Comments for

SpiralFrog Loses $3m in 3 months: Not "Getting It" is Getting Expensive

2007-11-20T18:09:48Z

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.

‚ÄúExecute 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 ‚Äòbloggers‚Äô to attract attention to us on the internet.‚Äù

Here's one blogger, SpiralFrog, that will help attract attention to you any time there's a juicy story.

Comment from Peter Cooper on 2007-11-20

2007-11-20T18:31:27Z

Before some nasty grammar nazi gives you a hard time for it.. double check the title of this post :)

Comment from Marshall Kirkpatrick on 2007-11-20

2007-11-20T18:36:52Z

Thanks Peter! Nothing to put a cloud over the morning like looking like an idiot! Much appreciated, hope you're well.

Comment from Elisabeth McLaury Lewin on 2007-11-20

2007-11-20T19:01:51Z

Well, gee, if they're going to hire "gorilla" marketers, I might take notice of SpiralFrog. Will they be getting actual gorillas, or just marketing hacks in furry suits?

And, wow, losing $3 million in three months? That's more zeroes than I can wrap my brain around today. Sheesh. Thanks for sharing this news - it certainly gives one pause.

Comment from Alfred Toh on 2007-11-20

2007-11-20T20:16:47Z

I'm really curious what they spent that $3M on? Music license ? Salaries ? Development cost? Marketing ? It will be good data to look at for startups to learn how to reduce their burn rate and NOT do it like them.

Comment from Jon on 2007-11-20

2007-11-21T02:10:48Z

RCRD LBL seems to be a pretty good site. I especially like the idea of music widgets embedded on my (or your) site. Definitely beats the warts out of the frog.
Thanks for the info! I'll pass it along (with references to you, of course.. ;)

Comment from andy carvin on 2007-11-21

2007-11-21T16:47:21Z

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 ‚Äòbloggers‚Äô to attract attention to us on the internet.

I love how "bloggers" is in quotes. That says it all.

Comment from personalized christmas cards on 2007-12-07

2007-12-07T12:42:18Z

Cool site. Thanks!!!