7digital Expands to the Skies With In-Flight Music As Revenues Grow

Courtesy of 7digital
 Simon Cole

Digital services company 7digital has signed what it describes as a “first of its kind” deal with one of the world’s leading in-flight entertainment providers to bring its music offering to the skies.

The two-year deal with U.S.-based Global Eagle Entertainment, which operates its Ku-band in-flight broadband service on more than 500 airplanes worldwide, will see 7digital provide the back-end technology, web development and rightsholder reporting for new in-flight music services launching in the fourth quarter of 2017.

Precise details of what form those services will take and on what airlines they will run have yet to be announced, although Global Eagle’s client base includes Southwest Airlines, Norwegian Air, Emirates, Japan Airlines, Singapore Airlines, Qatar Airways, Air France and flydubai.        

“Until now, in-flight music entertainment has been [the equivalent of] music piped in by the cabin crew,” 7digital chief exec Simon Cole tells Billboard, referring to the Global Eagle deal as marking “a whole new area for digital music.”

“Airlines are increasingly about connectivity. This is a first entry into what I think will be a huge new sector of in-flight entertainment,” Cole says, pointing to the limitations of the current music offering for the majority of air passengers, which typically extends to a selection of pre-programmed playlists, grouped by genre.

“What you can’t do is choose from a library of all the music in the world and actually build your own playlists on a plane,” says Cole. “Passengers currently listen to music on their own devices because it’s better than what’s being offered in-flight. But once you’ve got a connected airplane, there’s no reason why you can’t have a search bar and search for any music you want, or build any playlist you want. The airline industry is opening up to digital music and the connected airplane is as significant a development [for the music industry] as the connected car will be.”     

In addition to Global Eagle, London-based 7digital also announced two other new contracts alongside its half-year trading update. One is with French company Deedo SAS to provide the assets for a new as-yet-unnamed streaming service specifically catering for the African market, which is scheduled to launch in 27 African markets towards the tail end of this year.

The other is a two-year deal with U.S. fan engagement platform Fan Label, which will see 7digital provide access to its preview clip catalog and handle licensing and rightsholder reporting.

They follow the acquisition of 7digital’s largest European competitor, Berlin-based 24-7 Entertainment, earlier this year. As part of that deal, which was finalized on June 20, 7digital took over the contract to supply digital music to its owner MediaMarktSaturn -- Europe’s biggest electronics and entertainment retailer -- including a three-year deal worth £11 million ($14 million) to provide existing Juke services in Germany and the Netherlands.

Other deals completed in 2017 include becoming the first B2B platform for hi-res audio provider MQA with HDTracks and the re-launch of TriPlay’s emusic service in the U.S. In 2016, the British company also acquired French digital music provider Snowite, which has since been integrated into 7digital France.

Those deals, coupled with a 25 percent rise in licensing revenue, helped push 7digital’s sales in the first half of 2017 up 13 percent to £5.9 million ($7.8 million), according to its mid-year reports.

In 2016, 7digital had an operating loss of £5.2 million ($6.3 million), although Cole expects the year-end figure for 2017 to see a much-reduced loss and confidently predicts that, by 2018, the business will be making an annual profit of £3 million ($3.9 million) as the full benefits of its latest acquisitions are realized.

“Certainly the corner has been turned for us,” says Cole, crediting the completion of the 24-7 deal with “turning our business from mildly loss-making to profitable.”

“What we do is inextricably linked with the development of the digital music industry as a whole, and what is happening very fast now is that the music industry has become digital in a much more rounded fashion,” he continues. “But the truth is that there is something like 160 million people paying for digital [subscription] services in the world today. And there are about 3.5 billion people listening to music on non-digital platforms, whether that’s sitting on a plane, listening to a CD at home or the radio in the car. The job now is to take the balance of those 3.5 billion people and bring them into the digital world. That’s what we’re in business to do -- to work with the music industry to fill out the complete digital music picture.”