Universal Takes Free Music Plunge

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.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.