IP Democracy: Ad-Supported Content Downloads DOA..For Now

You know a company is in big trouble when it sends its lawyer as a replacement speaker at a high-profile industry event. That’s what happened at the Midem music conference in Cannes this week. Robin Kent, CEO of ad-supported music download start-up SpiralFrog was slated to speak at the industry gathering, but the company sent its outside counsel, Marc Jacobson of Greenberg Traurig instead.

The cause of the patently poor replacement was a “management shake-up” at SpiralFrog, which apparently lost its CEO, five members of the management team and three board members, not to mention, apparently, office space, all at once.

Mathew Ingram earlier this week wondered what caused what he believed at the time to be a massive “walk-out” at SpiralFrog. The answer, it seems, is that despite SpiralFrog’s deals with EMI and Universal Music, the company couldn’t make the ad-supported download model work, nor could it attract two of the industry’s biggest companies, Warner Music and Sony BMG.

Even EMI had its doubts when it signed on to make its music available for download on an ad-supported basis. And for good reason.

With the still-massive amount of free but unauthorized P2P file-sharing options available, most users won’t opt for ad-supported music (the ads were supposed to play while files were being downloaded). If they want free music, they’ll just go the illegal route. To a lesser extent, the same dynamic holds true for TV shows and movies.

Consumers willing to pay for downloaded content won’t be happy if they have to accept ads at the same time. So, right now the market is stuck between free but illegal downloads and pay-as-you-go downloads without advertising.

Posted by Cynthia Brumfield on January 26, 2007 4:07 PM to IP Democracy