SprialFrog, the big music industry's experiment with free music downloads, is bleeding money and considering hiring bloggers to improve their public profile. According to financial filings required by the company's investors and dug up by Joseph Weisenthal at PaidContent, the company reported a Q3 loss of $3.4 million on revenue of only $20,400, leaving only $2.3 million in the company's bank account.
That's a whole lot of money to throw away but it shouldn't come as any surprise. The SpiralFrog model is awful. Users get free downloads of DRM laden songs that they can listen to in Windows Media Player, but they have to periodically answer survey questions and view ads in order to for the songs to continue playing. The site itself looks like one big ad with music appended to it. While some music execs have publicly changed their tune and said "going to war" with users was a bad idea - SpiralFrog's crazy plan is probably just a distasteful waste of money. The next step will be to annoy people with a marketing blitz.
For a totally different take on free music downloads as an ad supported business, see our coverage of Peter Rojas's startup RCRD LBL. RCRD LBL is hardly a dream come true, either, but it sure leaves SpiralFrog in the dust.
Wiesenthal quotes the company's report in the following response to the dismal numbers.
"Execute marketing campaign in the United States aimed at 13-34 year olds, through one or more of the following approaches: hire gorilla marketing firms for unconventional promotions; consumer targeted press releases; advertising on some of the youth community sites; or hiring 'bloggers' to attract attention to us on the internet."
Here's one blogger, SpiralFrog, that will help attract attention to you any time there's a juicy story.