Will SpiralFrog Give Pirates the Slip?

Would you be willing to view ads to get music? That seems to be a big question among e-commerce executives these days. A site called SpiralFrog.com is willing to bet that you would be willing to swap some eyeball time for music.

The website offers an interesting service, even if the name might seem a bit strange. Users will be able to download music for free, but they must commit to logging on once per month -- that keeps the music unlocked and playing. The whole idea is to leverage demographic information given upon registration to deliver highly targeted commercials (like those from Burger King (NYSE: BKC  ) ). The company has licensing pacts with Universal Music and performing-rights organization BMI and boasts a portfolio of 800,000 tunes and 3,500 videos. It also uses the Windows Media format. Sorry, Apple (Nasdaq: AAPL  ) fans, there's no SpiralFrog love for your iPod.

SpiralFrog's aim is to persuade users who consume music in a sinful way -- namely, downloading it with no remuneration to artists and copyright holders -- to exchange some value for the content, the value being the exposure to advertising. If the site can convert a decent amount of the renegade downloaders into upstanding, willing-to-pay-for-digital-content citizens, then it will go a long way toward addressing the issue of piracy.

That's a pretty darn big if, of course, because the numbers of illegal downloads are legion, and one has to question whether an individual who is already used to acquiring digital content for nothing would be willing to sign up for an ad-based model. I suppose SpiralFrog might steal some customers away from music-selling sites such as Yahoo!'s (Nasdaq: YHOO  ) Music Jukebox, but I just don't see a huge allure built in for current file-sharers. And make no mistake -- that group is the one SpiralFrog is going after.

Using ads as a way of supplying free content is not new, of course, and it can be used to good effect. Google (Nasdaq: GOOG  ) plans on monetizing its YouTube traffic via ads, and media companies like Disney (NYSE: DIS  ) have used commercials to pay for their streaming content.

But I'm just not sure that SpiralFrog will take off -- signing in once a month to keep content unlocked wouldn't seem to be an attractive alternative to pirates. Furthermore, music companies would want pricing power per song, not necessarily a cut of a volatile advertising market. And not being compatible with iPod -- that's a big killer.

Yet, there remains something intriguing about this for the music companies because there are so many people out there who believe music should be free. SpiralFrog will give the majority of sales revenue from the ads to the music partners, so this is definitely a selling point; at the very least, it encourages the experiment. If SpiralFrog takes off, it could become a viable competitor to companies that provide unlimited access to songs for a monthly fee, like RealNetworks (Nasdaq: RNWK  ) and Napster (Nasdaq: NAPS  ) .

It will be very interesting to see if this catches on, but I have my doubts. The consumer will choose whether free music is worth the intrusion of sponsorship.  

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