WEB-BASED MUSIC STREAMING SERVICE We7 has finally broken even, three years after being set up in the UK by co-founder Peter Gabriel, and it claims that ad-funded online music can work by paying all its running costs.
The company said all of its on-demand music in the UK was paid for in full from advertising online. This means not only paying off PRS, the music royalty collection agency, but also other costs to music publishers.
"This has been the holy grail for all on-demand ad funded music businesses so it has been our goal since inception," Steve Purdham, chief executive officer of We7, told the Inquirer in an interview today.
"It has taken three years to get to the point of providing a fair and reasonable payment for each song at advertising rates that are at standard market norms," he continued.
We7 is bullish on its successful ad-based model and took the opportunity to mention competitive services that have fallen by the wayside or been swallowed by larger companies. "They fell for the standard Internet trap and went for scale ahead of a sustainable economic model and ran out of investment money," Purdham said.
Purdham is not setting his sights on Microsoft Network's music, Sony's dead Connect store, or the de-fanged Napster, all of which failed to make a sizable dent in the ubiquitous monolith known as Itunes. Purdham is only interested in ad-based music streaming services that crashed and burned. Most of We7's competitors like Imeem, Spiralfrog, Ilike, Lala and Ruckus scaled up and couldn't sustain their respective businesses.
However, he aims to show that all streaming services are not the same. "On We7 consumers get great free music, advertisers get great audiences and the music gets paid for at a fair and reasonable rate for every song that gets listened to."
Here is the white elephant in the room here: Spotify. Purdham's sly dig refers to the fact that music streaming services have been accused of underpaying artists' royalties. Last year Spotify was accused of paying Lady GaGa just £108 in return for one million plays of her song Poker Face. The company has also has been delayed in the US market because of fears that users won't update to its subscription-based premium membership.
We7 believes everyone is a winner with its ad-funded on-demand model. Its music has a fair and known value per play. We7's ads were also built in from day one with full multi-media integration, rather than back-engineered. The company claims that a song played one million times generates anywhere between £2,000 to £4,000 for the PRS, artists and music publishing companies. Take that, Spotify.
Purdham admitted that juggling PRS, advertisers, artists and users is no easy trick. "Responding to all of these different objectives is why it has taken this long," he said. "The consumer wants music, the advertiser wants a responsive audience and the artists and publishers want a fair and reasonable rate for their craft."
We7's poke at Europe's most successful music streaming service comes after Spotify announced a host of new features. We reported this week that Spotify released an overhauled service with tweaked management and social-notworking functionality, probably in a bid to impress the US and take ITunes on.
Purdham remains unfazed. "We already have most of these functions and as a web service we innovate every month in order to evolve and create new capabilities," he said. Spotify's Achilles heel is that it's a downloadable application that hasn't been updated in two years, whereas We7 is purely a web-based:
"Spotify is a club with music is only available for people in that club. It is good and ideal for early adopters but We7 allows anyone with a browser to listen to music, which is why we have so much more mass market appeal." µ