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Peter Gabriel takes sledgehammer to music downloads (again)

Genesis of ad-supported services

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Updated Serial internet investor and musician Peter Gabriel today took the wraps off We7, a free at the point of use music download service where tracks are paid for by 10-second adverts spliced to their beginning.

The tracks will be MP3-encoded, and unencumbered by DRM, the firm said. A representative told The Register that the files will be encoded at 192Kbps.

Advertisers will pay We7 between £0.30 and £0.60 per download, and by listening to an ad-supported song a few times the consumer wins rights to access a version without a commercial. The firm is quoted in today's Times saying "three, four or five" listens will be needed.

The ads will be demographically-targeted on age, location and gender, but the option will be there for fans to pay for tunes sans-sponsorship from the get-go if they want; the rep said that 320Kbps was under review for these customers. The We7 site also has a limited Last.fm-style social recommendation facility.

It emerged earlier this year that legal download sales growth was beginning to flatline, and the record industry continues to examine its busness model in the face of declining global revenues.

Unfortunately, We7 doesn't have the backing of any of the four major labels: EMI, Warner, Sony BMG and Universal, who are keen to get paid every time anyone hears anything they own a slice of. Accordingly, Gabriel is pushing the indie angle. He said: "We7 provides artists - even across the more experimental or minority genres - with the opportunity to build a new source of income from their music."

However, the majors control about 80 per cent of the global music market, and therefore access to the mainstream casual music consumers who are least likely to object to adverts being grafted onto their music. [Mainstream music? Adverts? What's the difference? Ed.]

Don't give up

We7 will be run by Steve Purdham, who founded British censorware developer Surf Control, which sold to Websense for £201m last week. Purdham said that We7 will have only a few thousand songs when it comes out of beta in July. iTunes topped a million back in 2004, so We7's licensing people have a way to go if it intends to be a genuine competitor, rather than a niche curio.

The ad-supported model is by no means unique either. Way back in August last year, US start-up Spiralfrog attracted much international fanfare by announcing its download service, which had received Universal's blessing. It was supposed to have launched before Christmas, but is still only available as a limited trial for Canadian residents.

Gnutella-based P2P ad-supported service QTrax signed up Sony BMG last week, but on the proviso it would drench music in DRM to allow only a few free plays.

History may have a lesson to give here. Gabriel's last download company, OD2/Loudeye, was sold to Nokia last year for $60m. Nokia coughed for the technology behind Loudeye, rather than the brand.

A similar fate for We7's dynamic ad-grafting platform - being swallowed a firm with more negotiating grunt with the majors - isn't difficult to imagine. ®

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