Universal backs free music rival to iTunes

By Joshua Chaffin and Aline van Duyn in New York

Published: August 29 2006 05:02 | Last updated: August 29 2006 05:02

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.

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.

The service, SpiralFrog, represents a departure from Apple’s 99 cents-a-song business model and other legal download services which charge a subscription fee by being completely free. It is due to start up in December.

A report released last month by the International Federation of Phonographic Industries revealed there were still 40 illegal downloads for every legal one.

Although Apple’s iPod and its iTunes music download service has 80 per cent of the market for legally downloaded music, competition is expected to hot up in the run-up to Christmas.

This year, the IFPI has predicted that 60m music players will be sold worldwide, many of them MP3 players not compatible with Apple’s services.

As well as start-ups such as SpiralFrog, established companies are getting ready to flex their muscles. Microsoft is to launch Zune, which will offer music players and a music download store. MTV has launched Urge, a service that has downloadable music and music videos via subscription.

“Offering young consumers an easy-to-use alternative to pirated music sites will be compelling,” said Robin Kent, SpiralFrog’s chief executive and the former head of the Universal McCann advertising agency.

Mr Kent has held talks with labels Warner, EMI and Sony-BMG and hopes they will be lured by the surge in online advertising.

Merrill Lynch last week raised its forecast for the sector’s growth, predicting it would expand by 35 per cent this year in non-US markets to $11.6bn (£6.1bn). US growth is expected to increase by nearly 30 per cent to $16bn.

Perry Ellis, the fashion company, said it would advertise on SpiralFrog. Levi’s, Aeropostale, Benetton and others have expressed interest. “Our audience is into music and can be more easily reached on the web,” said Oscar Feldenkreis, president of Perry Ellis International.

Other music services are looking to advertising for their revenues. The new Napster allows consumers to listen to up to five tracks for free while they view advertising. Meanwhile, video-sharing sites, such as YouTube, have held talks with music companies about showing music videos, which would then be supported by advertising.

Mr Kent said his research revealed that young consumers would be willing to endure advertising as long as the brands and products were relevant to them.

From Bob Lefsetz:

"Ever see a western? With the posse in pursuit of the bad guys? What
does the brainiac ALWAYS say? LET'S CUT THEM OFF AT THE PASS!

Maybe record execs didn't watch enough TV, maybe they aren't aware of
this most basic concept. You don't succeed by convincing people to play
nice, to come back to where they once belonged, but by CORRALLING them
at some future point!

Rental, and make no mistake, SpiralFrog is rental, it's just that you
pay for it with your eyeballs/time as opposed to cash, has been proven
to be a failure. Napster's going out of business, and Rhapsody is a
niche product. So, why in HELL should I care, should ANYBODY GIVE A FUCK,
about a service that allows you to have the material on the MAN'S terms
when you can steal it all and own it with no questions asked? Isn't
the solution to monetize the stealing, by charging at the ISP level, as
opposed to capitalizing enterprises that nobody wants, trying to
convince people to be satisfied with LESS than they're already used to?

How Apple became the villain, I'll never know.

Hell, let's go back to the beginning. The Diamond Rio. The major
labels SUED to halt production. Thank god they lost, for if not there'd be
no iPod, never mind an iTunes Music Store.

And why was the iPod successful? BECAUSE OF EASE OF USE! Does
SpiralFrog sound easy to use to you? Forget the hypothetical interface,
you've got to plug in every month to keep your tunes? God, a kid can't
locate his house key, but he's going to play by SpiralFrog's RULES?

And then, Apple creates the aforementioned iTunes Music Store.
Providing the major labels with revenue and an avenue for future distribution
that allows them to mesmerize Wall Street and prevent their stocks from
crashing completely. And somehow, Apple is at fault? Apple creates
the market, but is a goat because it won't allow the labels to raise the
prices? Give me a break.

But the real story, which the labels won't admit, is that the iTunes
Music Store sales are de minimis to the ongoing theft. Never mind P2P,
but CD and hard drive swapping. But rather than address the stealing,
the record companies focus on Apple's near monopoly? Trying to break
that? Unbelievable.

And why does Apple have this monopoly? Because of the sheer ineptitude
of its competitors. Anybody can make an MP3 player, but people want
iPods, because they WORK better.

Let's ask Sony. Which had the name brand advantage. Connect and their
devices are a failure. Maybe because, at first, they only sold the
music in a proprietary format, THAT NOBODY ELSE USED!

I know that Microsoft pushes WMA. But if you think Microsoft always
wins, you've never heard of Google. WMA IS NOT the music standard.
Shit, do we have to watch the Betamax movie one more time? Sure, WMA
preceded Apple's AAC, but it's been ECLIPSED!

And, everybody savvy knows the real standard is MP3 anyway. And isn't
it funny that the labels want to punish Apple by throwing in with
MICROSOFT? Isn't that like punishing Righteous Babe by throwing in with
UNIVERSAL?

And should we be impressed with any digital moves made by Universal
anyway? These are the same guys who came up with Farm Club and PressPlay.
Literally the same guys, Doug Morris and Jimmy Iovine. Doug's a
sexagenarian song guy. Jimmy? He's an opportunist. Believing these guys
have the digital answer is akin to believing the guys who did the Mentos
movie are going to eclipse Paramount.

And really, if you're paying attention to digital, isn't Warner the
ONLY company taking any risk? (Even though their efforts have been
overhyped.)

But back to WMA. In case you didn't know, it's incompatible with
iPods. But it's worse, it's MAC-incompatible. How about all those schools
who signed up for Mac-incompatible music rental services? They're
dropping them like crazy. Because Macs are BIG on campus. And, as stated
earlier, people DON'T WANT TO RENT!

But it gets worse. Microsoft has stopped developing Windows Media for
the Mac. Prove it to yourself by trying to watch MTV's Overdrive on a
Mac. Can't be done. Because the idiots running the labels are afraid
of having their content stolen. So now a whole slice of the audience
can't sample your wares AT ALL?

And Macs may only have five percent of overall computer sales, but
amongst individuals, it's much higher. And these people are zealots. Who
do you think broke the iPod? Mac-users and early Windows adopters who
told everybody how fucking great they were. Who in the hell is going
to tell ANYBODY how fucking great SpiralFrog is?

But Apple's at fault here. Even though THEIR products are 100%
Windows-compatible. Make me puke.

Then there's the issue of the copy protection not working ANYWAY!

If copy protection was a good idea, Andy Lack would still have his job.
You don't grow a business by making sure fewer people can sample your
wares, but by ENCOURAGING sharing/word of mouth. Shit, the labels speak
the mantra of street teams, but they want the product locked up. The
key is to MONETIZE WHAT'S ALREADY HAPPENING, not to try and bring people
back to a past that never existed.

As for the WMA copy protection, it's been broken... Just read this:
http://www.macdailynews.com/index.php/
weblog/comments/microsofts_playsforsure
_cracked_fairuse4wm_strips_windows_media_drm/.

God, it's like 2000 all over again. But instead of Napster clones,
we've got RIAA-endorsed music sites. Not only Napster and Rhapsody, but
the theoretically legal iMesh and Morpheus and KaZaA and... NOBODY
WANTS THIS SHIT! Because it doesn't deliver what the consumer wants.
Can't we start focusing on usability and consumer experience as opposed to
protecting copyrights using the old model? If this goes on much
longer, the value of recorded music will be zilch.

Yup, that's where we're headed. When the CD crashes rather imminently
and all anybody wants are files. If you think people are going to pay
a buck a track for copy-protected files, you're living in a fairyland
inhabited by the likes of Mitch Bainwol and Dan Glickman. The reason
Bush can keep getting away with saying we're winning in Iraq is because
most Americans are not there FIGHTING! But hundreds of millions of
people want music, and they're not going to fall for the RIAA doublespeak.

So, CDs will be dead, the iTunes Music Store will represent maybe ten
percent of acquisition, and the rest of music will be FREE! Is this the
future you want?

Then stop buying into the hype. Ignore ridiculous pronouncements of
well-endowed vaporware and get down in the pit with the proletariat.
Eighty million people have iPods, not because they're tied to the iTunes
Music Store, but because they work best. Most people fill their iPods
with music they've acquired anywhere BUT the iTunes Music Store. It's a
circle jerk to see the iTunes Music Store as the future of acquisition
and it's even more of a circle jerk to believe you can deliver less,
for INCOMPATIBLE DEVICES, and people will want these new services more.

A lot of unprotected music for a low price that you own permanently.
This is the only solution. To think otherwise is to be ignorant."

Lefsetz is right, but all that aside, we can simplify.

Boycott SpiralFrog simply because it is RIAA.

Thanks for the education, Schmoo!! Now it makes sense! But just like mainstream media with tons of endlessly repeating ads, it will be everywhere, I fear.

It's ingenius evil - the kids are responsible for a large percentage of illegal downloads and do not own credit cards to buy at itunes or rhapsody etc, so they p2p their music for free. So let's get at the kids, come up with this big moral 'it's free, you help your favourite artists and you get the BENEFIT of 'cool' ads targeted right at you'. Maybe a handful of kids will fall for this but given a choice of downloading free music no hassles or downloading free music and being bombarded with ads (which will probably include adware/spyware/pop-up potential in the 10,000 word disclaimer , 8,000 words in and in very fine print) which will they choose?

Simple fact is, CD's wouldn't be dead if artists released a quality product at a fair price, downloads would still happen but kids would WANT the CD which they can play virtually everywhere (bedroom stereo, car stereo, computer, portable CD player etc) as opposed to .mp3 which is still mostly a computer or mp3 orientated format, hifi systems still do not typically include mp3 play ability ecept for some boomboxes and a percentage of expensive car stereos.

Instead of this, most major label CD's are overpriced tat, usually with 2-3 decent tracks at best and then they bring in DRM and spyware to top it all and they wonder why they can't sell CD's anymore doh !

Well,
seems like a really good news: THE DEATH of the 'pay-per-play' model, and the birth of 'free for consumers, advertisers will pay' way of doing music business. I only wonder WHY those suckers couldn't agree with Napster and Kazaa who (as I remember) proposed similiar solutions?

Pretty interesting idea. Not happy that I can put it on my iPod though hahaha.

That I "can't" put it on my iPod

Yeah, "free" in the sense that you have to listen to or watch about twenty minutes of commercials after every five minute block of music. So basically it's MTV only without the videos and without the Jackass.

Well, Put it this way. Content providers needs to stop pressing CDs and move into online download services. CDs = polluting trucks and materials that takes up precious resources. Plus, whatever copy protection it's on, someone's gonna crack it anyways and make thousands of copies and sell them.

And speaking of DVD movies, in order to transmit my movies to my iPod, I have to crack the security code to do that...Just to put it on another machine that I own. Pain in the (*&%#@ neck. I hope that Blu-ray's copy protection would go better to stamp out these dang pirates without hampering with my rights to backup and put my movies on the iPod.

Anyways, I think that online downloads are more secure anyways, because they can put DRM that stops people from making mass copies and other forms of casual piracy, while at the same time, allow consumer to make personal backup and portability copies of the movies. You download content on the Internet and it securely stores it on your hard drives. Your backup server copies the contents securely with an encryption code that prevents hackers from snatching content and making mass copies of it. You can beam your regular-stored content to your "entertainment terminals" at home like your living room, den, and the bedrooms. You can also securely copy it to portable devices for you to watch/listen to when you are away on trips and you can legally, with a fee, copy it for a friend.

my car stereo is a laptop...
before cable TV expanded the three big networks paid for all the TV programing with advertisments...
The basic wrong in filesharing copyrighted mp3s, is that the artist is out the dime the labels allow them to have, the trucking company that ships the CDs isnt out anything, the CD pressing plant didnt get ripped off, the graphic artist who painted the cover cant complain.... but yeah as a musician, I would want my dime!
I couldnt figure out the details of Frog, how much and what kind of DRM?, almost sounds like streaming radio but one gets to choose what's streamed...?, specail programing? what's THAT gonna do to my PCs?!?
How much are the artists gonna get?
Is the Frog gonna play fair with the Independants?
Being from an RIAA backed major label, you can bet that the Frog will miss the mark by a longshot.

New! Improved! from the same RIAA that brought you Sony's Rootkit, Sued Fans, enslaved artists, keeps Independants out of the Mainstream AND forces DRM down everyone's throat: it's SpiralFrog!

There are plenty of other things that pollute our environment; a lot of which should be of more concern than CDs. To me, the typical download does not offer the same quality and value as a physical product. Rather than trying to let computers rule our lives and escape the physical world, perhaps we need to reexamine our approach. Books use valuable resources (paper which comes from trees) and in most cases, are bulkier than a CD. However, I don't think I could substitute a book in my hand with reading a .pdf file.

I have also been better using my shelf space for CDs by getting those in the mini-LP sleeve design, mostly from Japan. I just did some measuring and discovered that in an open shelf space of 9"L x 8"H, I can house only 23 standard jewel case CDs. When utilizing the same space, I can house close to 50 CDs that are in the cardboard sleeves. Here is a link with a photo of the design of which I am speaking. These are of Elvis Presley