7digital financial results reflect decisive turn to streaming

British digital music company 7digital released 2014 financials that embody two major changes, one structural and one strategic. The structural change is last May’s merger with UBC Media Group — the 2014 results include seven months of merged operations, compared to the unmerged entity in 2013.

7digital offers a consumer-facing music download store, and is a white-label B2B provider of streaming services to the BBC and many other clients.

Strategically, 7digital has turned its tactic toward streaming, as its historical download business declines. Supporting comments in the financial presentation clearly embrace the change. “The 7digital business has switched from a model of powering download stores and selling content to a model of monthly recurring platform revenues from building streamed radio and music services.”

Gross revenue for 2014 (£10.2) dropped 12% from 2013 (£11.5), but the bottom line net figure improved to just over break-even from a 2013 loss of £4.5.

The following chart graphically illustrates the revenue shift from downloads to streaming.

“Results are above market expectation for the first year,” 7digital said. “Transition and direction of travel are clear.”