NPD Group Blog » It’s Not Easy Being Green

It’s Not Easy Being Green

Wednesday, April 1st, 2009
By Russ Crupnick, Vice President, Senior Industry Analyst

Spiral Frog has died. You are now probably saying to yourself, I know what spiral ham is, but what’s Spiral Frog?

Spiral Frog was a music download service, once feted by The New York Times as a possible major competitor to iTunes. They had a seemingly ingenious concept, which seems pedestrian today: Ad-supported music downloads.

Rather than buying a song track using a credit or gift card, you’d visit the site and be exposed to advertising in exchange for a handful of song downloads. Periodically you’d need to return to the site and view more advertising to renew your license for the songs. It seemed like a good deal, and because it was all properly licensed music, it was safer than getting songs from a file sharing network. Plus, the renewal aspect added stickiness to the site.

So, why did it fail? There was a lot of insider intrigue surrounding the company’s management, and there was a huge financing burden for licensing and royalty fees involved in the start-up’s business model. But the lessons of Spiral Frog aren’t all that complicated and most apply to other companies currently selling digital music, video, or gaming:

1) The library was incomplete. Consumers expect virtually unlimited libraries of content and don’t want to piece it together themselves. Spiral Frog hadn’t licensed all the major record-label content.

2) It’s got to synch with how consumers use content. You couldn’t put these downloads on an iPod, and you couldn’t burn them to a CD to play in your car. Enough said.

3) Most of us have never heard of Spiral Frog, or Ruckus, or iMeem, or CinemaNow. There’s a difference between services that offer brand name licensed music, movies, and games, and those that offer user generated content. Pitching licensed content requires patience, connections, and funding, not just an intriguing idea. These services may have loyal users but they lack the broad awareness that makes them appealing to advertisers, record labels, or game and movie studios.

The failure of every brick and mortar record store gets the media’s attention these days, but I’d guess as many (or more) digital entertainment services have flopped over the past few years. Add SpiralFrog to the list of names you may have heard of (like Yahoo Music, Urge, Virgin Digital) and some you haven’t (Cliq, Ecast, Cductive). Each suffered from some combination of flaws in a business where consumers expect a flawless experience.

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