We7 proving ad-supported music has a future?

January 22 Mike Butcher

Ad-supported music seems to be gaining traction as a business model. We7, a UK-based music download service driven by advertising sales, has raised a $6M Series ‘A’ round led by musician/investor Peter Gabriel and Spark Ventures and UK VC firm Eden Ventures. The founders of We7 are John Taysom, chairman, and CEO Steve Purdham. Purdham founded SurfControl, a publicly-traded firm that was acquired by Websense last year for about £204m. After one year We7 says it has some 90,000 users and has delivered over one million ad-supported music files from a catalogue of over 80,000 tracks. Ad trials have been run for Microsoft Xbox 360, Sony Ericsson and Café Direct. Joining the board is Eden Ventures, Charles Grimsdale, who co-founded music distribution service OD2 (along with Gabriel), in Nokia’s hands since 2006, and is a co-founder of Eden Ventures. Global digital music sales were estimated to have a trade value of $2 Billion last year, but digital ad spend was around £2.5 billion in the UK alone, which makes one think that music may have a way out of the file-sharing nightmare it voluntarily got itself into.

This entry was posted on Tuesday, January 22nd, 2008 at 5:21 pm and is filed under TCUK. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Robleh

January 22nd, 2008 at 9:52 pm

I think ad-backed music services are better suited to streaming, especially if you could integrate ads with social network data to make them relevant to individual users.

If Last.fm could get access to facebook’s data to stream contextual ads in exchange for revenue sharing deal they would be on to a winner. People are used to hearing ads on the radio so it wouldn’t be intrusive if done that way.
BILL

February 9th, 2008 at 3:03 pm

The latest attempt at new music distribution may be to give the music away free, but this is unsustainable from a cost/revenue perspective. There is not enough advertising demand available to subsidize the $30billion digital music market with ads; and if the inventory were created anyway, it would seriously deflate the display and keyword ad market.

Digital music market is now at $30 billion and rising (including illegal downloads). While digital advertising is only at $20 billion and slowing.

There’s an excellent analysis at the Brooding Savage blog.
http://www.BroodingSavage.com/journal/2008/2/7/ad-supported-music-1.html