Spiral Frog
Heres' a new business model for Tuneful Tuesday: Free, advertising supported music downloads. Think of a cross between typical P2P and Myspace, and you get SPIRALFROG (formerly Musicloads).
I spoke with Robin Kent, the CEO of Spiral Frog and former head of Universal McCann advertising agency, about the advantages of this model:
- Legal (No RIAA litigation against fans)
- Free (commercial advertising supported)
- Clean (i.e, no spyware, virus, malware or spoof downloads)
- Desirable target audience to advertisers (described as Marketers’ Dream)
- Cooperation from the labels
The thinking behind this is as follows: For every one legal download, there are 40 illegal (i.e., free) ones. Let's put up a site where we can capture some of the free downloadable music market, deriving revenue via advertising method (perhaps a 3rd party such as Google or Yahoo?). The target demographic market is the 13-34 year old age group.
They are not so much competing directly versus ITMS as they are versus Limewire and Kazaa.
There are three questions that come to mind anytime I see a new music site:
- Is it iPod compatible?
- How intrusive are the commercials?
- How restrictive is the DRM?
The answers to these often determine how succesful the site will become. In SpiralFrog's case, the answers are no, not sure yet, and somewhat.
When SpiralFrog launches in December, they will have a few challenges; Here are the issues that may arise once the site launches:
iPod Compatibility: No iPod compatibility? That means from day one, they are forsaking 75% of the marketplace. Indeed, Spiral Frog is not Mac compatible (not initially, anyway). That's a tough way to begin a new product, eliminating a huge swath of the market from consideration. Its tough to compete with cheap, easy to use, advertisement free, modestly workable DRM.
SpiralFrog responds to this by saying they are not competing with ITMS, but rather, are supplemental to what Apple offers. If you only want a 30 second clip before you buy a song, then you can go to iTunes. However, a full version of a song, along with additonal band info and a "MySpace" like community around each band could be a compelling proposition of the under 30 set.
Microsoft Zune: Not compatible with Microsoft's upcoming player Zune either; See above.
Free versus Cheap: Will "free" be the key to breaking Apples grip on legal downloadable music software and devices? That's a long shot -- most iPod owners have an extensive collection of music from beyond the iTunes Music Store. Their own CDs are a primary source, along with CDs of friends as the next source, and then P2P comes third. (If you want to say P2P trumps CDs for younger users, I won't argue with you).
I doubt they will cut into any of Apple's sales, but no cost, legal and virus free might give P2P sites a run for their money.
Restrictive DRM: 1 PCs and 2 portable devices per user. Kinda skimpy rights offering.
The Short Attention Span Generation: Each song takes 90 seconds to download, and while that is along time, the company hopes to keep viewers entertained with Concert information, videos, band discographies, photos, lyrics, etc. -- all the trappings of a serious music site. There are also plans for colloborative filtering -- as in "If you like this band, then you will like that band."
This is to my mind the toughest part of any advertising dependent site. Some of the most successful new technologies of recent years have had as part of their appeal a way for the user to control information/content themselves, and avoid the annoying and intrusive advertising. Think RSS, iPod, Satellite Radio, and TiVo.
On the other hand, Google is the most successful of all internet companies. Their advertising is discrete and unobtrusive. So an advertising model could possibly work be tolerated -- assuming its not pernicious popups or "watch to play" commercials. Marketers don't think “pre-roll” ads that run before or perhaps during the downloading process are effective. That's one of reasons YouTube was a monster hit, while iFilm was not. The "watch-to-play" pre rolls was one of the major differences.
~~~
I will reserve final judgement until I see what SpiralFrog looks like in December, but the concept is certainly intriguing.
>
Sources:
Universal Music backs free download website
Holden Frith
August 29, 2006
http://www.timesonline.co.uk/article/0,,26909-2332877,00.html
Universal Offers Free Music
C. Medford
Red HerringAugust 29, 2006
http://www.redherring.com/Article.aspx?a=18226&hed=Universal
+Offers+Free+Music§or=Industries&subsector=EntertainmentAndMedia
Everyone's Going Crazy About the Frog
Mark Mulligan
Jupiter Research, August 29, 2006, 07:15 AM
http://weblogs.jupiterresearch.com/analysts/mulligan/archives/016945.html
Universal backs free music offer
Tuesday, 29 August 2006, 11:05 GMT 12:05 UK
http://news.bbc.co.uk/2/hi/business/5294842.stm
SpiralFrog, Universal in free music download deal
Tue Aug 29, 2006 12:30 PM BST
http://today.reuters.co.uk/news/articlenews.aspx?type=technologyNews&storyID
=2006-08-29T113016Z_01_WEN4632_RTRIDST_0_TECH-SPIRALFROG-DC.XM
Universal to try ad driven music downloads through SpiralFrog - still with DRM
Marshall Kirkpatrick
Tech Crunch, August 29 2006
http://www.techcrunch.com/2006/08/29/universal-music-group-
to-try-ad-driven-music-downloads-through-sprialfrog/
Tuesday, August 29, 2006 | 03:40 PM | Permalink
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Comments
I don't know (but will go find out) why these folks would not be iPod compatible since (allegedly) others can (allegedly) download thousands of (allegedly) purloined songs from (allegedly) copyright-violating sites.
As for Zune compatibility, I would assume this has to wait until fifteen minutes after Zune is released so that some eight year old in Fedonia can reverse engineer and publish the format.
p.s. I don't even OWN an iPod or MP3 player and have more CD's than most record stores (remember record stores?), so don't come snooping round here looking for stolen content. You wouldn't like my eclectic tastes either, so don't come looking for the collection either.
Posted by: Jim Bergsten | Aug 29, 2006 5:33:03 PM
Too expensive. What? Free it too expensive? Yes. I just plain old cannot afford in either time or money or frustration to have my legal collection contaminated by myriad DRM restrictions that may cause me trouble or embarrasment or tempt me to be a bad citizen.
There's a fundamental disconnect. The market says songs are worth variously 20 cents to $1.00 plus or minus 30 cents. Music providers just plain old won't accept the market's judgement. Their biggest problem is that disintermediation has rendered their business model obsolete and technology has rendered any perception of convienience absurd.
Posted by: Robert Coté | Aug 29, 2006 5:33:54 PM
Crap. That's "Fredonia" as in the Marx Brothers movie of a different name.
Posted by: Jim Bergsten | Aug 29, 2006 5:34:17 PM
im highly suspicious of these decisions to abandon IP in favor of selling advertising. are we going to get free cars with AdSense installed in the dashboards next? there's only a finite demand for advertising out there. you've gotta wonder how much google is cannibalizing their own business with each new ad-driven program.
i think the way of the future is advanced security measures, not giving away all your IP
Posted by: anon | Aug 29, 2006 5:43:42 PM
oh i didn't even see the no-ipod part. yea this is another example of RIAA trying to force behavior down the consumer's throat. i predict massive failure
Posted by: anon | Aug 29, 2006 5:47:24 PM
Godel's Theorem of mathematical completeness is settled. No useful system can be made secure. I suggest Douglas Hofstadter's "Goedel, Escher and Bach - The Eternal Golden Braid" for a readable foundation.
Posted by: Robert Coté | Aug 29, 2006 5:51:37 PM
"Millions for advertising, not one cent for product."
Wait -- that doesn't sound right.
p.s. I agree with the first two sentences of Robert Coté's comment above.
Posted by: Jim Bergsten | Aug 29, 2006 8:25:34 PM
hmm good point about godel, perhaps more clearly true with music IP than any other case
Posted by: anon | Aug 29, 2006 9:23:08 PM
I saw something on techcrunch and thought I'd pass along. The restrictive drm also has one aspect in addition to the ones Barry mentions:
"you must log in to the Spiral Frog service at least once per month, and see their ads, or your files will stop playing!"
Free has its limits!
Posted by: InnerDaemon | Aug 29, 2006 9:27:32 PM
How much of music on Ipods is legal (paid for)? My estimate? About 5%. The rest? Shared by friends from computer to computer. Can't stop it. Apple/SteveJobs/Disney is THE biggest pirate organization of all time and they masquerade as being the captains of legal distribution. Pirates of the Caribbean? Hooey. Pirates of Silicon Valley/Disneyland I say. Advertising supported downloads are a great idea but success will be limited BECAUSE when all you have to do is plug your Ipod into a friends computer and upload 40gb of music in an hour or so, WHY WOULD YOU WASTE YOUR TIME? (especially if you're 12-24 and all your friends have Ipods full of music from which you can get all the music you'd ever want for free).
Posted by: Bob A | Aug 29, 2006 10:07:23 PM
Free, advertising-supported music downloads. Wow! Maybe I'm just breathing too much of the chemical-manufacturing air here in Oklahoma City- but an interesting word springs to my mind as soon as I read that:
Radio.
Posted by: Sherman McCoy | Aug 29, 2006 10:12:54 PM
No Mac compatability-no can listen...
Posted by: lola | Aug 29, 2006 10:16:14 PM
Sherman nailed it. And cracked me up!
Posted by: Craig | Aug 29, 2006 11:17:52 PM
A drug flashback perhaps, but I'm all but positive I saw an ad on the screen of the gas pump recently (I, of course didn't watch it).
Where's my free gasoline?
No, don't stop me -- I'm on a run here!
How about CHARGING FOR ADVERTS?
What a concept!! Eliminate products entirely! No development! No manufacturing! No shipping! No customer support (sorry, India)!! All Madison Avenue!
No more service economy -- no more service!
Money for nothing! Money for less than nothing!
Sigh. What was the topic again?
Posted by: Jim Bergsten | Aug 29, 2006 11:24:01 PM
Some thoughts on this:
I think it's at least partly commendable that the RIAA accept that they can't compete with free, so that they too are offering a "free" product. I give them a few points for at least trying to think beyond their traditional revenue model (though it's not really).
The DRM and lack of iPod support will make Spiral Frog fail, however. You not only have to compete with free illegal downloads, but also compete with flexibility.
It's only 10 years since Napster, and we can't really be expecting a multi-billion dollar industry to change its business model in that time. It's like Titanic doing a u-turn.
What's the alternative for music labels? Well, how about NOT MAKING AS MUCH MONEY AS YOU USED TO??! OR NOT MAKING MONEY AT ALL?!
The Internet should be getting rid of these scum sucking middle-men once and for all, and put the profits back into the hands of the artists and producers.
For a good example of a DRM-free download service, check out Warp Records' site.
Posted by: Frank Rizzo | Aug 30, 2006 6:44:21 AM
Sorry, that should be Bleep.com, not Warp. Bleep sells Warp (and other, such as Rough Trade) DRM-free music.
Posted by: Frank Rizzo | Aug 30, 2006 6:53:01 AM
Apple/SteveJobs/Disney is THE biggest pirate organization of all time and they masquerade as being the captains of legal distribution.
Blame Apple for how users use their product? Why not blame Toyota for speeding, or Bell Pacific for prank calls? I would argue that Apple have taken reasonable steps to make piracy more difficult: you can't take music off the iPod w/o special programs, for instance.
I had to check your email address to see if it was @riaa.com. Get over it. Free downloading is here to stay, whether you like it or not. Simply because of technology. The question is how you make money.
Myself, I download "illegal" MP3s all the time. If I like the album, I buy it on CD. If I don't, I delete it. The CD stays in its wrapper, but it means the artist gets at least some of my money ($1-2 out of the $10 or such).
Now, I'd be much happier if the artists themselves got most or all of my $10. But I don't see Tool putting up a Paypal link on their website.
Posted by: Frank Rizzo | Aug 30, 2006 7:11:03 AM
What's the price for "eyeballs"?
I'm sure UMG wants for each download as much money as they get from Apple.
About 70 cent.
So how many adverts has a downloader to endure for SpiralFrog to recoup the money they have to pay to the labels and publishers?
Posted by: Dieter Krist | Aug 30, 2006 9:29:11 AM
The free is great, the DRM sounds like a pain. I have a feeling most tech savy useres will download the free song and then use an audio recorder to record the song without the annoying DRM. Here is a question, why even have DRM if it is free? To force people to have to look at the ads?
I think they would become more popular, and get plenty of page views if they released free, DRM free songs.
If they are going up against Kazaa type sites, the DRM (if the song is free or not) is going to really cut into the appeal.
Posted by: Socketboy | Aug 30, 2006 2:13:11 PM
These songs aren't really "free" when you think about. You have to sit through long advertisements for each song, and the drm is laid on so thick, you won't be having much fun with the song once you get it. And this is not even close to competing with the p2p networks, I can download entire albums or discographies neatly organized and drm-free, with this service it's still the old song by song. Nice try, but this will be another failed RIAA experiment.
Posted by: blardy | Aug 31, 2006 12:47:36 PM
I think Spiral Frog Sounds like a huge pain. If the music can't be portable than what's the point? Should we lug our computer's around? hahaha just kidding...
But having to go back to the website every now and than to listen to the song you have already downloaded unto your computer is a huge pain! It's one thing to have to look at adverts when you are downloading the songs - that I don't care about, but having to go back every month or so to see it in order to listen to the song isn't worth it. Especially, if you are like myself - a student on a univeristy campus without any internet access in my room. So if I am not connected to the internet I can't listen to that song if the message pops up that I have to renew it? I might as well just download illegally, or buy cd's at ridiculous prices...take your pick!
Posted by: Leelo | Sep 5, 2006 11:23:49 AM
I think that having a free music site is going to be the next big music thing.
Why not have a free music site?
All them sily costs 20 cents this 30 cent here.
Bring on the FREE MUSIC!!!!!!!!!!!!!!!
Shame it isn't ipod compatibol
send your views 2:barnetby61@lycos.co.uk
Posted by: Benjamin George | Sep 5, 2006 2:24:27 PM
Okay, does anyone remember free, ad-supported internet access? Yeah, it was great while it lasted, but the ads never brought in enough money to support the service. Most people, I suspect, will open about 15 different instances of the program (or web browser), set all up to download different songs, and take off for work. Heck, I know that's what I'll do. And I can't wait for a linux version of the service, which will likely rip off the drm, although ad watching may still be required. And last but not least, why won't iPods be supported? Can't the iPod play just about anything a regular mp3 player can? And (some) iPod users do use windows
BTW, I love Robert Coté's last comment. I've wondered for ages why the RIAA has been prosecuting for people getting their own copies of music that can literally be picked out of the air.
Posted by: Amp | Sep 17, 2006 12:10:47 AM
It is possible (and easy once you know how) to get the music off your iPod but it took a lot of hunting round Apples website for me to find out. However it is only possible if you don't have the automatic update activated.
Any time I download music I also burn it to CD as a back up so will I be able to do that with Spiral Frog and then put it onto the iPod?? (I had a computer loose everything on it which is why I now put it all on CD and know you can get the music off) I know it's a long way round but I have yet to come across a CD that I couldn't put on iTunes even though other programmes wouldn't copy it due to whatever the record companies do....
Posted by: Victoria | Sep 28, 2006 8:57:37 AM
It is possible (and easy once you know how) to get the music off your iPod but it took a lot of hunting round Apples website for me to find out. However it is only possible if you don't have the automatic update activated.
Any time I download music I also burn it to CD as a back up so will I be able to do that with Spiral Frog and then put it onto the iPod?? (I had a computer loose everything on it which is why I now put it all on CD and know you can get the music off) I know it's a long way round but I have yet to come across a CD that I couldn't put on iTunes even though other programmes wouldn't copy it due to whatever the record companies do....
Posted by: Victoria | Sep 28, 2006 8:57:46 AM
