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@ MidemNet: Can Ad-Supported Music Pay Its Way?

This year may go down as the year consumers started getting free music en masse. Not that music itself is free, of course – just that a wave of companies has cropped up that, by attaching ads, hopes to generate enough cash to pay the labels what they continue to expect. Catering to this key conference theme, bosses of four such outfits – imeem, newcomer Qtrax, UK’s We7 and ad-funded mobile net Blyk – debated on stage…

imeem: CMO and biz dev head Steve Jang: “Last year, we got a lot of WTFs and quizzical looks; this year, all eyes will be on the segment to see if it really is ready. The labels are looking for a proof point here. Almost all premium content on the web is advertising-supported. Everyone realizes that advertising online is a $30 billion dollar market, and the total paid North American music market is, I think, $8 billion dollars.”

Qtrax: CEO Allan Klepfisz said of doing label licensing deals: “A colonoscopy is relatively painless in comparison”. He ducked the opportunity to name which labels are signed up but said all four majors were on board. “The industry is still split – there are some who are very grudginly doing an experiment to prove to themselves that it will not work. You need to build something which is as good or better than paid services – in the same way that Limewire hasn’t taken away from people buying on iTunes, neither should we – our aim is to kill off the illegal services.” “If you are going to go for low CPMs, you are never going to make an ad-funded model work.”

We7: Label support may be important, but CEO Steve Purdham of the Oxford-based outfit – funded by Peter Gabriel to inset pre-roll audio ads within tracks – said he started with a repertoire of just 30 tracks (15 from friends, 15 from unsigned acts). We7 has shifted a million tracks in its first 120 days though it still relies on a catalogue of about 500,000 indie songs. Purdham’s refreshingly honest assessment: “The majors have moved from last yr to this year, which is that they now understand ad-supported streaming – they haven’t got their heads around ad-supported downloads yet.

2 Responses to “@ MidemNet: Can Ad-Supported Music Pay Its Way?”

  1. The latest attempt at new music distribution is to give the music away free…. see SpiralFrog or QTrax. Unfortunately, this is unsustainable from a cost/revenue perspective, and counterproductive to the music retail market. The digital ad
    industry is simply not big enough to support the digital music industry.

    Digital music market is now at $30 billion and rising (including illegal downloads). While digital advertising is only at $20 billion and slowing.

    There's an excellent analysis at Brooding Savage blog.

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