We7 Expands Ad-Supported Music Delivery Service

Last year I wrote about an ad-supported music service that enables users to download tracks for free in exchange for listening to and/or viewing advertisements from marketers. We7, a similar type of music provider to SpiralFrog announced today that it's expanding its offering with an ad-supported audio streaming service to over 500,000 tracks from the Sony BMG catalog. All We7 users have to do is listen to a "short audio advert" before each song is played. Ad-based music delivery models like We7 are intriguing, and I think they have a chance of becoming viable businesses. Here's what I like about We7:

1) Artists are getting paid. I'm assuming it's at least the minimum amount for audio streaming as set forth by the US Copyright office
2) We7 discourages illegal file sharing by providing individuals with the ability to download music for free
3) We7 is providing a framework for music related cross-promotions. For example, allowing venues to advertise to certain types of music enthusiasts via their adverts.
4) We7 is allowing their users to purchase music without ads if they decide they do not wish to hear ads
5) We7 states that they will use non-personally identifiable information to determine what ads will be included with downloads

But, I do have a few questions (if you work for We7, feel free to post a reply):

1) Can advertising really support the company's bandwidth, catalog storage, royalties, operations, etc.
2) What's to prevent someone from removing an advert
3) How many times do you have to hear an advert once you've downloaded a track, and/or how long does the advert stay attached to a track
4) According to Derek Sivers, people are willing to pay for indie music. Why not just provide the ad model for major recording artists, but require people to pay to download indie music at a price set forth by the artist. We7 then takes a percentage of that price.

We7, a company backed by Peter Gabriel is doing quite well in their first year. Presently, they have over 130,000 subscribers, and they've distributed over 3 million downloads from 750,000 tracks since their launch in May of last year.
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I was listening to The Shins when I wrote this post.

Comments

[Gareth]

Thanks for the comments. To answer your questions:

1) We believe that it can. The combination of audio and banner adverts can pay for on demand streaming now and downloads in the near future. We obviously need some scale to make this work but we are convinced we can that scale (especially after the response we have had to the Sony BMG content)

2) If you want to get tracks without ads then there are many places you can do so without the difficulty of cutting the ad off and re-entering the track details. Taking the ads off is against our T&C and so unlawful.

3) Currently you can come back to the site after a month and re-download the track without an ad. You get 20 of those free a month and then there is a small charge. We can't remove it automatically because we are not using DRM technologies.

4) Its about choice for our users. Not everyone is willing or able to pay for music . We do offer paid for downloads for those that don't want the advertising.