We7 Trying Premium Subs As Question Hangs Over Free-With-Ads

One by one, once-free online services are having to launch paid subscription services to tackle the reality of insufficient ad CPMs.

As we reported from Midem, We7 will augment its free option with subscriptions on February 1 – now we have the pricepoints…

— Premium £4.99-a-month gets you the same on-demand music streams and personalised radio, but without ads.
— Premium Plus £9.99-a-month gets you the same and is required by new iPhone and Android apps coming out later this year, which will include offline play.

The free option will stay in place. CEO Steve Purdham will hope the mobile pricing, similar to Spotify’s own, will be successful, just as Spotify’s has driven up its paid subs – the other option, which removes ads, may not be enough to convince many users – We7 says each of its songs has 3.7 ad opportunities, but it doesn’t have that many ads anyway.

We7 first tested subs in April 209. The site claims 2.5 million monthly users, but it’s likely many of those are occasional listeners of the service’s off-site music embed widgets.

This could be a make-or-break year for We7 – launched in 2007 with funding from investors including Peter Gabriel, the original idea was to offer free downloads with embedded audio ads, but that didn’t work out; now it offers both streaming and a la carte purchases, and visual ads in those embeds – a great idea because ad agencies are more used to ad banners than audio pre-rolls and because, if We7 can make itself a platform for embedding music anywhere, its potential outgoing ad impressions could spiral up.

But the sector is challenged by whether income covers royalty outgoings. Purdham told Midem he has to pay a penny per stream. And he said at our October mixer: