Why are ad-supported models such a hard sell to the major record labels? “It’s simple”, answered Steve Purdham CEO of We7 in a recent interview with last100. “They are worried that if they leave the iTunes model, the revenues they get will be diminished”.
At the time, Purdham’s company, which offers ad-supported streaming and downloads, didn’t have a single major on board. That was just over six months ago, and how things have moved on.
In early March, We7 unveiled its first major label partner, Sony BMG, to offer free streaming of its music catalog to We7 users in the UK. And just today the company announced a partnership with a second major label: Warner Music UK.
The Warner agreement is two-fold, covering on-demand streaming (ad-supported), supplemented by full paid-for MP3 downloads. “We7 users will be able to listen to full tracks and albums on an unlimited basis at no cost, and also create playlists, share their favourites and embed songs into their personal webspace”, according to the press release. In return for this all this freeness, users will have to listen to short, targeted audio adverts before each streamed track.
Alternatively, for an ad-free experience users can opt to purchase any Warner track outright via We7’s integrated download store, similar to the current arrangement with Sony BMG. Tracks are to be offered in the MP3 format, compatible with virtually any digital music player including iPods. Aside from individual songs, We7 and Warner will also offer “album bundles with additional tracks, videos and interactive booklets.” Warner Music’s content should be available on We7 before the end of October.
It seems that Warner’s deal with We7 is more evidence of that the major label is willing to experiment with new business models. After starting legal action against another ad-supported music service, U.S.-based imeem, in May 2007, Warner Music Group dropped the lawsuit two months later in favor of a “strategic partnership”. More recently, the company announced that it had signed onto Nokia’s forthcoming all-you-can-eat music subscription service, “Comes With Music“.
Disclaimer: We7 was recently a last100 sponsor.