UK based download store 7digital launched in the United States yesterday with albums priced aggressively at $7.77 and single track downloads at $.77. All are DRM free mp3s and encoded at 320 kps. That puts 7digital pricing at more 20% below iTunes and 10% below Amazon for a higher quality download.
But can a newcomer compete with the might Apple and Amazon's massive online reach? 7digital hopes to grab some market share via sales partnership with Last.fm, Songbird, Winamp and Spotify when it launches in the U.S. "By piggybacking on their reach, we can grab some meaningful market share," said 7 Digital CEO Ben Drury. There's also an app for Blackberry smarpthones.
Another 7digital advantage is a more open platform, in contrast to iTunes and Amazon, that makes using the site for outside downloads and promotions easier. Developers can even integrate a 7digital click to buy option that never takes the buyer off the original site.
The Price Race Downward
Lower prices won't hurt 7digital chances either. "The price per unit is definitely plummeting," added Drury. "People will definitely spend less money on a track-by-track basis.... But the volume of consumption will go up."
But 7digital's real hurdle is...
getting consumers to hand over their credit card info and then keeping them in the habit of buying there. iTunes thrives because it created a tight and easy to use ecosystem centered around the iPod and now iPhone. Amazon grabbed some marketshare in part because millions of consumers felt comfortable buying there and already had their info on file.
But price is also part of Amazon's sales strategy and now 7digital has trumped them by more than 10%. Amazon is usually a price leader in other sectors and how they react could put additional pressure on labels to lower wholesale download prices. Publishers may finally be forced to reconsider their pricing as well.
Change is painfully slow in the music industry. But just as when Amazon entered the download marketplace, the addition 7digital - who have been innovators in Europe for more than 5 years - to the US market is a harbinger of lower prices and more aggressive competition in digital music.
