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Business News Deals Digital
7digital financials illustrate download to streaming shift
By Chris Cooke | Published on Thursday 26 March 2015
Now publicly listed, 7digital released an earnings report earlier this week. With many digital music firms in private ownership, or existing as subsidiaries of massive tech businesses with many other interests, 7digital’s regular reports to investors could now provide a few interesting nuggets of information regards what’s happening in the wider sector.
Unsurprisingly, the shift from download to streaming is seen in the figures, with download income accounting for 79% of revenue in 2013, and just 22% last year. And while that in part is due to the merger of 7digital with radio services firm UBC and some other innovations, it is also the result of the digital music side of the company increasingly providing a white-label streaming set-up to clients, rather than allowing them to run an iTunes-style download store. For example, 7digital is powering the expansion of streaming platform Guvera in various territories.
In terms of overall figures, the 7digital Group posted a ‘statutory loss’ of £2.6 million for the year, down from £4.5 million in 2013, despite turnover declining 12% to £10.2 million, mainly because of the decreasing importance of the download side of the business (something which was always “low margin”, the company’s report notes).
In addition to the Guvera alliance, 7digital used its financials report to confirm a new three year contract to power Sainsbury’s digital music store. We also found out that the company raised proceeds of £3.5 million against an investment of £1.6 million by selling part of its stake in audio-sharing platform Audioboom.
Remarking on it all, CEO Simon Cole told reporters: “These results represent a year in which we successfully created a new company from the merger of UBC Media and 7digital; we have ended it in a position ahead of the predictions we had made during the merger”.
He went on: “Our success and growing customer base is proof of the developing market for streamed music services and the coming together of the radio and music industries as technology and consumer habits change. As our business model has changed, our high margin monthly recurring revenues and profitability continue to grow, powered by the fast growth of our existing clients and new customers wins”.
