Universal Music Group Backs Ad-based Music Store
Posted on August 31, 2006
The Financial Times reports that Universal Music Group has signed an agreement to do business with SpiralFrog, a new online music download destination that has an ad-based business model. SpiralFrog will let customers download songs for free but SpiralFrog customers will have to watch advertisements.
Universal Music, the world's largest music company, is backing a start-up that will allow consumers to download songs for free. It will rely on advertising for its revenues, offering a different business model from that of Apple Computer's popular iTunes music store.SprialFrog will launch in December. It will be a 100% ad-based service. There will be no fees like with iTunes.
The move reflects music companies' willingness to experiment as they try to capture some profit from the boom in digital distribution still dominated by illegal file-sharing networks.
SpiralFrog's press release says through research they discovered that consumers "are more than willing to 'pay' for their content by watching non-intrusive, contextually-relevant, targeted advertising in an online entertainment environment where advertising is already part of the overall experience." For SpiralFrog to work it may depend on the duration of the ads customers will have to deal with.
Update: SpiralFrog went defunct in 2009.