I happened to be reading Bob Lefsetz recently on the Rolling Stones moving to Universal from EMI; after a few minutes I thought to myself, Hey, I think I know why the Stones catalog got pulled from eMusic so unexpectedly soon after its arrival. Note that this post is 100% pure speculation; I have absolutely no inside knowledge about what actually happened.
As previously noted by Yancey Strickler, eMusic did a fair amount of due diligence with both ABKCO (the company holding rights to the Stones’ older releases in the US, the only region in which the eMusic Stones releases were made available) and Universal (the major label through which ABKCO distributed those releases) in order to make sure there were no impediments to the proposed deal. However something happened between the time of the contract signing and the time the releases were pulled, something that caused either ABKCO or Universal to get cold feet and kill the deal.
I’m guessing that sometime during that period Universal senior managers started discussions with the Stones about switching from EMI to Universal. The discussions may have started right after the eMusic announcement, or they may have started after eMusic and ABKCO/Universal signed a contract and before the actual release.
It’s possible that the Universal and/or ABKCO managers negotiating with eMusic may not have known about the Universal/Stones talks, having been kept in the dark by more senior managers. A more cynical reading is that the Universal managers working with eMusic were in fact aware of the discussions (and perhaps even involved in them) and let the eMusic deal go forward anyway, for whatever reason. For example, they may not have wanted to tip their hand about possible complicating issues, or they may even have let the deal go forward just to test the waters and see how well the eMusic model worked in terms of stimulating demand through lower prices.
Now, since relatively few people want to buy new Rolling Stones releases, the Stones/Universal deal is primarily about the money to be had from milking the Stones back catalog. (As Bob Lefsetz put it, This is a banking deal, pure and simple. Universal calculated how many they could sell and made an offer. End of story.) Universal already distributed the early Stones catalog, as a distributor for ABKCO in the US and through its own label Decca in the UK (and perhaps elsewhere, though I can’t find confirmation of this on the net). A deal with the Stones for the post-ABKCO material would allow Universal to offer the entire Stones catalog in the US, UK, and perhaps worldwide.
However the deal with eMusic was a complicating factor in the proposed Stones/Universal deal. The presence of an alternate channel offering lower-priced Stones tracks would at a minimum introduce unwanted uncertainty into the financial model for determining the likely revenue and profits from overall back catalog sales, and it’s possible that Universal senior management wanted to eliminate that uncertainty. It’s also possible that the Stones themselves made ending the eMusic arrangement a condition of their signing the overall Universal deal. As noted in the Variety article on the Stones move to Universal, part of the motivation for the deal was launching a long-term campaign to reposition the band’s catalog in the digital marketplace; from the Stones’ point of view the vision for that campaign probably didn’t include selling their releases in what they might have perceived as the Internet equivalent of the record store bargain bin.
I find it an interesting coincidence that the availability of Stones releases on eMusic was ended exactly 30 days after it began (May 3 vs. April 3). This suggests that eMusic was allowed to sell the Stone releases only long enough to satisfy some minimum contractual commitment, and that ABKCO and/or Universal exercised their termination rights as soon as they could. Given the typical contractual requirement for some sort of advance notice of termination, I suspect eMusic itself found out about the problem very soon after the catalog went live on the site.
So, in the end, what did everybody get of it of this? Universal probably came out the best; it eliminated a potential impediment to the Stones deal, but not before getting the benefit of a real-world experiment in the effects on demand of lower pricing. The Stones got to preserve the illusion that all their back catalog releases are actually worth $9.99. eMusic subscribers got a few weeks in which to appreciate the work of one of the world’s once-great bands at a reasonable price point. And the folks at eMusic got to bust their butts to make the Stones launch on eMusic a success, only to have the rug pulled out from under them through no fault of their own. Just another day in the life of today’s music industry.