Yet Another Attempt At Ad Supported Music

from the if-it's-more-annoying,-it-won't-work dept

Back in October, we wrote about plans for yet another “free, but ad supported” music download startup, but didn’t see how the economics could work out. That site, FreeAllMusic, is apparently now getting set to launch, but it still doesn’t make much sense to us. Basically, you can download music (two of the four major labels have signed up) for free — and it’s not encumbered by DRM (that’s good), but you have to sit through some sort of video ad before you can get the music and you are limited in how much music you can download. The site’s CEO claims “We have made this process easier than stealing.”

We’ll ignore the confusion (most likely intentional) about the difference between infringement and “stealing” and focus on all the other problems with this service. First of all, it’s not easier than infringing. You have to sit and watch an ad. You don’t have to do that on file sharing networks. Second, the assumption behind the service is that people would use this the same way they use iTunes: meaning only a very small number of downloads per month. Initially, that means 20 downloads per month, total, and no more than five per session. That may be how people use iTunes, but that’s because each download costs money in iTunes. One of the reasons people prefer file sharing systems is because they’re not limited that way and can really easily sample lots of music quickly.

But the biggest problem with this concept remains with the basic economics. Since the argument remains the same as I stated a few months back, I’ll just repeat it:

You’ve got the record labels, who are used to getting approximately $0.67 per downloaded song. Assuming that needs to be made up by the ad (and even ignoring any profit for the site), then every single ad shown needs to cost that same $0.67. Translated into traditional ad terms, that’s a CPM of $670. Yikes. I don’t know any advertiser will to pay anything close to that — even if it’s targeted and you have a half decent chance of the person paying attention. Most CPM ad rates online these days are in the sub-$5 area. Convincing advertisers to jump to a $670 CPM on an unproven model? Good luck.

I’m all for experiments and new business models — especially those that make use of free music. I just don’t see this particular one getting very far. The economics are just not that compelling for anyone involved.

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Companies: free all music, freeallmusic

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Comments on “Yet Another Attempt At Ad Supported Music”

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46 Comments
hegemon13 says:

Re: A small math question:

No, concert tickets are more expensive because people are willing to pay it. If they weren’t, the market wouldn’t bear those prices. In fact, most big-name concert tickets are still sold well below what the market will bear, as proven by scalpers.

Besides, few contracts give the labels any part of the concert revenue. That is where the actual bands make their money. The bands see little to no revenue from album sales. So, there is little overlap and little feasible correlation between so-called “lost money to piracy” (album sales that go to the labels) and concert ticket prices (money that goes primarily to the artist).

And that’s all assuming that your initial rhetorical question is even valid, which it isn’t. No one said that recorded songs are WORTH 67 cents each. The article simply said that 67 cents is the amount the labels are used to getting.

McBeese says:

Many Shades of Grey

There are many shades of grey… but they’re all grey. There are many different kinds of stealing and words to describe them… but it’s still simply taking something that you have no right to. But enough of that… you are blind to that simple basic tenet of right and wrong.

If the downloaded songs can be merged with your existing collection and managed by any music player you want, then I could see how this model could work from the users perspective. I have a large collection of digital music already so the amount of new material I acquire each month is not that great. I’d be willing to have commercials playing while the music was downloading in exchange for free music.

However, like you, I don’t see how this works from the operators perspective. I don’t see any way for them to achieve even a fraction of $.67 in ad revenue per download.

Anonymous Coward says:

Re: Many Shades of Grey

So if a government offers privileges to some that I believe are wrong what should I do?

The only reason I don’t have a right to do this is due to an outdated legal system.

Your moral system seems to be based on the laws passed by the government. I can’t understand how someone would equate a government whose laws are constantly changing to right and wrong.

Beyond that, if I were “taking something that I have no right to”, why does the original owner still have it. I haven’t taken anything. I’ve simply copied it. There is no taking or stealing. There’s just creating more.

McBeese says:

Re: Re: Many Shades of Grey

“So if a government offers privileges to some that I believe are wrong what should I do? “

1) Work to elect a new government that supports what you want at the next election, or 2) Move to a country without laws like Somalia, or 3) bitch and complain anonymously on blogs.

“The only reason I don’t have a right to do this is due to an outdated legal system.”

Don’t expect the legal system to legalize stealing in any of it’s forms, including copyright infringement, anytime soon. I don’t think you’re ever going to have a “right” to take something that doesn’t belong to you in this country, and I’m glad.

What’s outdated and broken is the business model, not the legal system. The music industry is completely blind to a new distribution model and as a result is missing all kinds of opportunities to innovate and broaden their market. New competitors will ultimately find a way to bypass this friction forcing the labels to adapt or perish. Stealing is not the answer and it never will be.

Your moral system seems to be based on the laws passed by the government. I can’t understand how someone would equate a government whose laws are constantly changing to right and wrong.

No, it’s the reverse. The laws passed by the government reflect the morals of the majority of people in this country, not the other way around. But even without the law, I would still believe that it’s wrong to take something that doesn’t belong to you against the will of the owner.

Michael (profile) says:

Re: Re: Re: Many Shades of Grey

Let me start with this: I don’t agree with infringing or stealing. I don’t download music (or anything) without permission. I do use some file sharing services, but I am careful to avoid unauthorized content.

As for stealing and infringing, they are very different. If something is stolen from me, I no longer have it. Copyright infringement involves copying something so both people have all of it. While that can be unfortunate for the original owner – particularly if they intended to profit from the scarcity of it – it is far different than depriving the original owner of something.

senshikaze (profile) says:

Re: Many Shades of Grey

“There are many shades of grey… but they’re all grey. There are many different kinds of stealing and words to describe them… but it’s still simply taking something that you have no right to. But enough of that… you are blind to that simple basic tenet of right and wrong.”

actually no, the definition of stealing is:
the illegal taking of another person’s property without that person’s freely-given consent.

But answer me this, what am i “taking”? the music owner still has his music and can still sell it. at what point did i take anything from him? if you come out with the same number of items as you did going in, what have you lost?

There is no gray area for stealing. This is also not stealing.
Funny(sad) fact: the penalties for file sharing are much steeper than going into a store and depriving them of a physical product. up to $X dollars it is just a misdemeanor. with 24 songs shared you can have a penalty of ~$2 million and bankruptcy.
tell me that the world hasn’t gone stupid.

McBeese says:

Re: Re: Many Shades of Grey

actually no, the definition of stealing is:
the illegal taking of another person’s property without that person’s freely-given consent.

Actually, no. The definition of ‘steal’ as noted in Merrriam-Webster is:

1 a : to take or appropriate without right or leave and with intent to keep or make use of wrongfully.

or how about:

1 c : to take surreptitiously or without permission

Sounds to me like these definitions fit pretty well.

But answer me this, what am i “taking”? the music owner still has his music and can still sell it. at what point did i take anything from him? if you come out with the same number of items as you did going in, what have you lost?

You are taking a copy of an author’s work against the will of the author or the agent that the author has granted the distribution rights to.

Let’s look at this logic. I take a copy of several original Beatles songs. No problem, right? According to you, the Beatles haven’t lost any product because they still have what they started with. Now I decide to use the Beatles tracks in ads for my business, which happens to be a cheesy used-car business. What’s the harm right? The Beatles still haven’t lost any product and there is no lost sale because there is no way I would use Beatles tracks if I had to pay a license fee. Are you starting to get it yet?

There is no gray area for stealing. This is also not stealing.
Funny(sad) fact: the penalties for file sharing are much steeper than going into a store and depriving them of a physical product. up to $X dollars it is just a misdemeanor. with 24 songs shared you can have a penalty of ~$2 million and bankruptcy.
tell me that the world hasn’t gone stupid.

Good news. There is no penalty for not stealing anything, whether it be stored in physical or digital format. Yes, I wholeheartedly agree that the penalties for illegal distribution are out of line in most cases, but that is in part fueled by the rampant lawlessness of the entitlement society who feel that it’s ok to steal and redistribute something because they can.

senshikaze (profile) says:

Re: Re: Re: Many Shades of Grey

“Actually, no. The definition of ‘steal’ as noted in Merrriam-Webster is:

1 a : to take or appropriate without right or leave and with intent to keep or make use of wrongfully.

or how about:

1 c : to take surreptitiously or without permission

Sounds to me like these definitions fit pretty well. “

But i am NOT taking anything! you seem to miss that part. I am copying something. big difference, even in the eyes of the law.

and your car salesman analogy is weak at best. he isn’t making money directly from the song, only indirectly, and that is a stretch in logic. and yes, the Beatles lose nothing.

“Good news. There is no penalty for not stealing anything, whether it be stored in physical or digital format.”
Actually would say that DRM alone is more than enough punishment, and only music has moved out from under that weight just recently. Execs care only slightly more for customers than they do pirates, the only difference is that instead of suing, they leech them. Same in the end over a life time, just not as flashy as a lawsuit.

Thing is, I do not file share music. I buy from iTunes or Amazon if i want a big album, or i get music from Jamendo, and donate as I feel is necessary. I am not defending people who do file share, I am just saying that it isn’t “stealing”. Not in the eyes of the law or the dictionary.

McBeese says:

Re: Re: Re:2 Many Shades of Grey

” I am not defending people who do file share, I am just saying that it isn’t “stealing”. Not in the eyes of the law or the dictionary.”

So you agree that file sharing is wrong, you’re just being pedantic about the wording? To me, physical property theft, intellectual property theft, copyright infringement, trademark infringement, etc., are all wrong and are various forms of acquiring something that you have no right to, which I call stealing.

I have less of a problem with those who admit that what they are doing is wrong but do it anyway than I have with those members of the entitlement society who think it is their right to help themselves to whatever they want. I sincerely hope that karma teaches them a lesson.

Anonymous Coward says:

Re: Re: Re:3 Many Shades of Grey

As long as you’re okay with being called a murderer when you punch someone, a vehicular manslaughterer when you nudge someone with your car in a parking lot, a terrorist when you scare a kid on Halloween, a fraudster when you violate the terms of a coupon, and a thief when you go to the bathroom during a commercial break on TV.

Anonymous Coward says:

Re: Many Shades of Grey

“There are many different kinds of stealing and words to describe them… but it’s still simply taking something that you have no right to.”

Except, of course, that you’re not “taking” anything either. I see you’re still blind to the basic simple tenet of reading a dictionary.

Bruce Houghton (user link) says:

FreeAllMusic

The point of comparison for the labels isn’t iTunes who pay $.67 cents (or more often less) but P2P and other freely share music. And even the majors give away music sometimes.

Isn’t making 10 cents or even 5 cents better than nothing for many tracks? And Mike, wouldn’t you be the first to argue that 10 cents is a fairer price for a lot of music and that lower pricing would lead to more sales.

As we both write about, its all about music discovery with profits coming over time and from many places.

Maybe there’s a cross blog debate here? Or something for MidemNet?

Mike Masnick (profile) says:

Re: FreeAllMusic

The point of comparison for the labels isn’t iTunes who pay $.67 cents (or more often less) but P2P and other freely share music. And even the majors give away music sometimes.

If that’s true, that’s interesting, but I’ve heard time and time again that the major labels won’t do deals for downloads at less than $0.67 (other than on a one-off promotional basis). My assumption was that they would never work with a company like this at a lower wholesale rate.

Isn’t making 10 cents or even 5 cents better than nothing for many tracks? And Mike, wouldn’t you be the first to argue that 10 cents is a fairer price for a lot of music and that lower pricing would lead to more sales.

Yes, absolutely. Absolutely. I just find it hard to believe the major labels would ever agree to such wholesale prices — especially for an upstart site. The second they do that, won’t Apple and Amazon go back to the labels and demand similar wholesale pricing?

Maybe there’s a cross blog debate here? Or something for MidemNet?

Sure, I’m up for either one…

jonathon (profile) says:

Only offer 20+ year old content.

With digital content, is there a _legitimate_ reason for the labels to put anything out of print?

Take the entire music back list. Everything that has ever been in their catalogue. Eliminate everything that has been released within the last twenty or thirty years.

* Lease office space. 75 – 100 square feet per employee;
* Buy a US$300 desktop and $200 USB turntable for each employee;
* Have them play the music on the turntable, using _Audacity_, or similar program, writing the appropriate meta data for each song,whilst it is being played;
* When the album is finished, upload it to Free4All.
* Once any song, or album hits a specific number of downloads, transform it into a ring tone with non-gratis distribution;
* Once any song, or album hits a specific number of downloads per month, pull that album/song in for “digital remastering”;
* Once it has been digitally remastered, pull the Free4All copy, and add the digitally remastered version to iTunes, CD, and other outlets where consumers pay for the content;

It might not generate revenue this quarter, but in couple of years time, it will be a profit centre.
* People will pay for ring tones;
* People will pay for quality music;

hegemon13 says:

Not so bad

Okay, so this service isn’t great, and the 20-song monthly limit is silly.

However, it is at least a step, albeit a small one, in the right direction. Launching with two major labels on something like this is actually a pretty amazing accomplishment. And, for those concerned about wanting to do things the right and legal way, this provides a free alternative.

Personally, I’ll give it a try. If the downloads are high-quality, the time spent watching an ad may be worth it. After all, it can take time to track down a torrent of decent quality for any artist that is not currently a big act. If an ad guarantees a high-quality download, and if searching the site is intuitive and straightforward, I can see myself using it.

PrometheeFeu (profile) says:

Well Mike, it’s not that simple. Let’s take the 67 cents per song as the goal here. Now, the record labels aren’t really needing to make 67 cents per song downloaded. They just need to make as much money as with iTunes. Now, if instead of 67 cents per song, they get 67/1000 cents per song from advertising (or $0.67 CPM which is quite reasonable) all they need is 1000 downloads to replace every iTunes download. Now, I don’t know if that is possible or not, but it does not seem impossible at all given how the downloads are free. It’s not guaranteed to work, but nothing is.
A second thing to think about is that piracy does have a heavy cost for the pirate. There is always the risk of getting caught. That requires taking elaborate counter-measures and still fearing getting caught and getting slapped with ridiculous fines. I know quite a few people who would be willing to sit through an ad for the peace of mind of not risking getting caught.

AW says:

So I’m using the actual site. There is only one really short ad and the music selection is actually pretty darn good, especially seeing that the songs are not all no name players. That being said the snippets don’t always play right and the server can be tediously slow at times and the browse feature leaves a bit to be desired, as in either know who you’re looking for or it’s going to be a while.
The commercials are painfully short and were there an option to pay for a service upgrade I might consider it. They are going to need more ads to pay for the service though. Otherwise I don’t see how they are going to make it.

Def Method says:

I wish...

The author of this article had talked to the CEO about how the economics work out, rather than just making up some numbers to poison the well. You would think that a company wouldn’t just throw away millions of dollars without having a feasible profit model, eh? Well, I can’t wait for the techcrunch article on freeallmusic.com a year from now.

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