Deal allows free music from Internet

August 30, 2006|By Charles Duhigg and Dawn C. Chmielewski | Charles Duhigg and Dawn C. Chmielewski,LOS ANGELES TIMES

Music fans for the first time will be able to download free, legal copies of songs from a major record label under a deal announced yesterday by Universal Music Group.

The experiment in advertising-supported music marks a significant shift for an industry that has spent years fighting to stop global online piracy and was viewed as slow to embrace the potential of the Internet.

Universal's agreement with SpiralFrog will grant free, unlimited access to the hundreds of thousands of songs in the label's catalog, including such acts as Kanye West and U2.

SpiralFrog's users will be required to watch a 90-second advertisement while each song downloads. The New York-based company believes that advertising revenue will offset the cost of licensing Universal's music once the site launches this year.

Downloaded tunes can be saved to a hard drive or transferred to a portable music player, but users will have to visit the SpiralFrog Web site once a month and watch more ads. Otherwise, digital locks on the music will make it inaccessible.

Music insiders have predicted the rise of advertising-supported music since the original Napster software gave music fans their first taste of free - although unauthorized - song swapping. Other companies, including Napster, Kazaa, Q-Trax and a handful of others have tried to launch similar services.

But many have been stymied by technological difficulties that SpiralFrog also is working to resolve, and by the fact that the success of an advertising-supported model is far from guaranteed.

SpiralFrog's 90-second download is significantly longer than the 15 to 20 seconds it takes to download a ditty from Apple Computer Inc.'s industry-leading iTunes Music Store, where songs cost 99 cents. But SpiralFrog executives think young customers will be attracted to its slow but free model.

The company intends to target current users of illegal peer-to-peer networks who are frustrated by the poor song quality and viruses that thrive in the Internet's seedier corners.

"The currency we're using is time," said SpiralFrog Chairman Joe Mohen. "Young people are already downloading free songs illegally on peer-to-peer networks. We believe that advertisers will pay to show those consumers ads, and that those payments will rival what music companies get from iTunes or other online retailers."

Notably, the songs downloaded won't be formatted to play on iPods. That could be a boon to Apple rival Microsoft Corp., which is preparing to launch its own music player, called Zune, this year. Already, Microsoft provides the technology that supports subscription music sites such as Yahoo Music and the recently relaunched Napster Inc.

Mohen said SpiralFrog is in discussions to license the catalogs of the three other major music companies: Sony BMG Music Entertainment, Warner Music Group and EMI Group. Representatives from those firms declined to comment.

In many ways, the agreement between SpiralFrog and Universal Music, the world's largest record seller, reflects how the entertainment industry is scrambling to find new ways to earn money as the digital revolution makes it impossible to control how content is shared.

For years, the music industry sought to prevent anyone from distributing digital songs for free by arguing that unpaid downloads degraded the value of music. But in the past five years, as consumers have shown an unwavering appetite for free tunes, executives' attitudes have changed.

"If someone wants to buy a million CDs from us and then give them away on a street corner, that's fine with us, as long as we get paid," said Larry Kenswil, a top digital-media executive at Universal Music.

The record company will receive an upfront payment from SpiralFrog and a portion of the company's advertising revenue.

"Anything that encourages people to get music from legitimate sources is a good thing," Kenswil said.

Charles Duhigg and Dawn C. Chmielewski write for the Los Angeles Times.

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