MUSIC INDUSTRY BLOG

SpiralFrog, the highly profiled ad-supported download service, has shut its doors after a lukewarm reception in the UK and endless content licensing and upper management strife in the US prior.  The company was the first to deploy a ‘feels-like-free’ music download service in 2006 and secured both Universal and EMI, with competitors Qtrax and We7 following suit with similar ad-supported download services, before spiraling to its demise.

Digital music distribution is a hot item on this blog and those who read it know that I keep a close eye on the three major players catering to small independents, namely ReverbNation, TuneCore, and CD Baby.  All three have lowered the barrier of entry for indie artists and small labels to distribute their catalogues to iTunes and other major online retailers for upfront fees as opposed to hefty commissions by the likes of The Orchard, INgrooves, IODA, IRIS, and others, who generally avoid small players anyway.  Now, a new digital music distribution dotcom has emerged but with an ad-supported business model.  WaTunes aims to thrive on ad revenue by providing artists and labels with a free (no frontend fees, no backend commissions) distribution channel to online retailers such as iTunes, Napster, and eMusic.

The slightly questionable website service description and makeshift appearance promises to provide the same level of content marketing and distribution as its rivals, and much more.  In theory, WaTunes is offering a very attractive service to a huge potential market, but is it sustainable?  SpiralFrog, We7 and Qtrax have yet to prove that their ad-supported download services have legs.  In this economy, I’m not sure that any upstart can scale on advertising revenue alone.

Business models aside, I’m somewhat concerned about WaTunes’ cryptic service description and the fact that their web pages are riddled with spelling mistakes and poor marketing copy.  It’s a bit like walking into a fancy restaurant only to notice that the toilets are overflowing with shit halfway through your dinner.  Going with my gut here (no pun intended), I feel that the musician-led platform may be biting off more than they can chew… but I would love to be proven otherwise.  I like free.  Who doesn’t?

Music search engine, SeeqPod, that has already indexed (but not stored) 12 million songs, has been handed a formal complaint from EMI following a lawsuit from Warner last year.  Unlike Pandora and Imeem, the company has not pursued licenses to provide “playable search results” maintaining that they are not responsible for content sources and, therefore, free from any obligation to the copyright holder.  Legally questionable, Seeqpod has become very successful and the two major labels are probably going after it to settle on a mutual business model rather than to shut it down.  The news prompted me to play with the system a little and I enjoyed learning about their artist-centric advertising progamme that’s highly targeted and cost competitive.  Providing 5000 “exposures” (i.e. impressions) a month for $19.95, SeeqPod Echo is a nicely put together search-oriented advertising interface which may very well generate some relevant traffic for artists and music promoters who wish to tap into SeeqPod’s massive music listening community.  I’m curious to learn how the conversion rates stack up.

Ad-supported music service, Qtrax, hopes to differentiate itself by offering downloads previously only available as bootlegs.  This move may position the company atop of 25 million tracks under this category alone, assuming that that copyright clearance hurdles can be overcome.  In the mean time, Peter Gabriel’s competing ad-supported music service, We7, has announced a partnership with NME.com.  The strategy is geared toward increasing the value of advertising real estate by diverting traffic to the popular British indie music zine which is likely to improve the combined user time spent online and, resultantly, drive more ad revenue.  The two music services have been in the works for some time now and have faced great difficulty in both securing all the major catalogues and financing their operations through advertising alone, a model that will meet further challenges during the present economic downturn when advertisers are being particularly frugal.