Photo: Dave Goehring
Steve Purdham and Peter Gabriel—yes, from Genesis—joined forces three years ago to launch music streaming service We7, which now boasts 3 million monthly users in the UK. Every day it streams an average 31 minutes of ad funded music to each of its visitors.Out of We7’s 3 million users, the majority choose to listen to a short commercial message before streaming each song. The company has subscription options starting at £4.99 for listeners who are averse to advertising messages, however Purdham says, “Subscription [paid] is only a recent addition to us so it still yet to gain traction.”
Earlier this year the company reported a breakthrough: advertising revenue covered its streaming costs for the first time. It is expecting to be a full break-even operation in a year.
Steve sees downloads, merchandise, ticketing, ring tones, ring back tones, and premium music products as alternative income streams. But advertising and subscription will always be the leading revenue drivers. According to Steve, streaming is the future and the “download is dead,” so he won’t be expecting much from download revenues in the long term.
The numbers look promising at first but if it takes 3 million users to generate a partial break-even is this really a scalable, high-profit business that would be attractive to investors and buyers? Purdham is certain that it is.
US based streaming music service Playlist.com filed for Chapter 11 earlier this summer despite having a reported 45 million registered users in 2008. Purdham insists businesses such as Playlist, Imeem, and SpiralFrong have gone for scale (numbers) over economics (viability) commenting “you have to focus on the economics of making it work rather than the scale first. That is what we have done at we7.”
Will we7 succeed where other streaming music providers have failed?
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