Clarity call for digital model.

Key players in the online music market have suggested that an optimum business model for digital music is still far from clear, despite a raft of new digital start-ups.

We7 last week launched its embedded-advertising streaming service model, whereby music content is free for users, with revenue coming from advertising within tracks. With a well-executed PR campaign, it managed to make the Radio One news every hour last Monday, increasing traffic to the site tenfold.

The company, which also operates an ad-funded download service, says it now has 150,000 registered users, as well as the involvement of advertisers including Microsoft X Box, Virgin Wines and Sony BMG, which is also partnering to provide content.

However, We7 vice president of digital content Clive Gardiner admits that the model is still very much in its infancy. "If I look through the eyes of an advertiser, what they need to advertise with us is traffic, so when we do start targeting their ads properly, there is enough of a slice for that advertising to go to," he says. "To get good music, we need the ad revenue and advertising comes as our third priority."

The launch of We7's service follows the news last month that Sony BMG had followed Universal in joining Nokia's Comes With Music service, which allows consumers buying selected Nokia handsets to have access to Universal and Sony BMG catalogues to download for a year.

The message of uncertainty over the digital model was underlined by several players at Aim's Music Connected digital event last Monday (April 28), where representatives included Spiralfrog, Vidzone, Indie Mobile and Vodfaone. Qtrax, which had been scheduled to attend, was notably absent.

Orange head of music parternships Richard Wheeler told the crowd that his company was testing three music models ...