Music moves with the times
UK music streaming site we7 has announced that it has registered its first month in which the cost of making music available to stream for free was completely covered by advertising revenue. It reckons it's the first company to achieve this.
Commenting on the breakthrough, Steve Purdham, CEO, we7, comments: "Making ad-funded music on-demand add up has been our single ambition since we7 first started. We're thrilled to be able to say that we7 can deliver real value to music lovers, rights owners, artists and advertisers alike by making it add up in a fair way.
"The model is not unique - we have seen it for decades in TV and radio but for music on-demand it was critical to ensure that the rights owners and songwriters get paid a fair rate whilst stamping-out piracy. Now that we have achieved this momentous milestone we feel confident about increasing scale... It should also be said that we could only make this happen by good support from the major and independent record labels, artists and the PRS for music."
While we7, which was founded around three years ago, is keen to crow about this apparent vindication of its business strategy, it does also set an important precedent for the whole industry. Not only does it indicate there is an alternative business model for the music industry in the digital era, it may also render all the silliness around forcing ISPs to disconnect users redundant.
Right now, we7 reckons a million plays of a song on its site generates payments to the music industry of between £2,000 and £4,000. "What is really exciting for us is the fact that the equation has worked and has been achieved with ad rates which are sustainable at massive scale and the recent partnership with Yahoo will help us achieve this," said Purdham.
"There are still many challenges ahead, but with the potential of trillions of individual song plays, the opportunities for we7 and the music industry are huge. Ultimately, it's all down to consumer choice - if the consumer wants to listen to the music and nothing else, then the re-emerging subscriptions models will be a big part in generating value. If they choose not to pay, then we7's ad funded model will ensure value is preserved."
