from the interesting-model...-but... dept
I've seen all sorts of business models involving "free, but ad supported" music, but none of them really seem sustainable. This latest one is different, but I'm still not sure it has a chance. Rather than the typical "play music and have ads off to the side somewhere" model that most take, Free All Music, gives you a chance to download DRM-free MP3s... if you first watch a video ad. They even let you pick what sponsor you want to let "buy you" the music (and then, that advertiser gets to put your user name in future ads, noting that you downloaded the music).
While this is a more creative use of advertising that probably has more value to the advertiser than the typical ad-supported music sites (where most people just ignore the ads), it still seems likely to have some serious problems. First, the site is betting that consumption habits on such a site would be the same as iTunes -- 15 songs over the course of three months -- and is looking for ad deals to support that. But... that assumes that as the price drops from $1 to "time spent watching an ad" consumption wouldn't go up. Without the monetary barrier, it seems likely that consumption would increase significantly.
On top of that, I don't really see how the economics work, given traditional models in both the music and ad industry. It's not that those models necessarily make sense (in fact, I'd argue neither make sense), but it's what both sides will expect. On that front, you've got the record labels, who are used to getting approximately $0.67 per downloaded song. Assuming that needs to be made up by the ad (and even ignoring any profit for the site), then every single ad shown needs to cost that same $0.67. Translated into traditional ad terms, that's a CPM of $670. Yikes. I don't know any advertiser will to pay anything close to that -- even if it's targeted and you have a half decent chance of the person paying attention. Most CPM ad rates online these days are in the sub-$5 area. Convincing advertisers to jump to a $670 CPM on an unproven model? Good luck.
Finally, even if it's "free" it sounds pretty inconvenient. The fact is that people do have alternatives, such as file sharing networks. While they're not legal, they don't require you to waste a bunch of time before you can get the music you want to listen to. I'm sure some people would use it, but not enough to really matter long term.
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