Film, games and music retailer HMV is buying a 50% stake in digital music distributer 7digital for GBP7.7m (USD12.6m). The deal will see 7digital become HMV’s exclusive digital track seller as the retailer struggles with falling physical sales. Like-for-like physical sales at HMV fell 1.8% year-on-year for the 18 weeks to August 29.
The sellers are Balderton Capital, Sutton Place Managers and members of the startup’s management. 7digital CEO Ben Drury and his co-founder, CTO James Kane, will continue to run the company, but HMV will appoint three directors to a new board for the joint venture.
Commentators say forming a new board is a move designed to ensure HMV has control over its increasingly important digital distribution channels. 7digital will also take over e-book sales for the HMV-owned Waterstones book chain, which has an exclusive deal to promote Sony’s e-book reader in the UK.
7digital is forecasting a GBP1m (USD1.6m) EBITDA loss for 2009. However it is in the process of forging a number of distribution deals with partners such as Spotify and has a successful business as a white-label platform provider for sites such as Last.fm and Bebo.
StrategyEye's related categories: Online Music, Major Retailers
StrategyEye's related companies: HMV, Sutton Place Managers, 7digital, Balderton Capital
