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7Digital to sell rights-free music

"A UK start-up has beaten the likes of Apple, HMV and Tesco to be the first to sell music from all of the large labels online without restrictions on copying or playing devices. 7Digital, which was founded in 2004 and has received £5.75m in venture funding, said on Tuesday that SonyBMG – home to artists such as Bruce Springsteen, Bob Dylan and Leona Lewis – has joined EMI, Universal and Warner Music in providing its catalogue in MP3 format.

MP3 does not have the “digital rights management” protection technology used by most download services, including Apple’s iTunes. 7Digital is the first European service to provide the complete range of large labels DRM-free, as well as several independent labels. Ben Drury, its founder and chief executive, said removing DRM boosts online sales, as people buy more albums rather than individual tracks. Customers spend an average of £4.70 per transaction. “Early adopters understand what MP3 is and that it is the only format that works on everything,” he said. “The impact amongst early adopters has been really strong, and is slowly starting to trickle down to the mass market.” Mr Drury added that 80 per cent of 7Digital’s customer service calls were related to DRM, as they struggle to move tracks from one device to another.

While 7Digital has had 1.3m customers since it began, iTunes, which only sells tracks that work on iPods, is the runaway leader in the UK download market, with more than 75 per cent market share, according to Jupiter Research. Mark Mulligan, a Jupiter analyst, said music labels were granting DRM-free licences to other services ahead of iTunes in an effort to dent its dominance. But he said rival services may struggle to match iTunes’ seamless integration to the iPod. “We’ll see a lot more services going to MP3, which will put a lot of pressure on iTunes,” said Mr Drury. “It could be the only service that doesn’t sell MP3.”"