Universal challenges Apple with free music downloads

Stan Beer
Wednesday, 30 August 2006 07:04

Your IT - Home IT

The largest music company in the world, Universal Music, has issued a mind boggling challenge to the Apple dominated online music market by making its huge catalogue of music and videos available for free advertising-supported download. Microsoft will benefit because downloads will be compatible with Windows DRM supported MP3 players but not iPod.

Under a two-year agreement, US music website SpiralFrog.com will enable visitors to download music for free from the Uiversal stable, which includes artists such as U2 and Gwen Stefani, with both companies sharing the advertising revenue generated by traffic.

In order to download tracks, users will simply have to register at the site. However, the initial launch in December will only make the service available in North America. A service will be made available in Europe at the beginning of 2007, while it is not clear when other markets, such as Asia, Japan and Australia will have access to the free music.
 
A downside to the service is that, unlike Apple iTunes, tracks will not be transferrable to CD. However, as the MP3 player market starts to take hold, the CD as a medium for music is being tipped by many as a technology in decline.

SpiralFrog is reportedly in talks with other major music companies to negotiate similar bilateral agreements.

While SpiralFrog maintains that there is widespread support among the music recording industry for the ad-supported free download model, it is not yet known how artists themselves feel about the arrangement with Universal.

Advertising supported music downloads would appear to change the metrics of how artists get paid for their work. With the pay for each track model on iTunes, the payment of artists is directly related to how many downloads are sold through the site and the process is transparent. How artists will share in advertising revenue based on popularity, however, is less clear.

If the free downloads model is successful, however, it will pose the biggest challenge to Apple's dominance of the online music industry, where it holds about 75% market share with iTunes and iPod symbiotic model of downloading DRM protected tracks for US$0.99.