Ad-supported online music service Spiral Frog suspended operations yesterday, nearly three years after its launch.

SpiralFrog launched in Summer 2006 to much media fanfare, painting itself as a free alternative to .99/song iTunes, and as a legal alternative to illegal file-sharing sites. At that time, SpiralFrog CEO Robin Kent said, “Offering young consumers an easy-to-use alternative to pirated music sites will be compelling…. SpiralFrog will offer those consumers a better experience and environment than they can get from any pirate site.”

Kent was fired in early 2007, however, and the site finally officially debuted in September 2007, announcing a loss of $3.4 million (on revenue of $20,400) by November of that year. Subsequent rumored acrimony between staff and founder Joe Mohen did not advance the success of the music site.

Building the SpiralFrog business on ad-supported Windows Media DRM’d music never quite caught on with listeners – or advertisers.

CNET reports that “SpiralFrog has ceased operations and assets have been surrendered to creditors. To keep operations going last year, the company issued secured notes in order to borrow at least $9 million from several hedge funds and others.”

According to the latest MusicWatch consumer surveys from The NPD Group, Apple is again the top music retailer in the US.

The five leading music retailers in the U.S. for the first half of 2008 (January through June, based on purchases of CDs and a-la-carte digital music downloads) are:

1. iTunes
2. Wal-Mart (Walmart, Walmart.com, Walmart Music Downloads)
3. Best Buy (Best Buy, Bestbuy.com, Best Buy Digital Music Store)
4. Amazon (Amazon.com, AmazonMP3.com)
5. Target (Target and Target.com)

NPD’s data reflects the ongoing consumer shift from physical CDs to digital music, as iTunes maintained their leadership position reached earlier this year. Amazon rose from fifth place to fourth primarily for two reasons: first, online CD sales have seen less erosion than CD sales at brick-and-mortar stores; and second, Amazon launched its digital music store, Amazon.mp3, last year.

“We expect Apple will consolidate its lead in the retail music market, as CD sales continue to slow,” said Russ Crupnick, entertainment industry analyst for The NPD Group. “Amazon’s CD buyers tend to be older, so they haven’t abandoned the CD format to the extent seen in the average music buyer. Plus Amazon’s successful introduction of its digital download store will help the company improve its position in the future.”

According to the Guardian’s Tim Anderson, DRM’d music is going to stage a comeback, and Apple’s going to be the one making it happen.

The music industry wants to sell new services, like music subscriptions, and DRM’s is central to making these services viable. To succeed, though, subscription music services need to work with iPods and iPhones:

Apple customers with a subscription would probably never buy from third-party services, even while the likes of Amazon could undercut iTunes and be iPod-compatible.

Says Jupiter’s Mark Mulligan: “It’s highly likely Apple will get into the next-generation service game. That could be Apple selling iPods preinstalled with unlimited access to music, or with a bundle to a subscription offering,” he says.

Mulligan sees the market evolving into multiple tiers. At the top end, a minority will be willing to pay a premium for the best quality, DRM-free downloads. The middle tier will be “subsidised offerings like Nokia’s Comes With Music, where you buy a device and the cost of the music is included subsidised”; while at the bottom will be advertising-supported services such as Qtrax, SpiralFrog and We7, where free music is paid for by embedded advertising.

That would leave Apple with the top-end iTunes downloads and a subscription business. But would Jobs back it? In January 2007, Reuters asked him if Apple would do so. “Never say never, but customers don’t seem to be interested in it,” Jobs said. “The subscription model has failed so far.” Which hardly rules it out forever. DRM might not stop pirates, but it does rivals. And in business, the latter can be a greater threat than the former.

It’s looking more and more like analysts may be worrying too much about DRM, and not enough about whether music services were actually useful to customers.

Apple’s iTunes store rose to prominence despite selling DRM’d music, and it’s grown even more dominant as competitors have started selling non-DRM’d music. If the market demonstrates that there’s an interest in subscription music services, Apple’s likely to dominate the market with its own DRM’d offering.

What do you think? Is DRM down for the count, or would you consider a DRM’d subscription music service?

The music industry is working on an all-you-can-eat music model, Total Music, that is generating a lot of interest. The idea behind¬†Total Music¬†is that you’ll buy a portable music player or mobile phone¬†and either pay an inexpensive monthly fee¬†for access to unlimited music, or the cost will be hidden in either the purchase price for your music player¬†or in your monthly phone bill.

Some are hyped about this new plan, calling it revolutionary and suggesting that it could be an iTunes-killer.

In many ways, though, it looks like Total Music will be a total failure. Here’s why:

• Subscription music has failed already. The idea of subscription-based music isn’t new, and it hasn’t proven to be appealing to the public. Two earlier music industry initiatives, PressPlay and MusicNow came and went without leaving much of an impression.
• The music industry wants to trick you. What makes Total Music new is the idea that the cost of the subscription will be hidden in the price of the portable music player or rolled into your monthly phone bill. In other words, they want you to pay to rent music, but they don’t want you to think that you’re paying to rent music.
• Total Music will be totally DRM’d.¬†If the music industry is going to offer you unlimited downloads, they are going to give you double-dog DRM’d downloads. Songs will be licensed for your device and DRM will prevent you from doing things that you’re used to doing, like burning the songs to CDs or using them on other devices.
• You’ll have to pay and keep paying with Total Music. The music industry doesn’t want you to download all the music that you want to listen to, fill up your device, and then stop using their service. Because of this, they’ll make the songs expire when you stop the service. Instead of paying once to get the songs that you want, you’ll have to pay and keep paying as long as you want to listen to them.
• Total Music will cost you more. On the average, iPod owners spend about twenty bucks on digital downloads. Most of the music on portable media players comes from ripping CDs. Total Music is expected to cost about $5-10 per month. In just a few months of use, renting DRM’d, limited tracks using Total Music will become more expensive than buying the music and using it however you like.

Total Music doesn’t look like it will be an iTunes-killer, or even offer significant competition to Apple’s dominant digital music platform. In fact, Total Music is¬†likely to be a total failure, unless the music industry can find a way to use the service to introduce new users – people that aren’t familiar with the ease of ripping and handling digital music files – to the world of digital music.

Digital music consumers listen to more music, enjoy more new music, talk more about music and attend more concerts, according to a survey released today by the Digital Media Association (DiMA).

Nearly 60 percent of consumers report that they are listening to more music since they started using an online service. The 1008 consumers surveyed enjoy Internet radio, subscription music services, and pay-per-download music services, including AOL Radio, Yahoo! Music, iTunes, Rhapsody, Zune, Urge, Napster, Pandora, Live365 and others.

The vast majority of online music service users report that enjoying music over the Internet has expanded their musical tastes, letting them discover new artists and explore new music genres. About 25 percent reported having discovered a lot of new artists, while more than 60 percent of consumers surveyed say they have discovered some new artists. Nearly 7 in 10 online music consumers are enjoying new genres of music since listening to online music services.

“Prior to the digital age, someone who purchased six CDs per year – valued at just over $100 – was considered a significant music consumer,” said DiMA Executive Director Jonathan Potter. “Online music consumers’ spending habits, combined with what they are doing to promote and expand music enjoyment, is great for the entire music industry – artists, songwriters and producers.”

According to the survey, online music listening has increased music fans’ overall music discussion with friends and co-workers, with more than 35 percent now talking about music more. And, more than 75 percent of online music consumers report they have recommended a particular service to a friend or co-worker.

The survey also found that listening to and purchasing music over the Internet increases concert attendance. A full 15 percent of online music fans say they now attend more concerts.

The survey found that about half of digital music fans are spending more than $200 per year on music, and nearly 30 percent are spending more than $300.

“These findings demonstrate that real music fans – and today’s music tastemakers – are online,” said Potter. “This makes the 2006 holiday sales jump in music devices and sound recordings exponentially more important to artists, songwriters, producers and music publishers, as online music’s impact extends way beyond immediate revenues. Consumers of innovative online music services are reviving the music economy as they enjoy more music and more new music in every way possible, and most importantly, as they introduce their friends to the music and online services they enjoy.”

The “news” that iTunes sales are plummeting seems to have been picked up by every blogger and analyst that has an axe to grind about iTunes or digital music in general.

A common theme in the coverage is that people were finally rebelling against copy-protected digital music.

This would make sense….if digital music sales were really plummeting and if it were clear that the general public cares about digital copy protection. In fact, iPods are selling like hotcakes and the number of copy-protected iTunes songs sold per iPod is up by about 15% in the last few months.

While the doom and gloom predictions for the iTunes store haven’t panned out yet, it’s true that iPod owners don’t spend a lot on digital music.

There’s an obvious reason this, though. Buying albums via the iTunes music store just isn’t a very good deal.

We took a look at the 10 most popular albums of the week (12/16/2006), based on Billboard data, and checked their prices at Wal-Mart, Best Buy and iTunes.

iTunes Store An Expensive Option For Purchasing Music

Note: The Beatles’ Love album is not currently available at iTunes, so it wasn’t included in the totals.

When you’re shopping for singles, iTunes is a great option.

When you’re loading up your iPod with popular albums, though, it’s usually cheaper to buy the physical CD and load it into iTunes than it is to buy the album from the iTunes store. You’ll spend up to 10% more to shop at the iTunes store, and not have anything tangible to show for it.

The mainstream music industry is experimenting with selling unencrypted MP3 files, a move it has long resisted because of concerns over piracy.

Blue Note Records is selling the latest single from jazz-pop singer Norah Jones, Thinking About You, through Yahoo as an MP3. Another EMI act, Christian rock band Relient K, also released two MP3s through Yahoo yesterday.

The move may be an experiment to see if the music industry can break Apple’s control over the digital music download market. The mainstream industry failed to make a dent in the market with services offering music encrypted with Microsoft’s PlaysForSure, a technology that now has an uncertain future. Microsoft’s latest digital music service for the Zune is a closed system, like Apple’s.

Unencrypted MP3s provide a way for the music industry to sell digital music downloads, without being locked into either Microsoft’s or Apple’s technology, and opens up their potential audience to anyone with a computer.

The move comes as some high-tech and music-industry executives are becoming concerned about Apples growing dominance in the digital music business. Currently, the majority of digital music downloads sold are via the iTunes music store, and iPod owners can’t easily use tracks downloaded from most other digital music services. By selling standard MP3 files, companies can sell tracks that will work on iPods.

Blue Note General Manager Zach Hochkeppel called the initiative “an experiment.” One risk of the move is that the tracks are likely to quickly make their way onto file sharing networks. Because of this probability, major labels are likely to limit this option to promotional singles for the near future.

While Apple’s iTunes store has been the first service to successfully sell major label music as digital downloads, it’s success has meant that Apple has been able to set download prices and control what music gets exposure.
via WSJ

Goombah is a free desktop application, launched today, for Mac or Windows that provides music recommendations based on your tastes and the interests of other Goombah users.

Goombah analyzes each user’s iTunes collection and listening behavior and connects them to people and music that match their taste. Users can sample recommendations and purchase them from various online sources, download free, legal MP3s, and browse entire music libraries of matching members and friends.

Goombah offers a wide variety of free, legal MP3s from established and emerging artists that are targeted to users based on their taste. Users can download these tracks to play on their iPod or other music player and keep them forever. This promotional music is sourced from record labels and third-party distributors, vetted for quality, and updated weekly on “Free Music Fridays.”

Users can control the range of Goombah’s recommendations with an “Adventurous” slider, changing from popular recommendations to fringe artists with a click. Personalized recommendations, matching members and free music can be easily generated by iTunes playlist, genre, artist or any combination of tracks.
Goombah, whose name means close friend or trusted advisor, uses “matching member” libraries to generate virtual consensus on recommendations. Recommendations are limited only by the array of music in Goombah members’ collections, and are not influenced by what is marketed or narrowed by a pre-selection of tracks or artists. According to the company, the music recommendations continually change as the community grows and are not only precise, but diverse and full of pleasant surprises.

“As consumers’ music libraries transition from physical CDs to virtual files, and the sheer number of ‘tastemakers’ increases, finding reliable sources of recommendations for new music — that map to his or her personal tastes — is becoming more difficult,” said Mike McGuire, research VP, Gartner. “Consumers are looking for tools which can help manage a more complex environment while giving them ways to link with like-minded music fans.”

“Goombah provides a compelling way for consumers to discover music and build their personal collections. We also offer a way for artists to efficiently find their audience regardless of how large or small it may be,” said Diane Sammer, CEO of Emergent Music, LLC, the company that developed Goombah.

“Goombah’s distributed approach and matching technology makes it the workhorse of recommendation services, resulting in quality taste-based matches for all users. Goombah finds the best tastemakers for each user and music spreads through the community organically like word-of-mouth between friends,” explained Sammer.

via Axehole » New Community-Driven Music Discovery Service Launches Today With Stupid Name