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Summary:

Any upstart looking to dent the retail music download market, currently dominated by Apple, faces myriad challenges: heavyweight competitors with powerful brand names, downward pressure on price and a marketplace for music that’s shrinking overall. But British retailer 7digital is undeterred, and as such is launching […]

7digital-GBAny upstart looking to dent the retail music download market, currently dominated by Apple, faces myriad challenges: heavyweight competitors with powerful brand names, downward pressure on price and a marketplace for music that’s shrinking overall. But British retailer 7digital is undeterred, and as such is launching in the U.S. with a goal of grabbing “meaningful market share” via a new BlackBerry store, e-commerce relationships around the web — and a price point significantly below that of Apple.

How far can the company get? 7digital’s standard price point — 77 cents a song, $7.77 for albums — isn’t too far from Lala.com‘s (often $7.49 or $7.99, sometimes less, sometimes more, for albums), which has miniscule market share after years of trying. It will have to work very hard to gain visibility, particularly in the U.S., where its brand recognition is currently all but non-existent. It’s betting that people will buy songs from partner sites that stream them for free, including European sensation Spotify. And BlackBerry users don’t see their devices as music players the way Apple customers do — at least not yet.

Still, providing over-the-air downloads to BlackBerrys is virgin territory, so 7digital has at least one decent chance at a land grab. What’s more, it has a deep-pocketed parent in HMV Group, the publicly traded retailer that acquired 50 percent of 7digital last month, valuing the startup at about $25 million. But to gain “meaningful market share” in the U.S. means eventually threatening the top five, all of which have well-established brands. 7digital has a smart, multifaceted approach, but it also has a very difficult road ahead of it.

  1. great to see notable names like 7digital bringing the price point down. hopefully the $1.29 experiment will only last for so much longer.

    one thing to note is 7digital is bringing to the US a large amount of new long tail material. unfortuantely, americans aren’t attracted to european music like the other way around.

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  2. Paul – Great post. Do you think 7digital can knock out the other 2 music stores on Blackberry App World — Thumbplay, which offers MP3 downloads for $0.69, and Didiom, which allows you to name your own price/bid on 2 million MP3s on your Blackberry?

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  3. [...] in the U.S., where its brand recognition is currently all but non-existent,” GigaOm’s Paul Bonanos wrote. “7digital has a smart, multifaceted approach, but it also has a very difficult road ahead of [...]

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  4. [...] 3.6 percent) — a need that stems from its yet-unproven freemium model. Spotify has already partnered with 7digital for download sales in Europe, adding an additional revenue stream beyond subscriptions and [...]

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  5. [...] 3.6 percent) — a need that stems from its yet-unproven freemium model. Spotify has already partnered with 7digital for download sales in Europe, adding an additional revenue stream beyond subscriptions and [...]

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