Thursday, September 7, 2006

SpiralFrog: Not How People Want To Consume Music

I applaud the folks over at SpiralFrog, EMI Music Publishing, and Universal Music Group for trying to set the music free. SpiralFrog has done an excellent job building an ad-supported and DRM-controlled distribution mechanism that sits somewhere between legal licensed subscription services, like Yahoo Music Unlimited and the hordes of illegal P2P-sharing sites (no need to name them here).

TechCrunch covers how it works, so I'll not go into that here.

I have little doubt that revenue will be generated by the partnerships that SpiralFrog has already successfully put in place (props to their BizDev team). At this point, however, I'm wondering if ad-supported DRM-controlled music is, in fact, a big business, and if this approach will really matter long-term. The more cynical side of me could see this as a desperation move on the part of the labels to find some revenue and leverage for their music portfolio at any cost. But, really, how much revenue could this drive once SpiralFrog takes its cut?

So, what's the innovation, and does it really give the major labels a better connection with their customers? Isn't that really at the heart of where the major labels need to go... NOW? I get the feeling that this partnership is not focusing on getting closer to the consumers (you don't do that by putting flashing ads in their face).

Checking in with my favorite, and most-geeky, band, The Barenaked Ladies, we find what they think about this.
On a totally unrelated note, have you heard about SpiralFrog yet? It's Universal Music's attempt to deal with the new world of music, and it seems downright bizarre to me. Basically, they're saying you can have all this music for free, but you can only keep it on your computer and one other device. That kind of maniacal need for control is what will be the death of major labels. If they continue to stop people from listening to music in the way they want it, people will continue to make other choices. I think that labels need to stop the restrictive and manipulative use of DRM, and, frankly, we should legalize P2P, and have it properly licensed from the ISP level (sure, the ISPs will complain, but, let them complain).

I'm with those guys. But for now, back to revenue.

So, today, I can sign up for 2-years of the Yahoo Music Unlimited To Go Service at this link for $119.88 - that's about $5/month for all-I-can-drink subscription to their music library, including the right to transfer the music to my portable music player (it's half that cost if I just want to stream it to my PC).

So, Yahoo has established that it's pretty darn cheap to legally distribute a pretty big music collection as a subscription service to customers (yeah, you don't own the music, but the price to extend your subscription in 2 years will be significantly less then anyway). Is Universal Music Group and EMI Music Publishing making money in the face of this? Probably not a lot. If the Yahoo model was working, they wouldn't need to be out there slapping ads around each song.

Oh, we forgot to tell you.

SpiralFrog and Yahoo Music Unlimited don't work on the iPod.

That's fine if you only really care about addressing 20% of the market. Not a big business.

Guess what? DRM-free music works on 100% of the market.

If the major labels really want to free the music and truly do believe that they can build big revenues around ads, then they should build a non-DRM-controlled solution for that (which is really not hard at all).

But, what do I know? I'm just a customer.

I use an iPod and won't be using either of these services. My money stays in my bank account for now. Imagine how much money you could make if you gave your customers your product in the form that allowed them to most easily consume it? Remove the friction and the revenue will follow.

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