Richard Wray and Owen Gibson 

Sony joins We7 to make music free

We7, a free, advertising-supported online music service backed by Peter Gabriel, has become the first to claim the support of a major label. By Richard Wray and Owen Gibson
  
  


We7, a free, advertising-supported online music service backed by Peter Gabriel, has become the first to claim the support of a major label, after Sony BMG, home to Mark Ronson, Bruce Springsteen and the Hoosiers, pledged to license its catalogue of more than 250,000 tracks to the company's new online music streaming service.

The news comes as digital media group 24-7 Entertainment, which has built more than 40 online and mobile music services including Tesco's download site and a music portal for 3, prepares to launch an innovative unlimited music download service for a Nordic mobile and broadband provider, rumoured to be Denmark's TDC. It is also understood to be in talks with a number of UK internet service and mobile phone providers about a similar service.

Meanwhile mobile phone operator O2, owned by Spain's Telefónica, will this week announce a deal with online music pioneer Napster. Vodafone is also understood to be in talks with the outfit.

These moves making it easier for consumers to listen to and legally download music are the latest steps towards persuading consumers to stop illegally sharing and downloading tracks. They come as governments in Britain and France have warned that they will introduce legislation that demands internet service providers (ISPs) monitor what their users are doing if the tide of illegal file-sharing cannot be turned.

The new service developed by 24-7, expected to launch next month, is a big step towards helping ISPs produce legal music services attractive enough for consumers that they will not resort to peer-to-peer sharing networks.

The service, developed under the codename UMAP or unlimited music across all portals, will allow all mobile and broadband customers of the company unlimited access to music for no extra cost. They will not have to pay any subscription or fee above what they are already paying for their mobile or broadband service.

Consumers will be able to download as many tracks as they want to their computers or mobile phones and keep them for as long as they remain a customer. The tracks are protected by digital rights management (DRM) technology, so they cannot be copied on to a CD or transferred to a standalone music device such as an iPod.

The service will have well over a million tracks at launch, with 24-7 understood to have signed up EMI. Other major labels, including Universal and Warner, are also in talks with the company.

"It will allow every customer of this company from day one to access music without any extra cost, whether they are a mobile or online customer," explained Frank Taubert, chief executive of 24-7 Entertainment. "It will be a major shift for the industry.

"The music market is still looking at illegal downloads and peer-to-peer sharing and we all have to think about how we are going to shift these people over to legal services," he added. "Why would anyone want to download illegal tracks again if they can get everything for free legitimately?"

For the company offering the service it provides another way of increasing customer loyalty and the amount it saves in consumer acquisition costs can be used to subsidise the "free" element of the service. The music companies get paid every time one of their tracks is downloaded.

The industry will be watching, however, to see whether offering music at no extra cost to the consumer hits sales of digital downloads. The hope is that people who have up until now heard tracks they liked on the radio, downloaded them illegally, listened to them a few times and then moved on, will instead use the free service to download them legitimately. It remains to be seen, however, whether when these consumers decide that they like a track and want to keep it, they will return to using illegal sharing networks or pay for the track.

Rather than rely upon an ISP or mobile company that already makes money from consumers to subsidise a free service, other digital music companies are looking to advertising to fund music.

We7 already offers free music downloads. It attaches targeted adverts to a song for 30 days before they are removed by DRM software. The tracks provided to We7 by Sony BMG will be made available through a new streaming service that will allow users to build up playlists of songs they want to hear while they remain online. The label hopes people will sample new music before clicking through to a download store to buy it.

Sony BMG UK chief executive Ged Doherty did not rule out also contributing tracks to We7's own download service but said the streaming service was a logical first step. The download service, which has deals with several independent labels, appends a short ad to the beginning of each song that remains in place when it is downloaded and transferred to a portable player.

Acknowledging that the troubled music industry had previously been too slow to experiment with new revenue models, Doherty said the move was part of its "do and build" strategy. Sony BMG is in talks with a range of other ad-funded services, he added.

We7, which launched last year, will initially offer the service to its existing members before rolling it out to new ones. It will pay royalties to Sony BMG for each song listened to.

Gabriel, who has consistently been in the vanguard of the digital music business and previously had a hand in launching early download business OD2, said: "The digital revolution has produced exciting and extraordinary opportunities in the music business, even though it has been largely written off by many. We7 is a model that will supply free music to the consumer and still provide a stream of revenue to musicians and content owners."

Chief executive Steve Purdham said the move was "a significant leap forward for We7 and the industry as a whole" and confirmed it was in talks with the other major labels. He dismissed concerns that an infinite jukebox of the kind envisaged by We7 would devalue music, saying it would become just one of several means of distributing music while ensuring artists and labels got paid.

Doherty added: "What appealed to us about We7 is that they've quietly got on with business rather than making big promises. It's easy and user-friendly."

A new model army: download and streaming devices

Though Apple's iTunes hogs the headlines, the music industry is working with a host of online and mobile companies to try and persuade consumers to stop stealing music by offering a range of download and streaming services.

All five of the UK's mobile phone networks have their own download stores and Vodafone has also signed up with UK-based MusicStation for an all-you-can-download subscription service, which costs £1.99 a week. Nokia has announced plans for a service called Comes With Music, to be launched this year, which will give users access to an unlimited number of music tracks that they get to keep forever, although only on their Nokia phones, according to reports.

A host of retailers are selling track and album downloads - from online brands such as Play.com and Amazon to "bricks and mortar" players such as Tesco and HMV. Some of these stores recently started offering tracks in the open MP3 format, so they can be played on any device.

Services such as Napster and Rhapsody, meanwhile, helped pioneer the subscription music model on the internet and Last.fm, which was snapped up last year by CBS, helped popularise streaming music services. Last.fm has agreed deals with the major labels to offer three free streams of any track before consumers have to buy it and US social-networking site Imeem also offers free streaming of any track.

We7 is one of several attempts to launch advertising-funded download services, but many of its rivals are still battling through the rights-clearance process. SpiralFrog has launched in the US, with major label Universal on board, but Qtrax, which this year promised 25m tracks via a legal peer-to-peer service, has still to launch its download offering.

 

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