SpiralFrog Croaks a Warning

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SpiralFrog Croaks; A Warning...

By: Andy Beal
2009-03-20

SpiralFrog, the music download service supported by ads, has finally croaked. The service publicly launched with a bang back in 2007 but...

...needed $9 million in funding just to keep the lights on in 2008, and now CNET is reporting the web site is no more.

In SpiralFrogs situation, the company couldnt overcome a macro-economic perfect storm says a source close to the company. The sagging global economy, combined with the collapse of the capital markets and rapid compression of the ad markets, led to the companys demise, said the source.

Part of me feels vindicated that the freemium model isnt the holy grail that everyone predicted. After all, if a service offers free music downloads"with the user only having to endure a few ads"and still cant survive, what comfort does that give to other ad-supported consumer sites?

The other part of me is now concerned for related services, such as YouTube. Its a well known fact that YouTube is hardly making buckets of money from its user-created videos and the demise of SpiralFrog doesnt offer much in the way of comfort that the Google owned site can earn its keep from displaying ads alongside videos.

Of course, YouTube has the benefit of displaying ads from the worlds most sophisticated ad network, and SpiralFrog had more issues to contend with than just ad-revenue, but it does make you think about the future of businesses that rely on ad revenue to survive. It seems that we have those that charge for their offering"Amazon downloads, iTunes, etc"and those that are still burning through VC cash because they have yet to decide on a revenue model.

Theres not much in between. Its hard to find a company that provides music or videos and is actually raking in the cash from their ad revenue. Know of any?

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About the Author:
Andy Beal is an internet marketing consultant and considered one of the world's most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.


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