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.”

Apple today announced that all four of the major networks are offering primetime programs in high definition on the iTunes Store.

Apple still provides no ad-supported streaming offering, which has opened the door for Hulu and others to target the huge audience for free streaming Internet television.

The list of HD programs now available on the iTunes Store includes ABC’s “Brothers & Sisters,” “Desperate Housewives,” “Dirty Sexy Money,” “Eli Stone,” “Grey’s Anatomy,” “Life on Mars,” “Lost,” “Private Practice,” “Samantha Who?” and “Ugly Betty.” CBS programming includes “CSI,” “CSI: Miami,” “CSI: New York,” “NCIS” and “Numb3rs.” FOX shows include “Bones,” “House,” “Prison Break” and “Sons of Anarchy,” which airs on FX. NBC shows include “30 Rock,” “Heroes,” “Kath & Kim,” “Knight Rider,” “Law & Order: SVU,” “Life,” “Lipstick Jungle,” “My Own Worst Enemy” and “The Office,” and SCI FI Channel’s “Battlestar Galactica” and “Eureka,” and USA Network’s “In Plain Sight,” “Monk,” “Psych” and “The Starter Wife.”

Standard definition television shows on the iTunes Store are $1.99 per episode, while HD programs from ABC, NBC, CBS and FOX are $2.99 per episode. Many series offer a season pass option which allows customers to purchase entire seasons at a discounted price.

“We’ve got an incredible Fall 2008 TV lineup with over 70 primetime comedies and dramas, including many of the most popular shows on TV in stunning HD,” said Eddy Cue, Apple’s vice president of Internet Services. “With over 200 million episodes sold, iTunes customers have proven they love watching television on their computer, iPod, iPhone and TV with Apple TV.”

Fortune reports that Apple is threatening to kill the iTunes Store over music royalties. 

The Copyright Royalty Board in Washington, D.C. is expected to rule Thursday on a request by the National Music Publishers’ Association to raise royalty rates on songs purchased from online music stores, like iTunes, from 9 cents to 15 cents per track. 

“If the [iTunes music store] was forced to absorb any increase in the … royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss – which is no alternative at all,” notes iTunes vice president Eddy Cue. “Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably.”

At this point, Apple’s stance seems to be little more than saber rattling. Apple is quickly moving to diversify the iTunes store beyond music. While the digital video market is slow to take off, Apple has another hit with its App Store.

Apple has unleashed a storm of criticism as a result of its decision to ban an ebook comic book, Murderdrome, from the iTunes store.

Murderdrome may be stupid, it may be offensive and it is certainly gorey – but it’s no worse than a lot of comics that you can get at Barnes and Noble or Borders. You can view the full first issue at the publisher, Infurious Comics.

Here’s what Infurious has to say about the situation:

By now, you might have heard that Murderdrome has been banned by Apple. This is due to the part of the sdk that suggests content must NOT offend anyone in ‘apple’s reasonable’ opinion. Here at infurious, we would love to work with Apple to ensure a content rating system can be put in place to allow material that is no more offensive than many of the R rated films available to download on iTunes.

The ban from Apple may ultimately be a gift to Infurious, making them notorious. But the ban raises the question of whether you want anybody deciding for you what you can read.

We’ve criticized the Kindle in the past because it’s an expensive doorway to a relatively closed system of buying expensive content. And we’ve praised the iTunes/iPod platform for embracing Internet media, making it easy to subscribe to mainstream podcast content throught the iTunes store, but also leaving the platform open so that you can subscribe to anything you want.

Apple can compete with Amazon’s Kindle, but it’s not going to do it by picking and choosing what you get to read, or putting a convoluted approval process between you and the content you want to read.

It’s only going to revolutionize ebooks if it can create a platform with same openness and ease of use that it’s brought to podcasting.

Update: There’s great coverage of this at Fortune and at Mike Cane 2008.

Update 2: Here’s a video demo of reading Murderdrome on an iPhone:

Apple today announced that it had sold over five billion songs from the iTunes Store.

The company also announced that iTunes customers are now renting and purchasing over 50,000 movies every day, making iTunes the world’s most popular online movie store.

Apple said in a statement that its iTunes Store is now the world’s most popular online music, TV and movie store, with a catalog of over eight million songs, over 20,000 TV episodes and over 2,000 films.

You almost have to feel sorry for the mainstream music industry. Almost.

The major labels have teamed up with Napster to offer what they are calling “the world’s largest and most comprehensive MP3 store.”

Yep – the labels are so intent on breaking Apple’s dominance in the world of digital music that they are giving Napster – the brand that RIAA head Hilary Rosen once called “both morally and legally wrong” – the opportunity to distribute more music as MP3 than Apple.

Per Napster’s announcement:

Napster’s download store is more than 50% larger than any other MP3 store and boasts not only the largest major label MP3 catalog in the industry, but also the largest library of independent music available anywhere. All Napster download sales in the U.S. will now be in the user-friendly, DRM-free MP3 format, which is compatible with virtually any MP3 player or music phone, including the iPod and the iPhone. Napster is the first music subscription service featuring major label content to offer 100% of its catalog in the MP3 format for download sales.

Pricing for download sales is 99 cents for single MP3 tracks and $9.95 for most MP3 albums.

Can Napster Make Doing What The Music Industry Wants You To Do Cool?

It’s great to see Apple getting some much-needed competition. It’s also great to see the music industry giving people what they want – digital music downloads that will work on any player.

It’s also a bit pathetic.

The music industry’s digital music initiatives have failed so miserably that they are stuck teaming up with their former nemesis – even giving Napster exclusive deals.

Even more pathetic is that the move is unlikely to make a dent in Apple’s iTunes sales. People haven’t demonstrated in any significant numbers that they care about music file formats or DRM yet – so it’s hard to imagine that they are going to start now.

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?

Television content available through Apple’s iTunes Store continues to grow.

HBO and Apple today officially announced that programming from HBO is now available for purchase and download via the iTunes Store. Programs include The Sopranos, Sex and the City, Deadwoo, Rome, Flight of the Conchords and The Wire.

“We’re very excited to make these legendary HBO programs available on the iTunes Store,” said Henry McGee, president of HBO Video. “Whether catching up on Sex and the City in anticipation of its upcoming movie release or reliving a favorite Sopranos episode, we think viewers will love being able to watch these shows on their iPod or iPhone.”

Television shows purchased and downloaded from the iTunes Store can be viewed on a Mac or PC, iPod nano with video, iPod classic, iPod touch, fifth generation iPod, iPhone or on a widescreen TV with Apple TV.

With the announcement, Apple also introduces more variation in pricing for TV shows. Sex and the City, The Wire and Flight of the Conchords are $1.99 per episode, and The Sopranos, Deadwood and Rome are priced at $2.99 per episode.

At this point, the biggest hole in Apple’s iTunes Store offerings is movie selection. While Apple’s offerings are steadily increasing, they still are a tiny fraction of what’s available via NetFlix.

According to a Hollywood Reporter report – Apple’s iTunes store will be getting more movies and getting them sooner.

Apple is expected to announce today that it has struck a deal with a wide array of movie studios to sell new releases at its iTunes Store. The move would come as many bricks & morter options for renting and purchasing DVDs are disappearing.

Apple has been criticized for the limited number of movies available through iTunes and on the Apple TV. We noted earlier this year that iTunes lags about 89,000 movies behind NetFlix.

The new agreements would help address address that; it is expected to involve Fox, Walt Disney Studios, Warner Bros., Paramount, Universal, Sony Pictures, Lionsgate and New Line.

Update: Apple has now made this announcement official.

Apple confirmed the rumor we reported earlier, announcing that the iTunes Store had surpassed Wal-Mart to become the number one music retailer in the US.

“We launched iTunes less than five years ago, and it has now become the number one music retailer in the world,” said Eddy Cue, Apple’s vice president of iTunes. “We are thrilled, and would like to thank all of our customers for helping us reach this incredible milestone.”

At the rate iTunes is growing, you can expect to see music sections disappearing at major retailers and the record labels looking for creative ways to fight Apple’s growing dominance in music sales.

While Microsoft, Amazon and others are trying to figure out how to duplicate Apple’s success in digital music, the real opportunity lies in figuring out how to help people find what they want in the rapidly growing mass of legal free music.

Apple’s announcement is based on data from market research firm the NPD Group’s MusicWatch survey that captures consumer reported past week unit purchases and counts one CD representing 12 tracks, excluding wireless transactions. The iTunes Store became the largest music retailer in the US based on the amount of music sold during January and February 2008.

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