5 Comments

Summary:

FreeAllMusic, an Atlanta-based startup, thinks it can buck the trend of flameouts in the free ad-supported music space with a refined model — and it’s already convinced two major labels to come on board.

The distressed sale of Imeem and flameout of SpiralFrog were among several events this year that cast doubt on the viability of the free ad-supported music model, but at least one upstart company thinks it can buck the trend. FreeAllMusic, an Atlanta-based startup, entered private beta today with a model that gives consumers free MP3 downloads in exchange for watching visual ads from sponsors who pay for them — and it’s already convinced two major labels to come on board.

I spoke with CEO Richard Nailling this afternoon, and while he acknowledged that the free ad-supported music arena “is a bloody space,” he believes FreeAllMusic is easier for consumers — and provides more guarantees for advertisers — than SpiralFrog, its closest antecedent. For now, the company is allowing consumers to choose a visual ad from among up to a dozen advertisers, but brands may be able to associate themselves with artists and songs eventually. Once an ad is chosen, FreeAllMusic broadcasts more banner ads elsewhere around the web that include the downloader’s screen name and the sponsoring brand; Coca-Cola, Warner Bros. Television and Zappos.com are among the early advertisers.

I’m naturally skeptical of a new company so similar to one that perished so recently, but Europe’s We7 has persisted with another related model with some success, and FreeAllMusic doesn’t have any of the DRM-related entanglements that dogged SpiralFrog. Still, people are generally loath to jump through hoops to acquire music, especially when it’s still so easy to acquire it for free without sitting through ads. And I don’t think anyone will be too enthusiastic about his screen name appearing in banner ads all over the web.

The company hasn’t disclosed which two major labels it’s signed up, although Nailling said each is providing its full digital catalog, as is one independent label. He added that FreeAllMusic completed a seed round this fall and is currently raising a Series A round, with emphasis on strategic investors rather than VCs. And while Nailling said the company will take steps to avoid growing too fast at first, such as capping downloads at five per week, its private beta is set to open up sometime early in 2010.

Related research

Subscriber Content
?
Subscriber content comes from Gigaom Research, bridging the gap between breaking news and long-tail research. Visit any of our reports to learn more and subscribe.
By Paul Bonanos
  1. Many thanks for the name-check, Om. we7 is indeed looking good. we are still focussed on UK for now because both music licenses and advertising spend are country-specific in the main. We are the no.1 UK music site by page views (which of course generate web inventory to support the service).
    we7 as you may know is Pater Gabriel’s company and has deep music roots, but when I founded the company the first members of the we7 Advisory Board I chose were Jim Spanfeller and Dev Patel (you may recall I was an investor in Forbes.com and in WhereOnEarth Dev’s pioneering geolocation company which Yahoo acquired). So at we7 we built in on-line advertising industry knowledge from the outset. We now know that the advertising is non-intrusive and highly effective. And the music of course is pure joy.
    All the best for the Holidays.
    John Taysom, Founder, we7.

    Share
  2. Actually the use of the FAM user ID in the external banner advertising is opt-in on a per download basis. Users are not required to share any information about their download if they don’t want to.

    Share
    1. Thanks for clarifying this, Richard — I appreciate it.

      Share
  3. [...] and legally questionable channels: Hype Machine, Lala.com, Grooveshark, Play.me, YouTube, Blip.fm, FreeAllMusic, BeeMP3.com, Skreemr, MySpace and elsewhere. Pandora and Last.fm help me discover things through a [...]

    Share
  4. [...] ad-supported download service in the U.S. this week, representing another twist on a model once left for dead. The company, backed by AU$30 million ($27.5 million) in venture money, is gambling that its unique [...]

    Share

Comments have been disabled for this post