Spiral Frog R(edd)IP?

IMPORTANT DISCLAIMER: I’ll state up front that I have no privileged information on the current financial situation at Spiral Frog and I’m only going to focus here on the strategic positioning of the music service. This strategic analysis stands, whatever the outcome of Spiral Frog’s current management situation.

There have been press reports concerning Spiral Frog’s difficulties for some time now and it seems that things are finally coming to a head (see this story for more details).


If Spiral Frog is to close its doors, it’ll be a shame but at the same time not a huge surprise: Spiral Frog would be paying the price for first mover advantage. The history of technology is a path littered with the corpses of companies that had good ideas too soon. Most often it is the early followers who are the successes, learning from the mistakes of the pioneers. Apple is the shining example in the digital music space. Apple was far from the first to sell music digitally. Instead Apple watched the likes of OD2 and MP3.com make their respective mistakes and acted, still quickly enough to be in pole position just as the race was really getting started.

Spiral Frog here has played the role of OD2. They had the right idea, but were too early and didn’t execute successfully. It was in August 2006 that Spiral Frog burst onto the scene with a high profile announcement regarding a licensing deal with Universal Music, and I had high hopes for it and Qtrax. (This was incidentally the first high-profile manifestation of the rebirth of UMG as the preeminent digital innovator major).

Spiral Frog, and indeed Qtrax, had the vision to see that the music industry would soon need a digital Plan B. That paid download sales were not going to get anywhere close to keeping pace with the rate of decline of CD sales. They also knew that young file sharers were never going to suddenly switch in their tens of millions to becoming iTunes buyers. So ad supported, free music seemed like a perfect fit. And it is. Unfortunately Spiral Frog asked the right questions but didn’t provide quite the right answers.

Ultimately Spiral Frog’s hop was weighed down with DRM temporary downloads that didn’t work with iPods, difficulties in getting all content owners on board, and license fees that challenged profitability. That’s not to say Spiral Frog didn’t have their successes (they registered 1 million unique visitors in early 2008) and equally it’s possible that there is life in the old frog yet. But any future success will depend upon significant revisions to their business model.

Ad supported is going to be a corner stone of digital music, but the next wave of services that are leveraging this business model are doing so by creating business models that are more financially viable and don’t try to create a watered down version of the iTunes experience, which in itself is a costly thing to do from a licensing perspective. So look to the likes of Last.FM, imeem, Spotify and We7 as the early followers who will reap the benefits of Spiral Frog’s hard learned lessons. In fact We7 have really put those lessons into practice, moving from an ad supported download model to a predominately streaming model, in the process acquiring half a million users in the UK. The added irony for Spiral Frog is that the growth of the mobile Internet is enabling those PC streaming services to get portability without needing downloads.

Spiral Frog played a crucial role in driving the ad supported music sector forward, unfortunately it was too much too soon.

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6 thoughts on “Spiral Frog R(edd)IP?

  1. I haven’t found anyone even asking this question, let alone offering a reply.

    What happens to my copies of the music that I have downloaded from Spiralfrog? Will I retain the licenses forever or will they expire within 60 days?

  2. They’ll eventually stop working after the DRM key serving database is turned off.

  3. In terms of the ad-supported model, ez-tracks seems to be thriving. I have dealt with them as an affiliate and noticed that they completely dominate the SERPs. Of course their dirty little secret is that all the songs are cover songs! Consumers usually only find that out after they sign up. My geuss is thats how they maintain a profit margin.

    Dan
    http://www.danosongs.com

  4. Great info, we DO expect (though) that the ad-supported model WILL work. //keeping our noses down and pushing ahead…
    Sincerely,
    The Songnumbers Team
    PS, we just pushed out BETA 2 of our site!

  5. Well, it does seem that the DRM on the files has expired. Is there any way I can re-acquire rights (assuming at some cost) without having to down-load them all again?

  6. Pingback: Spotify No Longer Too Unlimited* | Full Stream Ahead

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