Pakman MIT Sloan Lecture 091508
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David Pakman's lecture to Erik Brynjolfsson's "Economics of Information" Class on 9.15.08
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Pakman MIT Sloan Lecture 091508
- 2. Why arenโt there entertainment retailers who cater only to the tastes of adults?
- 4. eMusic Snapshot โขโฏ Online Entertainment โClub Modelโ focused on adults 25+ โขโฏ Music, Books, more โขโฏ High-margin subscription business (44% GMs) โขโฏ Recurring revenue streams (monthly/annual subs) โขโฏ 425,000 paying members โขโฏ Download model focused on value and discovery โขโฏ Songs as low as 25c, audio books for $10 each Monthly Price Songs/Books Price Per $9.99 1 Book $9.99 $11.99 40 songs $0.30 $19.99 75 songs $0.27 โขโฏ โฆand more eMusic 20 Oct Confidential 2005
- 5. Subscriber Growth Subscribers 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0
- 6. 40% Of all music was purchased by adults in 2001 Oct 20 eMusic Confidential 2005
- 7. 73% Of all music was purchased by adults in 1H2007 Oct 20 eMusic Confidential 2005
- 8. N o2 Digital music retailer in the world Oct 20 eMusic Confidential 2005
- 9. Strong Number Two Market Position A La Carte Download Market Share โ The NPD Group Service 2007 iTunes 71% eMusic 10% Amazon 5% MSN Music 3% Real/Rhapsody 3% Napster 2% Yahoo! Music Less than 1% MTV Urge Sony Connect
- 10. 425,000+ Subscribers Oct 20 eMusic Confidential 2005
- 11. 225,000,000 Songs sold in last four years Oct 20 eMusic Confidential 2005
- 12. 4,300,000 tracks 400,000 titles 35,000 labels Oct 20 eMusic Confidential 2005
- 13. MP3 no DRM Oct 20 eMusic Confidential 2005
- 14. Own Your Music Donโt rent it. Oct 20 eMusic Confidential 2005
- 15. How is eMusic Different? โขโฏ Value โขโฏ Bundled subscription โขโฏ Lowest price in the market per track โขโฏ (But much higher per customer spend) โขโฏ Compatibility โขโฏ Works with every device โขโฏ Ownership vs rental โขโฏ Discovery โขโฏ Long-tail service truly sells non-mainstream music โขโฏ Opposite sales profile from hit services
- 16. Advantages of marginal cost model โขโฏ Price flexibility unrivaled in physical world โขโฏ More consumer choice โขโฏ Add value through services eMusic Confidential
- 17. The consumer is now in control.
- 18. RShare ANts P2P Gnutella P2P Ares Tor eMule Grokster Bit Torrent Free is everywhere. Entropy Kazaa Morpheus Limewire Freenet Blogs eDonkey GNUnet Azureus
- 19. Their life is on-demand and self-programmed โขโฏ TiVo โขโฏ Blogs โขโฏ Pandora โขโฏ Netflix โขโฏ iPod + iTunes โขโฏ YouTube โขโฏ Facebook โขโฏ Twitter
- 20. In music, DRM... โขโฏ Built Appleโs dominance โขโฏ Allowed iPod to be closed ecosystem โขโฏ Discouraged legit buyers from buying โขโฏ Slowed digital adoption โขโฏ Placed competitors at disadvantage โขโฏ Lotsa roadkill โขโฏ Sony Connect โขโฏ Yahoo! Music โขโฏ MTV Urge โขโฏ Musicmatch โขโฏ AOL Music โขโฏ Didnโt stop or slow piracy
- 21. In five years, there will be no more... โขโฏ DRM on digital media โขโฏ Release windows โขโฏ 24 hour viewing requirements โขโฏ Arcane restrictions on how consumers consume โขโฏ Labels as they exist now