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And then the paid-for music download model could croak.
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And it announced last week that it was planning to set up a download service for out-of-copyright books, allowing users to print them out for the first time, so putting it in direct competition with both conventional and online bookstores.īut if a giant like Google were to offer free music downloads, backed by its huge strength in online advertising, it would prove a far bigger threat than Spiral Frog. It already allows users to search, if not directly download, video and audio. For example, Google works because it can find almost anything on the internet, for free. Other internet services have shown that breadth of content is vital to success.
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"With it being PC based and limited to one record label, it's not a great offer. "Sites like these don't necessarily need a big-bang approach or to get it all right first time," says Deloitte's Mr Shedd. In a crowded market, most believe businesses will either have to merge or look for new ways to build the scale they need to compete with Apple. And even if it fails, the business model of free legal downloads could catch on.
However, that Spiral Frog might succeed is a possibility that cannot be ruled out. "We have always seen the ad-funded model as a way of hooking consumers in, and persuading them that the service is something worth paying for." "This won't be an iPod killer, if only for the reason that you won't be able to play these downloads on an iPod," he says. Mr Arber doubts that Spiral Frog will dislodge iTunes and its music player, the iPod, from their No 1 position in the market. "Spiral Frog says will attract kids away from peer-to-peer sites, but to do that, they have to offer range of content." "There will always be people wanting something for nothing," says Jonathan Arber, an analyst at Ovum, the IT and telecoms consultancy. The final big factor that will make or break Spiral Frog, and other services that could follow its lead, is whether it can give music fans the content they want. "For a free service to succeed, it needs to offer high convenience across as many locations as possible," he says. The company has not disclosed the details of its business model, but industry sources believe it has pre-purchased music in a bulk deal from Universal, meaning it will need high advertising revenues to recoup its costs.Įd Shedd, partner in the technology, media and telecoms practice at Deloitte, points out that the way Spiral Frog downloads are listened to on MP3 players will also determine whether the service can really take on the likes of iTunes. Spiral Frog, though, appears to be relying on advertising revenue alone.
Napster hopes that enough users will convert to paid-for subscribers to offset the cost of the free content.
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Users can download for free, but if they want to move their music somewhere else - burn it on to a CD, for example, or put it on a portable music player - they need to upgrade to the paid-for service.
Companies such as Coca-Cola have given away music downloads as part of their promotional activity and, earlier this year, Napster, the now-legal music site, started providing some free content on a limited basis. There have already been small steps taken towards free and leigitimate services. "There was an argument that music would be devalued if it was free," he says, "but the major labels no longer think that - as long as they receive their money, whatever the source."
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