPhone, Android and other devices.

Which of the digital music distributors—including Orchard, Rhapsody, Napster, Pandora—do you consider your chief competition?
The Orchard is a digital distribution and marketing services company that supplies eMusic. They are an excellent partner to eMusic. Rhapsody and Napster have staked their businesses more on streaming than downloading to own, which we still believe is a compelling piece of the overall product. Pandora is a great radio product for those users that choose this flavor of offering. We are a digital music club that offers more music and community for less.

How do you see the 99 cents and $1.29 digital download price points evolving in the future?
There will be downward pressure on pricing if music sales continue to decline. The market will grow if the record label suppliers support new and innovative retailers trying to build new businesses. More people are making and consuming music in more ways than ever before.

What kind of promotions do you undertake with actual physical retail stores?
We have download cards in more than 30,000 physical retail stores. We also have inserts in millions of products through hundreds of consumer electronics partnerships and work with many other brands to create customized music download promotions.

How has your own personal background on the Internet and in media prepared you for this job, Danny?
It’s impossible to be in the media business in 2010 and not be in the technology business. My background in digital media, which began in the mid-‘90s, coupled with some of the management experiences I’ve had in the creation of entertainment programming, sales and retail, provides me with the tools necessary to move eMusic forward. The digital media world is moving so fast, we’re all learning and evolving every day.

Are you bullish on the digital future of the music business?
Yes, there are more ways to make, discover and consume music than ever before. The market force will create economic opportunities for quality music.

Do you have any plans on signing your own artists?
We have a program called “eMusic Selects,” which focuses on unsigned bands but doesn’t require long term rights from the artists. We don’t plan to sign artists in the traditional way, but we work closely with artists when we can make it mutually beneficial. Our Access + Rewards program offers a lot of ways for artists to connect more closely with their fans.

What do you see as the future of the MP3 format?
The marketplace has voted MP3 as the most compatible, convenient, effective and efficient way to buy and store music. There are always improvements being made to file format flavors, in fidelity, compression, cost, etc.