Music 2.0 - Exploring Chaos in Digital Music

August 30, 2006

Spiral Frog - Mutant Spawn of Napster

Filed under: Music Industry — maths @ 3:19 pm

Mutant Spawn

Rags Gupta’s take on Spiral Frog’s ad supported ‘free’ music download model on the Digital Music News blog was that

“Spiral Frog and UMG should be lauded for trying a different approach to music distribution……but this will come down to execution and I fear that there will be too many hoops for consumers to jump through. I hope I’m wrong.”

The Spiral Frog model is not at all unique despite what the hype accompanying it claims it to be but Rags is spot on in pointing out that ease of consumer use is paramount for success.
The advertising model for music exists in some form already and some forms of it already exist in other countries…for example, for proof of concept, just have a look at the online model that is adopted by numerous companies in China including the No.1 facilitator of music downloads in China - search engine Baidu. It is believed by some that up to 30% of Baidu’s revenues can be attributed to searches for mainly illegal music downloads. However, there is a catch to this - the rightful content owners including music labels and publishers only get a fraction (if any at all) of the advertising revenues earned by these companies.

So the problem boils down to one of rightful revenue allocation…the companies currently making advertising revenue off other people’s content are too greedy to share the rightful proportions and subsequently, once bitten, twice shy content owners in turn start to ask ridiculous minimum guarantees from any prospective company that actually wants to work out a fairer revenue share model.And so a vicious circle develops…

In response, the smarter content owners (mainly independent labels) realize that firstly, trying to prevent these companies from misappropriating their music for free distribution is a costly legal exercise in futility but on the other hand, trying to find a reasonable revenue sharing arrangement with these untrustworthy ‘distribution’ companies is simply a fools errand. In addition, it has to be recognised that in China, it is almost culturally ingrained that full-length mp3s can be easily obtained for free, and trying to change that is too onerous a task.

So these content owners instead decide to give in and GIVE away their full-length tracks for free to these ‘free music distribution’ companies including Baidu in return for higher priority promotion for these legit free tracks over the other illegal tracks that populate their free sites and hence a marketing channel develops.

Theoretically, these priority promoted free songs will rise up the popularity stakes and make stars out of the respective artists who in turn earn their revenues from advertising endorsements, ringtones, live appearances, concerts etc. And the free music distribution companies earn their revenues from advertising. And that’ how the hitherto unwieldy music ecosystem exists in China - it’s not likely to be a permanent model but it is going through its evolution stages.

But the point is that to fully maximize the advertising model and for its attendant ecosystem to develop in each country with its existing cultural inheritance, the ‘free’ songs have to be paid for by consumers’ attention - but even attention has a threshold and reasonable price. In Spiralfrog’s model,

“anyone taking up the offer will be forced to listen to 90 seconds of advertising before downloading each song and the downloaded recordings will self-destruct after six months”.

So what this means is that consumers will have to ‘pay’ again and again for the same music with 90 seconds of their life every 6 months for each and every song they download. All this seems like is a propagation of the continuous payment scheme for the same piece of music that music lovers have been subject to over the years as a costly by-product of each newly introduced format by the music industry - LPs, 8-track, cassette, CD, MD, DRM’ed AAC/WMA…

In this internet age, there is a high chance that users might reject yet another proprietary DRM’ed format, not to mention its iPod incompatibility but mainly it smacks of too much control and self-importance by Spiral Frog to reject the people’s current format of choice and convenience - the ubiquitous mp3.

But the most damning indictment of the Spiral Frog model is the fact that the major labels are only now - 5 years after bludgeoning Napster - learning that it might be possible to earn revenues from free downloads. But before they can do that, they now first have to build up a huge user base - and this was something that Napster had in abundant supply. If only the labels had found a way to tap Napster then instead of trying to build it’s own version of it years after the genie has escaped the lamp…

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

You must be logged in to post a comment.

Copyright © maths

Powered by WordPress