Business Matters: Why We7 Could be the Next Pandora
Business Matters: Why We7 Could be the Next Pandora

Is We7 The Next Pandora?
-- U.K. digital music service We7 could be the closest thing to Pandora outside of the U.S. With a few years of learning under its belt and a product revamped for the mainstream, and with 3 million unique users a month in the U.K., We7 is now aiming for bigger things.

Pointing to its own growth and the success of Pandora, CEO Steve Purdham tells Billboard that digital music can now be a sustainable business. "Three years ago, the digital music models were impossible. Two years ago they become improbable. A year ago they became difficult. And now they're just hard work."

We7 needs the kind of scale Pandora is now reaching. Its growth will be improved by the round of funding it announced Tuesday. The round, of an undisclosed amount, was led by Peter Gabriel, Eden Ventures, Qualcomm Incorporated (via its venture capital function) and Pentech Ventures.

Purdham says the main use of the funding is expansion into other European markets. "Now that we understand the economics of the world, that's why we feel comfortable and confident to start expanding outside of our home region of the U.K. and look to expand into multiple countries in Europe in the next six to 12 months."

Exactly which countries We7 enters and the timing of the launch will depend on licensing, says Purdham, but he says Belgium, Spain, Italy and Germany are high on the list. "If we can get to four countries in addition to the U.K. by Christmas, that would be a good result."

Following Pandora's example makes good sense. If scale is needed to reach profitability, make a product that will be used by mainstream consumers. If advertising rates won't support the royalty costs of downloads or on-demand streaming, build the service around non-interactive streaming. And if most people simply want a simple product that chooses the music for them, you're in business.

And that's the path We7 has taken, says Purdman. "We are already moving the product to a much simpler, mass market style of personal radio, plus requests and facilities that are actually designed for the music listeners rather than the music fanatics."
( Press release)

GrooveshA(&)Rrk
-- Digital music service Grooveshark has two new initiatives to help young, undiscovered artists. The first is its "Breakthrough Radio" channel, a partnership with Indaba Music. The channel features music taken from Indaba's community of over 600,000 artists.

In addition, Grooveshark has partnered with label services company Rocket Science "to identify provide support to artists who are having noteworthy success on the Grooveshark platform," according to the press release. "Using listener data to identify breakout artists is an exciting opportunity for us," said Rocket Science owner Kevin Day. The first band to be a part of this collaboration is Quiet Company from Austin, Texas.

Rick Rubin: Subscription-Minded
-- As recording companies and publishers dither on the direction and substance of music services, Columbia Records co-chairman Rick Rubin is a believer in subscription music services. Here's what he told Billboard.biz in an interview posted Wednesday.

"People love music more than they ever have and ... are willing to pay for music. It's just a question of finding the best way for that to happen, without holding onto any of the past… I think people will have many more options and choices of how to digest music, and hopefully the labels will get to the point where they are in the business of serving the audience instead of trying to hold on to an old model. Ultimately if they do service the audience, I think it's going to be a big business -- a bigger business than it has ever been"

In fact, Rubin has been adamant - and vocal - about the importance of subscription services for a number of years. He had this to say to the New York Times in the Sunday Magazine way back in September 2007:

"You'd pay, say, $19.95 a month, and the music will come anywhere you'd like. In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home. You'll say, 'Today I want to listen to ... Simon and Garfunkel,' and there they are. The service can have demos, bootlegs, concerts, whatever context the artist wants to put out. And once that model is put into place, the industry will grow 10 times the size it is now."

OK, so the $19.95 a month part was a bit off. And no licensed service is anywhere close to having demos, bootlegs or "whatever." In fact, the lack of "whatever" plagues even the download store with the largest catalog. From out-of-print titles to fresh music by underground bands, there's an amazing amount of music that cannot be found at legitimate music services.

And the iPod is hardly obsolete today. It's been replaced by another Apple product, the iPhone, that allows for a wireless connection to iTunes (which is an even more powerful music merchant than it was four years ago). But Rubin was right about the ability to access music from a multitude of devices. And Apple will soon enable its customers to do that via iCloud.
( Billboard.biz, New York Times)

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