EMusic Chief David Pakman departs a believer

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Former EMusic Chief Executive David Pakman has a response to critics of his indie music subscription download service: It’s not the model, stupid.

Pakman announced his resignation from EMusic yesterday and today blogged about his unflagging confidence in the business of subscription downloads, saying that “our success cannot be understated.” He notes that EMusic has increased its subscribers fivefold — to 400,000 — and its revenues tenfold, to $70 million, in the five years since Vivendi Universal sold it to New York-based investment firm Dimensional Associates Inc.

The company has made those leaps without the benefit of deals with major labels — which avoided EMusic because it lets users download tracks in the universally usable mp3 format, even though the big labels have since teamed with Amazon and even iTunes to sell mp3s. Still, EMusic has managed to carve out a niche for avid indie music consumers, the kind who buy several albums a month and for whom paying a flat fee (as low as $11.99) is a steal.

And eMusic still sees strong potential for growth. Chairman Danny Stein said in a statement that the company expects its next chief — probably an outside hire recruited by the executive search firm Barlow Group with input from Pakman — to raise revenue to the several-hundred-million-dollar range.

While EMusic wouldn’t comment on how that would happen, the company has been giving its website a makeover, incorporating photos and information from sites like Wikipedia and Flickr. It’s also plotting to put out over coming months a new welcome page — its current one walls off content from nonsubscribers — and a recommendation engine.

Those changes should help the company burnish its image as a clearinghouse for all things indie, a specialization that may continue to pay off if — as the also CEO-less MySpace Music seems to be doing so far — other streaming, subscription and download sites stick to pushing mostly major label content.

--Swati Pandey

Logo courtesy EMusic