SpiralFrog Finally Emerges from Death Spiral, Launches Today

After a ten-month delay which saw the company's own high-profile organizers ousted in a management coup that to this day remains mysterious, the ad-supported music service SpiralFrog finally emerged from beta today. It's being billed as the first free music download service to provide fully licensed, DRM-enabled music for MP3 players (though not iPods). Its catch is that it compels you to first sit through a word or two from their sponsors.

Like commercial radio, SpiralFrog is supported through advertising, though it compels users to pay attention to ads during the download process. For advertisers, the value proposition is to enable the site to target ads directly to specific listener segments; for users, it's the option to keep the songs or the videos.

On the surface, it sounds like an evolved form of commercial radio. But like a reality show featuring 50 of the World's Greatest Train Wrecks in slow motion, SpiralFrog demands its user's constant attention. During a limited beta test in Canada last May, one tester noted how the service's download manager omits the typical queue feature, opting instead for downloading one song at a time. This is so the manager has time to present ads.

Between ads, the user is given a window of opportunity to click an "Activate" button which enables the downloaded song on his system. If he doesn't click the button before the timer runs out, he has to download the song again...and watch the next ad and wait for the next window.

It is a tricky value proposition, especially coupled with the fact that SpiralFrog is dealing mainly with independent labels for now, and that its music catalog is reportedly limited to a mere 800,000 titles. Its business model has it sharing its advertising revenue with copyright holders - mainly the record labels. It was this lucrative idea that won SpiralFrog the support of Universal Music Group back in August 2006, and of EMI the following month.

That idea might have had a bigger window of opportunity of its own had a still-unexplained palace coup not resulted in the ouster of SpiralFrog's entire executive team last December. At that time, CEO and co-founder Robin Kent - formerly the head of one of the world's leading advertising agencies - was fired by his company's board.

Following him out the door was his entire dream team, including former RIAA and IFPI chairman Jay Berman, former Sony Music Publishing president Richard Rowe, and former music producer and long time David Bowie colleague Robert Goodale.

Rather than twiddle his thumbs after burying what he still believed to be a good idea, Kent and his friend and former SpiralFrog CMO Lance Ford regrouped under the name Rebel Digital. That group will serve as the advertising provider behind the forthcoming Qtrax network, which is owned by a separate company but whose business model is similar to SpiralFrog's. Last April, Qtrax announced it had already reached distribution deals with all four major music publishers, plus several of the lesser ones.

"What was another company's loss is our gain," said Qtrax' CEO last April when the Rebel Digital deal was announced.

It could be a very long road ahead for SpiralFrog, no matter how well its value proposition is received by consumers. If it starts to succeed, its competitors at Qtrax might have the inroads they need to make it succeed more. And if it doesn't, Qtrax may have its own window of opportunity to pull out and regroup once again behind a new strategy.

Update ribbon (small)

1:00 pm ET September 18, 2007 - This afternoon, a spokesperson for SpiralFrog contacted BetaNews in an effort to correct what he perceived as mis-perceptions regarding his company's history.

The idea for SpiralFrog and its technology, the spokesperson said, is solely that of current founder and chairman Joe Mohen, who came up with the concept in 2003. He said the total number of people who left the company in December, including then-CEO Robin Kent, was three, although we listed four based on multiple sources, and although press reports cite the total number as seven.

4:10 pm ET - BetaNews contacted Robin Kent for further clarification. Kent told us that the total number of people who left SpiralFrog in December numbered eleven, including himself, four other members of management (three of whom we named), and four board members.

But Kent also confirmed for us something which contradicted a great deal of the biographical information written about him - some of it while he was at SpiralFrog - concerning the genesis of the idea. Kent gave credit to SpiralFrog chairman Joe Mohen for the idea of the ad-supported free download business model; he stated his own role in the business was to rebuild the brand from its original concept (initially called "Music Loads") into the catchy, geometric, amphibian image it now conjures. He also praised Mohen for that idea.

With that having been learned, and with the SpiralFrog spokesperson's contention having been confirmed, we excised from our story above the implication that Kent originated the SpiralFrog business model, and we stand corrected.

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