Can 7digital Dent the Download Market?

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.

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