7digital Launches In US With 77 Cent Downloads

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.

image from routenote.com

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. 

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  1. by “launching in the US,” does that mean 7digital is expanding their catalogue?
    i think the spotify partnership could be a bigger deal for 7digital than spotify
    love to hear Dury’s belief that the volume of consumption will go up despit the price coming down. i wish the rest of the industry was quicker to echo that sentiment.
    i’m not sure music is headed all the way towards free, but i think ~$.25 in the long-run is a pretty optimal range

  2. Y’know, I like buying music, and I like contributing to good artists, but I just can’t get around the idea of paying money without receiving something physical.
    Bits just seem so ephemeral, and to be honest, when I’m buying an artist, it’s because I already have their music from some other source and I love it, so I want to pay in order to be a part of their success.
    But just getting a download for my money seems kind of underwhelming. I’d rather buy a T-Shirt or CD (and I do).
    What I’d like to see though, is a re-imagining of what the physical product could be. Think about it, the physical distribution of a release could be anything at all.
    Jewel cases have never been a popular thing and lots of people bemoan the loss of the large format artwork from an LP. When you buy a CD these days, what are you really getting that you don’t already have? A physical copy of the artwork and liner notes. So why don’t we focus on that and blow it up to a size that makes it attractive?
    I’m talking about art books and you could always have either a CD or even a flash card of some kind stuck inside the cover so it still comes with the music.
    I’d love to have a bookshelf full of art books instead of a stack of jewel cases with broken hinges and tiny artwork.

  3. Regardless of iTunes and Amazon, there’s another hurdle – the presence of 2 great mobile MP3 stores on Blackberry App World, right next to 7digital – Thumbplay ($0.69 per track), and Didiom that lets you bid on 2 million MP3s.

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