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Ad-Supported Music Service Signs Universal

The world's largest music company, Universal Music, is doing an about-face on Apple and iTunes. It's backing a startup that allows consumers to download songs for free. The service, called SpiralFrog, will rely on advertising for its revenue and starts in December. Kudos to Universal for its willingness to try something radically new. For years, the music industry has been at odds with illegal file-sharing services that let consumers swap songs for free. Even as iTunes, Real's Rhapsody and other pay-for music services have become profitable companies, the vast majority of Internet users continue to illegally download music. It's something like 40 illegal downloads for every legal one, according to the International Federation of Phonographic Industries. It was inevitable that someone would try to make a completely ad-supported music service. At the helm of SpiralFrog is a former advertising executive: Robin Kent, Universal McCann's former chief executive, is now heading the fledgling online music company. "Offering young consumers an easy-to-use alternative to pirated music sites will be compelling," he says. He told the Financial Times that aside from the deal with Universal, SpiralFrog is in talks with other big record labels, like Warner Bros., EMI and Sony-BMG. So far, the former agency exec has lined up clothing brand Perry Ellis to advertise on the site. He's also held talks with Levi's, Aeropostale, Benetton and other brands. SpiralFrog's entry into online music comes at a time when several players are taking a stab at Apple's commanding lead. Kent says consumer research shows that young people will be happy to endure advertising--as long as it's relevant. It sure beats the alternative: paying for it




Read the whole story at Financial Times »

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