We7 intros premium subs as music sites cut cloth accordingly

As free-music websites begin to realise they’re not making enough money to pay for the tunes their users play, Peter Gabriel-backed We7 is following Last.fm by introducing a premium subscription feature. Coming this summer, the model exactly matches Spotify‘s own price system – £9.99 a month or £0.99 a day to listen to streamed music without ads.

That doesn’t mean We7 is ditching its free, ad-supported option, which will continue for non-subscribers. But, with YouTube crying to PRS For Music about proposed rates reform, and with Last.fm now charging €3 a month for music streaming outside the UK, US and Germany, it’s clear music sites are having to find dependable revenue sources as the advertising climate, on which they depend, turns down with the economy.

Chief executive Steve Purdham, who earlier founded SurfControl and was a DJ, last month told paidContent:UK: “The rates don’t allow you to create an economic model that makes sense.” To meet royalties costs, he said the site would need to sell ads consistently at £10 per thousand impressions, but it’s currently making anywhere between £1 and £12.

We7 seemed to struggle with its original business model of embedding self-expiring audio ads in free music downloads and has since diversified to audio ads in the web-based stream, as well as its basic pay-per-track downloads. So, the site now has a wide range of listening options. But, so far, many of the ads in streamed tracks are for We7 itself and Gabriel’s other online interest, recomendation engine TheFilter. As well as the new premium model, We7 is also using brand promos to remove the ads – the first with this Sunday’s Daily Star, giving readers a promo code that will unlock a month’s worth of free music without the usual ads.

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