We caught up with UK online music service 7digital’s chief executive Ben Drury this week. A seasoned digital music industry professional, he shared his insights on Apple’s music market challenges as competition proliferates, social networking in music, lossless music downloads and much more.
Distorted Loop: Why does music matter?
Ben Drury: Although music is not defined in Maslow’s hierarchy of needs (ref: http://en.wikipedia.org/wiki/Maslow_hierarchy_of_needs), I believe it must figure pretty highly on most people’s lists. In all cultures, with the possible exception of some extremist religious societies, music forms an integral part of self-expression, social cohesion, worship etc
Distorted Loop: How committed do you feel the majors are now to digital music services?
Ben Drury: Incontrovertibly so. It took them years to be fully committed but they now recognise that any growth in music will have to come from digital. We certainly saw 2008 as the threshold year of the labels finally embracing digital music fully with the licensing of DRM-free services.
Distorted Loop: Is it a level playing-field for all parties, or do some distributors get better treatment than others?
Ben Drury: Not yet. Companies with deep pockets are able to extract favourable licensing terms and the majors are still wedded to the allure of large advance payments or revenue guarantees. This does stifle innovation – large companies are less able to innovate than small companies traditionally.
Distorted Loop: What progress have you seen toward a blanket European license for music download services?
Ben Drury: On the publishing side (i.e. the songwriters) there has been some progress but unfortunately in the short term it has made things worse. Things will slowly improve but it will take years to sort out.
Distorted Loop: Apple is the dominant force still in music – would you agree with this?
Ben Drury: Yes – in downloadable music. But Apple enjoyed years of arguably artificial competitive advantages due to the way the labels originally licensed the iTunes Music Store. These are now falling away and things should actually be very interesting from 2009 onward – we see a lot more innovation and competition to come.
Distorted Loop: What do Apple do right, and what do they do wrong?
Ben Drury: Their strength and weakness lies in the tight iPod + iTunes integration. It works because it’s a closed system and tightly controlled but because it’s a closed ecosystem, it doesn’t play nicely with other hardware, software or services. We believe ultimately that a more open approach will prevail based on MP3.
Distorted Loop: Is it Apple, or file-sharing, that’s the enemy?
Ben Drury: Both and neither at the same time. The key point here is supply and demand. File-sharing and iPods wouldn’t exist if there was no demand for music. Actually there is more and more demand but legal services providing open access to music on multiple devices need to catch-up. We’re working on it as are others!
Distorted Loop: 7Digital stole a march on most with the introduction of DRM-free MP3 downloads – what has been consumer reaction to this?
Ben Drury: Incredible. We were expecting a lift but the reaction and the sales uplift surprised us and the labels. We’re really happy with the response seen on blogs and Twitter. People seem to love the fact that with our service, we keep a backup so you can download your MP3s again at a later date – you can’t do that with iTunes, Amazon or indeed the illegal services.
Distorted Loop: Can you share any sales figures?
Ben Drury: We can’t share any sales figures but we now have over 1.5m registered customers and our average transaction value is north of £5.
Distorted Loop: What’s in the way of other services going DRM-free?
Distorted Loop: Pete Jenner once told me he saw the future of music as being a ‘massive market of multiple niches’, how far would you agree with this?
Ben Drury: Well if you take the view that everybody’s music taste is different, albeit subtly, then yes I guess this holds true. I don’t believe there will be thousands of different services though. You need economies of scale to make a digital music service work.
Distorted Loop: What’s the most exciting development you’ve seen in digital music in the last year (not including DRM-free, sorry)
Ben Drury: The move to licensed full-length streaming track services like Spotify.
Distorted Loop: What do you see as the biggest risks to the evolution of the digital music industry?
Ben Drury: Ongoing licensing complexity.
Distorted Loop: There’s a mantra saying future music sales will be about access, not ownership – how far do you agree?
Ben Drury: Certainly it will be less about owning a physical product. And if you pay for a download it’s a form of access so I don’t see things in black and white. Access models will be interesting for sure.
Distorted Loop: Do you think labels will ever license lossless music download services?
Ben Drury: Yes. We’re already selling FLACs of certain artists. Lossless and high-definition audio (better than CD) will happen be may be a niche market.
Distorted Loop: Returning to 7digital – when are you launching in the US?
Ben Drury: We’re already in beta and we’re working hard to fully launch in early 2009.
Distorted Loop: What’s your message to US users?
Ben Drury: We’re focused on differentiating by quality of experience. So 100% web-based, 320kbps MP3s, online backup, great recommendations etc.
Distorted Loop: How would you describe the typical day of an avid music consumer in the digital age in five years time?
Ben Drury: A seamless mix of download and streaming services will help the music consumer discover and experience music constantly in whatever environment they happen to be in at the time.
Distorted Loop: There’s a lot of people now connecting the idea of social networking to digital music – what are your thoughts on this?
Ben Drury: This is crucial. Music has always been a socially charged experience and has a defining role in what social groups you “belong” to. Peer recommendations are often more powerful than any algorithmic recommendations.
Distorted Loop: Can you offer any insight into 7 digital’s future plans?
Ben Drury: It’s all about the service. We want to take the digital music experience beyond a retail experience and you’ll see 7digital on mobile before too long. We’re also trying to have the broadest global footprint of any digital music service.
Distorted Loop: Finally, what was the first piece of music you personally purchased, and also the last?
Ben Drury: I can’t remember the singles but the first albums I bought were U2’s Rattle and Hum and Pink Floyd’s Momentary Lapse Of Reason. The latest download I bought was the new Kings Of Leon album.
Thank you Ben.