Does This Frog Have Legs?

Filed in archive Commentary , Companies , Innovation , Major Labels , Marketing on September 8, 2006

Startup Spiral Frog has announced a deal with Universal Music to distribute ad-supported music. Terms were not announced. Files would be distributed in protected WMA format and so not be compatible with iPods.

The model isn't new. INTENT Mediaworks has successfully and profitably deployed ad-supported music for two years. The company is currently securing licensing with major labels.

So is this amphibian destined to hop to the stars or be tomorrow's appetizer? That depends on Spiral Frog's execution and how it fits in with alternatives, such as low-cost or free music through streaming, P2P, and subscriptions, as well as paid downloads like iTunes.

Spiral Frog users (froggers?) will need to regularly visit the web site to authorize music plays. I assume that the frequency and process will not be onerous.

There are two approaches that would work. The first is highly disruptive. The user's attention is required to respond and dismiss advertising after it's done to play the song. This works in a preview environment. After a few times the user tires of the disruption and either deletes the song or pays for it. But by then he may have generated up to twenty-five cents in advertising, which more than pays for the music.

The second approach is low disruption. Advertising is through automatic commercial insertions. This generates much lower ad revenue per play but also many more plays. The user can simply add the song to his playlist and not worry about it. This approach has successfully been proven with commercial radio.