We7 CEO Says Better Music Services Deter Piracy

Recently, I spoke with Steve Purdham, who is the CEO of we7, an on-demand music streaming and radio service based out of the UK. In this interview, Purdham talks about his company shifting to focus on their personalized radio feature, the importance of acknowledging the needs of the mass-consumer, and how cloud-based music services will inevitably change our relationship with and desire to own music.

Do you think it's important to acknowledge the needs of the mass-market as being different from the more involved music fan? Are music companies underestimating how vast of chasm exists between the two?

Steve Purdham: Absolutely, in classic marketing parlance the idea of segmentation and the individual consumer's needs in each of those segments have to be strongly considered. There is a massive difference between the active music fan (music obsessive/maximiser) and the passive mass-market music fan (music listener/satisficers).

To the active music fan, discovery, sharing and choice is everything and that desire to find something better and then broadcast that. For the music listener it's ‘entertain me’, make it easy, and stay within my comfort zone.

This means that the products and how the products face the consumer have to be totally different. On-demand Jukeboxes and discovery sites are great for the active fan and Radio Plus services are great for the music listener.

Does the shift of user interest away from on-demand streams to radio on we7 signal a more universal preference in the market, leaving companies like we7 and Spotify with less interest to capture than imagined?

Steve Purdham: I think it signals more that there are differences that have to be catered for and if you ignore the preferences of the consumer, you do so at your peril. In the US the most simplistic and minimalistic and brilliant music service is Pandora (at least on the surface), yet its one of the most successful digital music service.

In Europe we have nothing like Pandora, we jumped up the food chain to the online ‘music obsessive’ with the full on-demand cloud-based jukebox, but the Internet has that habit of giving the quiet masses a voice. Very quickly after introducing simple radio with no fanfare or focus we found almost 83% of our regular 3m monthly UK users had shifted to the hybrid Radio/Jukebox listening.

We shouldn’t be surprised, again the Internet just reflects real life and the numbers of people who listen to music via traditional radio and have a very limited record/CD/download collections is a much larger number than those music obsessive’s who build big music libraries, read NME/Rolling Stone every week and have download libraries measured in the tens of thousands.

As a result of that, we have shifted to an Internet Radio Plus model that is easy to start, entertains but if the ‘music listener’ suddenly becomes ‘obsessive’ they can request a song or album to play immediately and drop back to ‘radio mode when the feeling suits them.

Is a dilemma emerging between labels and streaming sites because in deterring users from piracy they also bring them away from purchasing digital downloads too, netting the record labels less money overall?

Steve Purdham: The danger in the question is it links several things that should not be linked. Music piracy took hold because there were very few alternatives to access music digitally and as with any good music obsessive they find what they want. Over the last three years the labels have worked hard to support new models coming through we7, Last.fm, 7 Digital, Pandora, RDIO, Mog, and iTunes now there are a great number of good legal services where that music itch can be scratched in a safer, easier, reliable manner and artists and performers can get paid. That is the reason piracy continues to be deterred, the legal services are just better.

Digital downloads is separate altogether. I am really a technologist, I build Internet companies, so the eventual slow down and eventual demise of downloads has always been on the cards almost since they first started. Downloads were a technology that circumnavigated the technical issues of the time such as bandwidth, devices, internet enabled and other things. Don’t get me wrong there is still a lot of money in downloads for the industry to be had but they should not be surprised at the eventual shift away from them.

Cloud based access is the natural position for the Internet; it is what the Internet does. So it is not surprising that the gravitational pull of music listening should drift towards this eventual home. Remember people don’t download, stream or P2P music they LISTEN to music, so on the Internet the natural form is the search, press play, listen and the location of a physical file is irrelevant.

Therefore, the dilemma is not between the labels and the streaming companies but the inevitable consumer shift from albums, to tracks, to individual listens. Now this can sound horrific for an industry already struggling with the shift from physical to digital but if between us all we can get subscriptions, ad funded, micropayment models right we are talking scale that is so significant with annual listens measured in numbers beyond trillions per region and that is a prize worth having.

I remain very optimistic that the music industry is heading for a very positive place but with a few bumps along the way.