SpiralFrog, a previously unknown start-up, who made headlines during the Summer and Fall of 2006 when it announced a deal with a major recording company to offer free, ad-supported music downloads, is now in turmoil. Just as the service was about to go live to the public, the company unexpectedly sent its attorney to the Midem conference in Cannes to replace former CEO Robin Kent, who was given the boot late last month. Kent, who was doing a big Rain Dance at show to pimp the new service, suddenly got the hook, leaving many to wonder aloud about what was going on behind the scenes.
“There’s been a management shake-up,” Marc Jacobson of lawfirm Greenberg Traurig told a conference at which Kent had been due to speak. SpiralFrog still plans to launch, Jacobson said, but has no firm date. He declined to elaborate and made no comment on speculation that the company had been unable to sell enough advertising to meet royalty fees.
SpiralFrog and other ad-supported services had promised a new approach to tackling piracy. Create a Peer-To-Peer (P2P) network with a multitude of ads, so the transfer of music would appear seemless, but would in fact be legal. Soon after Vivendi SA’s Universal Music Group came on board in August, EMI Group PLC also struck a deal with SpiralFrog. Suddenly, downloads from mainstream music catalogs were to become free.
Although SpiralFrog had signed up EMI and Universal before its launch plans were canceled, it had failed to win deals with the other two majors, Warner Music Group Inc. and Sony BMG. The market may be there, but doubts remain over whether the terms on offer can persuade enough established recording companies to enter it seriously.
EMI still harbors reservations about ad-supported download and subscription sites. Roger Faxon, who heads the publishing division, said the company was ready to experiment with such services â€” but only “if we can understand the economic model and how our songwriters will be appropriately compensated.”
EMI is negotiating to sell its music on Google Inc.’s video-sharing site YouTube.com and News Corp.’s popular online hangout MySpace.com, Faxon said, declining to elaborate. “I tend to believe it’s these models that will capture the public’s imagination, rather than the straight download models.”