Universal backs free music rival to iTunes

Posted by: Piano World

Universal backs free music rival to iTunes - 08/31/06 08:40 AM

(from an article on the Financial Times )

By Joshua Chaffin and Aline van Duyn in New York

Published: August 29 2006 05:02 | Last updated: August 29 2006 05:02

Universal Music, the world’s largest music company, is backing a start-up that will allow consumers to download songs for free[/b]. It will rely on advertising for its revenues, offering a different business model from that of Apple Computer’s popular iTunes music store.

The move reflects music companies’ willingness to experiment as they try to capture some profit from the boom in digital distribution still dominated by illegal file-sharing networks.

The service, SpiralFrog, represents a departure from Apple’s 99 cents-a-song business model and other legal download services which charge a subscription fee by being completely free. It is due to start up in December.

A report released last month by the International Federation of Phonographic Industries revealed there were still 40 illegal downloads for every legal one.

Although Apple’s iPod and its iTunes music download service has 80 per cent of the market for legally downloaded music, competition is expected to hot up in the run-up to Christmas.

This year, the IFPI has predicted that 60m music players will be sold worldwide, many of them MP3 players not compatible with Apple’s services.

As well as start-ups such as SpiralFrog, established companies are getting ready to flex their muscles. Microsoft is to launch Zune, which will offer music players and a music download store. MTV has launched Urge, a service that has downloadable music and music videos via subscription.

“Offering young consumers an easy-to-use alternative to pirated music sites will be compelling,” said Robin Kent, SpiralFrog’s chief executive and the former head of the Universal McCann advertising agency.

Mr Kent has held talks with labels Warner, EMI and Sony-BMG and hopes they will be lured by the surge in online advertising.

Merrill Lynch last week raised its forecast for the sector’s growth, predicting it would expand by 35 per cent this year in non-US markets to $11.6bn (£6.1bn). US growth is expected to increase by nearly 30 per cent to $16bn.

Perry Ellis, the fashion company, said it would advertise on SpiralFrog. Levi’s, Aeropostale, Benetton and others have expressed interest. “Our audience is into music and can be more easily reached on the web,” said Oscar Feldenkreis, president of Perry Ellis International.

Other music services are looking to advertising for their revenues. The new Napster allows consumers to listen to up to five tracks for free while they view advertising. Meanwhile, video-sharing sites, such as YouTube, have held talks with music companies about showing music videos, which would then be supported by advertising.

Mr Kent said his research revealed that young consumers would be willing to endure advertising as long as the brands and products were relevant to them.

Copyright The Financial Times Limited 2006
Posted by: Piano World

Re: Universal backs free music rival to iTunes - 09/06/06 01:21 PM

In an article from BBC News (http://news.bbc.co.uk/1/hi/business/5318938.stm)

And now, EMI joins[/b]...

EMI publishing in downloads deal

Work by the Arctic Monkeys is among EMI Music Publishing's catalogue
EMI Music Publishing has become the latest firm to sign a deal to make its music catalogue available on a free legal downloads service[/b].
Under the deal, online music service Spiralfrog will offer work from EMI's artists - which include the Arctic Monkeys and Eminem - online in the US.

New York-based Spiralfrog will launch its service in December and make its money by carrying adverts on the site.

It will rival Apple's iTunes, which charges 99 cents per song in the US.

Last week Vivendi Universal agreed to make its music catalogue available through Spiralfrog.

"We are very pleased to help launch Spiralfrog," said Roger Faxon, co-chief executive of EMI Music Publishing - which has the largest music catalogue in the world with over one million copyrights.

"It is a very exciting concept which fuses advertising with music downloads and other services to recapture consumer demand which has been hijacked by online piracy.

"Anytime we can create a new revenue stream for our songwriters and combat online piracy, you will see EMI Music Publishing leading the charge."

Spiralfrog chief executive Robin Kent said that obtaining the rights would help his firm "provide young consumers with access to recordings from a wide range of artists that they want to hear".

Under the deal, Spiralfrog will also gain rights to song lyrics. Spiralfrog is discussing possible deals with other big record firms, questions still remain over how the artists will be paid.

The music downloads industry is a burgeoning market. According to the International Federation of the Phonographic Industry, 60 million MP3 players were sold in 2005, while 420 million single tracks were downloaded during the year - up 20 times on two years earlier.
Posted by: Piano*Dad

Re: Universal backs free music rival to iTunes - 09/07/06 03:18 PM

You cannot compete with free unless the range of music available on the free sites is narrow in comparison to what iTunes will offer.