Not content with a huge windfall from the sale of filtering company SurfControl, Steve Purdham has linked up with former Genesis frontman Peter Gabriel to launch a new music downloading venture.
We7, as it is called, allows fans to download music for free, as long as they are prepared to listen to 10-second ads attached to each song. The tracks then become ad-free after four weeks.
We caught up with Steve to ask about his plans for the service, and what interest he has managed to generate from labels and advertisers.
Can you provide a brief outline of the service?
The model is fairly simple. It gives listeners the ability to download free music, the artist to get paid and the advertiser to get listened to. It’s a symbiotic relationship between the downloader, the rights-owner and the advertiser.
When we go live with the dynamic beta this month, you will be able to download tracks for free with the ad, or you can buy them for 99p without the ad.
The idea is that, after three or four weeks, you will be able to come back and download the track without the ad. Effectively, you will have listened to the track at least five or six times and it will have paid for itself for the advertiser.
What interest have you had from advertisers so far?
A lot of interest. We only became visible a few weeks ago, and the site is really only there at the moment for three things. One is to be visible to the advertisers, and the discussions we have had so far has been very positive. The brands are trying to understand how this fits in with their campaigns.
We are also looking at consumer interest, and trying to get an increased number of labels to accept the idea that this could be an additional revenue stream, not a replacement of their existing channels. It will eat more into the piracy side than the non-piracy side.
It’s a bit of a catch-22 scenario and each party wants to know what’s happening with the others before they go forward. But we’ve made progress on all three levels.
Have you had any concrete interest from any of the major labels, considering you aren’t DRM-based?
The content providers are increasingly interested and we have deals in place with V2 and other European catalogues and labels. But it will probably be the summer before we can announce a number of significant names.
You know as well as I do that the major labels treat new models with suspicion and caution. We are also breaking other moulds as we are MP3 delivered, rather than DRM. If you look at Warner Bros and Sony BMG, they are obviously very aggressively against non-DRM delivery.
It’s unlikely that we will have major access to all of the majors’ catalogues from day one, but from the early discussions we have had with most of them so far, they would be interested in doing trials with specific genres of artists.
Why do you think you will be competing with illegal downloading activity rather than the likes of iTunes?
This isn’t about replacing iTunes or any other legitimate download mechanism – Amazon, for example. Only a small percentage of music downloads are truly paid for in an iTunes-type model. It’s about how we, in addition to other download mechanisms, provide a revenue stream.
Do you not think any paying downloaders will be attracted to the service?
I’m sure that as we gain momentum, there will be an element of crossover. But you need to look at the total revenue capacity of the market. If iTunes is 100 and we are zero, but in two years’ time it is at 80 and we are at 60, the net effect is positive.
Are you looking at white-label deals with other download providers?
We will do. The key to We7 is its technology – the ability to deliver the advertising inventory, and with an increasing amount of relevance. We will have four delivery mechanisms, which will either be under the We7 brand or a white-label brand.
We will have the We7 portal, as well as white-label partners’ portals. One of our first partners is an American jazz publication called Jazziz. They have 500,000 subscribers to their print magazine and will go digital in the next few weeks. The music delivery will be through We7.
The third mechanism is through personalised widgets that people can put on their Myspace profiles, blogs, band sites or fan sites, and they will allow you to display your current playlist. You can stream the music or download it, and when you download it, we take over at that point and add the ad onto the front of the track.
The final one is sharing. One of the problems historically with sharing has been that invariably it has been an illegal event, but a big part of We7 is being able to share the music. You will be able to share links to tracks or individualised playlists, so when I send them to you, you can download it along with the ad.
What are you offering to advertisers in terms of targeting?
If you provide advertisers with the ability to whisper into someone’s ears, you have quite a responsibility. Part of our rationale is about making advertising tolerable and giving the individual the ability to choose the advertising they hear. It’s the targeting, effectively of an audience of one that makes the economic model viable.
The technology allows it, so we want it to be very targeted. Initially, we will target based on a very small amount of information people will give, as well as behavioural and positional information. Over time, we will also give downloaders the ability to define more and more closely what they are interested in.