Last100: Can Ad-Supported Digital Music Work?

With the high profile launch this week of Qtrax, a free and legal P2P music offering (ReadWriteWeb coverage), ad-supported music downloads are very much in the spotlight, and as always RWW network blog last100 has its finger on the pulse, with great news coverage and analysis of the week that was in digital music, including an exclusive interview with the CEO of a large ad-supported music web site.

Following Qtrax’s bungled launch, and an admission that the company had in fact only persuaded one out of the four record major labels to sign on, despite publicly stating otherwise, last100 asks if a free music download service on the scale of Qtrax is too good to be true?

If Apple can’t persuade all four majors to license their catalogs for DRM-free paid-for downloads, and even Amazon, seen as the company most likely to rescue the music industry away from the grip of Apple, is only able to do so on a trial basis (with regards to Universal and Sony BMG at least), then what chance does Qtrax have with an almost completely new and unproven model.



To put this into even greater perspective, both SpiralFrog (see last100’s review) and We7, two services that have offered ad-supported music downloads for significantly longer, are only able to offer a catalog of around half a million tracks each of a million and a half million tracks, respectively. Why? Because the labels are far from convinced that advertising dollars can ever replace revenue from paid-for downloads or CD sales.

In a followup post today, last100 scored an exclusive interesting Q&A with We7 CEO Steve Purdham. UK-based We7, backed by Peter Gabriel, enables users to download free MP3s that have a short (and targeted) audio advert embedded at the start of each track. The ads then auto-expire after four weeks of listening, allowing users to re-download the same tracks ad-free.

Purdham talks on a range of issues including the company’s mission, DRM, resistance by the major labels, new business models and We7’s competitors.

On the major labels reluctance to embrace ad-supported music downloads, Purdham says the reason is “simple:”

“They are worried that if they leave the iTunes model, the revenues they get will be diminished. So out of 79p they get, say, 46p and they are worried that ad [supported models] will net a lot less. However, there is a realization that in a world where for every track sold by iTunes… 10 tracks are downloaded illegally with no payment, so the real track revenue is 4.6p. Ad funded models need to show they are additive on the whole or scale to make the total cash available higher than before.”

And asked whether Qtrax’s service is too good to be true, Purdham comments:

“Well let’s just say the reports seem to suggest so, which is a shame as I want to see more ad models appear and then the winners are the ones that execute well. The strange situation with Qtrax, and Spiralfrog last year, do nothing for the cause. There are many big questions that are hanging over Qtrax which needn’t have been there but I hope they don’t destroy the opportunity for the rest of us.”

You can read the rest of the interview over at last100, and don’t forget to subscribe to the RSS feed to get the latest digital lifestyle news and analysis.

Facebook Comments