Universal Takes Free Music Plunge

from the questions-linger dept

We've talked plenty of times about how record labels, despite their oft-repeated insistence to the contrary, can compete with free -- in particular, how they can embrace free music as a promotional tool and use it to sell other goods. One of the major record labels, Universal, has indeed decided to go the free route, but with a little twist: it's going to work with a startup to make its entire catalog freely available through an ad-supported service. At first glance, this sounds pretty great, but a second look raises some questions, the biggest of course being how they'll make this work commercially. When you see sites with massive amounts of traffic struggle a bit to monetize through ads, it simply underlines the point that having available ad inventory isn't the only thing sites need to be successful through advertising. The startup, Spiralfrog, says its 13- to 34-year-old target demographic is very attractive to advertisers; but this is largely the same market that delivers low clickthroughs and CPMs to social-networking sites. All this comes before even figuring out how to split up the revenues and pay artists.

Another concern is that the company says its files will use some form of copy protection, which raises even more questions, in particular, will consumers have the ability to move files to their music players? The issue of DRM incompatibility among device vendors would say no, and Apple's resistance to license out its FairPlay DRM means iPod users are likely to be left out in the cold -- which won't help this system gain traction at all. Using DRM could also limit the value of the music as a promotional tool, which The issue here isn't that this free set-up will be competing with the likes of iTunes and Napster, but with P2P networks as well. This has been the issue all along, and the lesson still hasn't changed: the labels must come up with something better than the file-sharing services to draw customers away. They can already get free music, and to switch services will take something offering them a better experience, not just an equal price. Universal certainly deserves some credit for trying this new business model, and let's hope they can make it work. Update: Tech Trader Daily points out that iPod users will indeed be left out, and as an added bonus, our old friend Jay Berman, a former RIAA boss, is on SpiralFrog's board.

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  1. icon
    chris (profile), 31 Aug 2006 @ 9:23am

    the answer to the obvious question

    if it's free, why use DRM?

    the answer is that it's not free. you have to sit thru ads, and can't actually use the music for anything once you have it. no, you don't pay actual dollars, but you don't get the music either. you're getting what you pay for.

    i would gladly pay a dollar a track for music that i could use on my terms. i'd pay $2 a track even, as long as i only had to pay once. if i could get a bunch of stuff like shirts, posters, books and whatnot (real property that can't be digitally duplicated) at the same place i would spend a lot more. i have done that with artists like MC Fronatalot and his kind. until i can get my music on my terms none of these download systems are going to work.

    the point of DRM has little to do with preventing piracy, since DRM does nothing to stop it. people circumvent DRM before the share it, and the stuff you get off P2P networks has no DRM on it.

    DRM is about control. the industry wants the power to make the legitimate user pay over and over. pay for the CD, pay for the copy on your computer, pay for the copy in your portable player, rinse and repeat when they change formats. as long as they do this, it will make the piracy problem worse, not better, because only thru piracy can you get media on your terms.

    the industry will either change or die... either way, the consumer will win.

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