7digital: Ben Drury
Founder Ben Drury explains how 7digital has claimed the number two slot in the UK download market
When planning an assault on the supremacy of iTunes, it helps if you know a bit about the digital music scene. In his former role as head of music at BT, Ben Drury bought and ran dotmusic.com, the UK’s largest music site in 1999 and 2000. When the site was sold to Yahoo in 2003, Drury and his business partner, James Kane, primed themselves for an audacious bid to grab a slice of the growing legal download market.
Four years on from the site’s 2004 launch, 7digital has beaten the likes of Tesco, HMV and Napster to the number two spot in the UK download market, behind Apple’s iconic site. In a market littered with high profile failures and underachievers, including Microsoft and Nokia, how has Drury engineered 7Digital’s dramatic rise? “It’s not a case of how much money you throw at it. It’s a question of making the music consumer’s experience right,” he says. “The bigger guys, like HMV, can’t move as quickly as a startup company.”
Apple ensures that the majority of its tracks come in a DRM (digital rights management) protected format which won’t work outside of the iTunes environment. Many consumers feel that this unfairly prevents them from doing perfectly legitimate things with the files that they have purchased. Drury has worked hard to ensure that there are a number of key differences between iTunes and 7digital, of which the rights-free MP3 format is the most crucial.
“We can sell DRM-free music files that work on any player, from iPods and iPhones to Blackberries and Nokias – Apple can’t do that. We’re in a good position because consumers demand choice. Until the market opened up to MP3, it was difficult for anyone to even try to compete with iTunes. But that is changing now.”
Cannily adopted a leadership position in MP3 in the UK, 7digital was the first company to sign a deal with Warner Music that allows it to sell its entire catalogue in a rights-free format, a move which saw sales rocket by 300%. The site also sells EMI’s DRM-free music and is working to add the back catalogues of other major labels.
“Warner was attracted to our flexibility, our innovation and the way our platform can cope with all the things that they wanted to try, from premium bundles to differential pricing – all the things that iTunes is not doing and other players in the market aren’t ready to do.”
Where iTunes has a flat pricing structure, 7digital’s is variable and competitive, often undercutting the price of albums by £3. It has also taken a lead on innovation, offering consumers a free ‘locker’ service that acts as a back-up for downloads bought through the site, so the site’s 1.2 million registered users can buy, access or store music without downloading a new piece of software “You get all the advantages without worrying about backing things up, installing software, or viruses – you just need a browser.”
At the beginning of the year, the firm, which now employs 40 people in London and Cologne, raised £4.25m from Sutton Place Managers and Balderton Capital. This will fund an international expansion that Drury hopes will see the site competing across Europe and in the States.
He won’t be anticipating an easy ride: Amazon is already making headway in its challenge to iTunes in the US, and is rolling out its own international expansion this year. Drury welcomes the challenge. “With the clout that Amazon has, consumers will realise that there is a world outside iTunes when it comes to legal music download. They’ll make their choices based on the quality of the service and the quality of the content that’s on there. I’m very happy to compete on those terms.”