Published:
08-Aug-08
7digital, the London-based digital music store and service enabler, has announced a portfolio of services targeting UK internet service providers (ISPs). The services fall into three tiers:
• Full white-label service providing large ISPs with a technical platform and expertise to launch their own dedicated transactional or subscription services, including full integration into the ISPs' billing system; however, in this case ISPs will have to license music catalogue from rights holders directly.
• Co-branded music store using 7digital's DRM-free catalogue and technical platform which allows ISPs to offer music services to their subscribers with less investment than operating their own service
• Joining the existing 7digital affiliate program allows small ISPs to generate some incremental revenue from the sales they drive to 7digital's core online store.
The move follows an agreement between UK's six leading ISPs and the British Phonographic Industry (BPI) to send out warning letters to suspected illegal file-sharers. 7digital seeks to enable ISPs to provide their subscribers with legal alternatives to file-sharing.
Our take...
7digital emphasized that the offer is a response for the unserved demand for such services from the ISPs. In fact, several European ISPs, faced with intensifying competition in mature markets, are already using music download services to combat customer churn: French ISPs Neuf Cegetel and Alice (Telecom Italia) offered DRM-wrapped downloads free to subscribers in 2007, Danish telco TDC launched a combination of a 'free' rental and paid download to own (DTO) service for its customers in April 2008.
Previous attempts of partnering with ISPs for music services provision in the UK were almost universally unsuccessful. However, Screen Digest believes that the OD2 powered stores from Tiscali and Orange in the UK were hamstrung by the DRM restrictions applied to their entire catalogues. OD2's use of Windows Media DRM significantly limited device compatibility, which in a hardware-driven music market is a crucial precondition for service uptake. By contrast 7digital.com's catalogue includes DRM-free MP3 tracks from Warner Music Group (WMG), EMI, Universal Music Group (UMG) and a host of independent labels (although distribution rights for UMG DRM-free tracks are limited to 7digital.com store and direct UMG outlets powered by 7digital).
Screen Digest believes that the next 6-12 months will see all Major Labels opening up to DRM-free distribution in the UK by a variety of outlets. Noteworthy, Amazon MP3 store launched in the US only after obtaining DRM-free distribution licenses from all four Majors; with the anticipated Amazon MP3 store launch in the UK, the move to MP3 in the UK seems inevitable and, as happened in the US, is unlikely to be limited to Amazon only. The absence of DRM and its associated barriers to purchase should help improve sales from the 7digital powered stores in comparison to their OD2 operated predecessors - which is to say that the ISP-powered stores will find an automatic niche in the UK online music market.
