Online Retailer eMusic Racks Up 100 Million Downloads

LOS ANGELES – Online music retailer eMusic said it's racked up its 100 millionth digital music download this week, a milestone reached roughly three years after the service launched.

The sales total is a far cry from the 1 billion tracks sold in about the same time by the digital music leader, Apple Computer Inc.'s (AAPL) iTunes Music Store.

But despite the gulf in sales compared with iTunes, eMusic's numbers to date suggest demand for music in the MP3 format — free of copy and playback restrictions — is growing.

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"Except for iTunes, the only store that is doing well online with downloads is eMusic, and the reason is because they do sell it without [playback restrictions]," said Phil Leigh, an analyst with Inside Digital Media.

EMusic, a unit of New York-based Dimensional Associates Inc., offers downloads through a subscription plan. The company said the service has more than 220,000 subscribers.

The service racked up its first 50 million downloads a year ago. The privately held company declined to disclose financial details.

The service has managed to lure paying customers with a catalog of more than 2 million tracks by independent artists.

By comparison, online music stores run by Napster Inc. (NAPS), RealNetworks Inc. (RNWK), Yahoo Inc. (YHOO), Apple and others sell music from major-label acts.

Still, selling music in the MP3 file format — which is compatible with the most popular digital music players on the market, including the iPod and Microsoft Corp.'s (MSFT) Zune — has given eMusic added appeal, Leigh said.

"Right now, it's the only legitimate site where you can buy MP3s," Leigh said.

That could change if major labels, artists and music publishers ever embrace selling music in the MP3 format, Leigh said.

Recently, several major record labels have flirted with the concept, making a handful of tracks available for purchase in the consumer-friendly format.

The likelihood that eMusic could reach iTunes-like sales is slim as long as major record companies refuse to sell MP3s, said Michael Gartenberg, an analyst with Jupiter Research.

"While there is demand for alternative or independent music, at the end of the day consumers really want hits," Gartenberg said. "Hits really drive the market."