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@ Midem: SpiralFrog Exec Downplays Losses As Standard Start-Up Mode

IMG_3606Right now, it only counts Universal amongst its major-label suppliers, but ad-supported free music distributor SpiralFrog is in Cannes to woo the rest. As VP Matthew Stern puts it, “That’s why we’re here, to have those conversations.” The outfit lost $6.7 million in 2006 and $3.4 million in Q307 on revenue of $20,400, but delayed such questioning until the Mar. 31 earnings statement: “Any startup needs to invest money before they earn money. All of us will have some investment to make, whether it’s technology or staff. At the beginning, of course you’re going to see numbers that don’t fall in line with revenue.”

Stats: SpiralFrog has added another 30,000 registered members since Jan. 24, when it announced it had reached 400,000. It’s grown from 800,000 tracks at its September 17 launch to 1,030,000 tracks, “so our growth ingestion has been very positive … we’re adding thousands of tracks a week … this month, we’re on track for our target of 1.2 million.” He said the service is averaging about 10 minutes engagement per user.

International: SpiralFrog won’t yet launch outside the US and Canada. “We’re not going in unless we have licenses. That’s why we’re here; we’re talking to people. The most difficult part is the publishing aspect. In Canada, it’s easy; in the States, there’s 30,000-odd publishers; in the EU, is there going to be a body that covers everything? If not, we go region-by-region, territory-by-territory.”

Rivals: Ad-funded free music is the buzz this year, with rivals including imeem, We7 and Deezer. “That’s great for everybody. Anybody ad-supported that’s launching is just validating the model, so it’s great.” How about Qtrax, the much-hyped free P2P service which hosted a big launch here yesterday but which is already mired in controversy?: “Until they launch, it’s difficult to say because it’s all press release right now.” Qtrax counts two SpiralFrog alumni – ex-CEO Robin Kent and ex-CMO Lance Ford – amongst its founders, but no hard feelings.

Advertising: “There’s a lot of talk of forced advertising, but there’s no forced advertising.” CPMs: “We’re ranging all over the place; we’re getting healthy CPMs.” Such “financial” details are off-limits until SpiralFrog’s March earnings, however.

Paying artists: “At the end of the month, we take the individual play count of that song, divide it by total play count and multiply it by the advertising of that month. So it’s a per-play payback, which is fair because the ones that are more promoted get paid more. Labels are getting 50 percent, publishers 10 percent.”

3 Responses to “@ Midem: SpiralFrog Exec Downplays Losses As Standard Start-Up Mode”

  1. Belanie

    Agreed with hd. If you want to talk about losses, you can talk about the failure of Qtrax. But that's been talked about already. It's old news.
    Spiralfrog (despite losses) is doing well and still growing even though its barely a year old. Not only that, but it works. Everything functions the way its supposed to (unlike Qtrax). Besides, it's the only place where I found free and legal music thats downloadable onto both computer and mp3 player. You can't do the same on any other site.

  2. The key to advertising supported music is to monetize the time that people spend listening to the music, which averages about an hour a day. Spiralfrog attempts to monetize the time that people spend on their website, which apparently is 10 minutes whenever they visit. The ad revenue from this limited engagement will never pay the freight on the licensing for the downloads. Economics dooms Spiralfrog to failure.

    Check out the Ad-Supported Music Central blog: