LONDON (Hypebot) –
UK music streaming service we7 has its first month where on demand music was paid for in full by advertising. That may make we7 the first company to demonstrate that a music on-demand ad-funded model can be profitable and still return measurable payments to rights holders.
1 million plays on we7 generate payments to the music industry of between £2,000 to £4,000 ($3100 – $6200 US), according to the company. Without mentioning Spotify by name, we7 claimed that their payouts "dwarf previously reported competitive models, especially revenue share models which shift the risk to the artists and songwriters".
The list of failed companies in the ad supported space is long and likely still growing. iMeem, SpiralFrog, iLike, Lala and Ruckus are a partial list of the companies that have tried to make ad supported music profitable and either gone out of business or been sold, often at fire sale prices.
The difference may be in we7's model of controlled growth, but record labels giving reasonable terms and time to experiment have also helped to make it work.
“With the emergence of new digital models it is important that they are given opportunity to develop and grow, but with a clear understanding that music has a value which needs to be recognized and paid for," according to Simon Wheeler, Director of Digital at Beggars Group, comments: There is a wealth of great music being created now and we7 continue to push the boundaries to deliver that through a great consumer experience while returning real value to the labels and its artists.”
"Music has never been a ‘freemium’ model – the key going forward is protecting the value of music with smart economic delivery," concluded we7 CEO Steve Purdham.