Who does Tesco want to compete with now that it owns We7?

Whether Tesco’s acquisition of We7 last week is a measure of the music streaming company’s attractive vitality, or just a sign it’s gone from being the poor man’s Spotify to a pale version of Last.fm is besides the point.

The deal, which saw Tesco take a 91% stake in We7 for £10.8m, marks another move by a bricks-and-motor retailer to grapple with digital retail, but at least it’s a stronger step for We7 than Sainsbury’s £1 purchase Anobii (also last week) was for the ebook retailer.

Despite a tongue-in-check headline from Techcrunch that asked What the heck is a grocery store doing buying a music streaming service? Tesco hasn’t been just a ‘grocery store’ for quite some time.

One in every ten pounds spent in British shops goes to Tesco, which has been expanding for some time into pretty much every sector it can, from second hand cars to insurance to online beauty.

And We7 isn’t the retailer’s first move into the online entertainment space. Last year Tesco bought online film service BlinkBox and Tesco says the We7 deal is just “the latest step in [a] strategy to offer customers new and innovative ways of accessing digital entertainment”.

Mark George, Digital Director at Tesco, said: “Customers and technology together are transforming the way we listen to music.  Tesco is already one of the UK’s largest retailers of CDs; this move will help us offer a greater choice for the growing number of customers who want to access music instantly on any device, whenever and wherever they want.”

Tesco will use We7’s technology to “launch a range of digital music services in the future”, he added.

But whether Tesco can repoint We7 and get it back on course to compete with the all-conquerring Spotify, or whether it has another (and far more profitable) company in its sights in the shape of Amazon remains to be seen.

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  1. We7 moves on (again) | Dominic Tyer's blog

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