Streaming Music Services: Is the death of the frog a case of contagious disease?

Posted on 29. Mar, 2009 by Antonella Stellacci in Music Industry Trends

Late at night on March 19th after less than 3 years in operations, Spiral Frog silently pulled the plug on its site.

Just like a rockstar, hyped and controversial during its life, the frog didn’t miss to spark a heated debate with its suicide.
That its death happens not long after the demise of Ruckus-the streaming service built for college student and acquired by another now- zombie, Total Music- only contributes to the darker tone of the debate.

So what killed SpiralFrog? Was it an isolated case of bad capital structure, huge upfront fees, lack of usability, poor advertising revenues? Could another startup take over its mission?

Let’s see where other similar services rank in today.
Imeem
+4 is better than 2: has secured deals with all the four major labels - that’s already two steps ahead of the frog that Sony and Warner never liked…
+Hall of Fame: named one of the top 10 music services for 2008 by Wired.com. Kudos!
+A Mobile Pioneer: has already gained itself a reputation as a pioneer in the mobile music landscape by becoming the first and best music app on the Android
That was only…hum one month ago!
This week Imeem is all over the news but the tone is “slightly different”: Michael Arrington at TechCrunch estimates their debt at a “manageable” $30mln which, with this economy, is definitely not something you worry about…..UG
But wait, it’s not dying, it’s just renegotiating its deal with the labels. According to MediaMemo it has already been able to secure better fees per stream. The question is if this is enough to save it from going under. Ironically Imeem is partially owned by the major labels.
Ok, we’ll wait…

Last.fm

Eventually it has decided to switch from free to subscription and start charging users outside the US, UK and Germany 3euros/month. This model is not new to Last.fm: it had been announced over a year ago, the idea being that users would be able to stream a song only 3 times before having to pay for premium features. That model never materialized – which supposedly angered the Warner management, disappointed at the poor economic returns of the CBS poster child.
Last.fm, acquired by CBS, has deals with over 280,000 labels and artists, some of which it pays directly (except Warner Music Group…).

Playlist

2008 didn’t end well for Project Playlist. The premises were all great: former Facebook exec Owen Van Natta was appointed CEO and the company got another round of funding. But then came the label ban to Playlist widgets from MySpace and Facebook, two main drivers of traffic for Playlist.

Will 2009 be a better year for Playlist? This week EMI announced they dropped the lawsuit and signed a deal with Playlist – the terms are undisclosed though…

With Sony already on board, that’s two more to go…Unfortunately though MySpace and Facebook have not yet reinstated the Playlist widgets…

I guess it doesn’t surprise anyone if Michael Arrington ends the week with a dire vision of the future for music startups. A future with no future…

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