Ok. Here we go gain. A couple marketing guys from Atlanta have announced their new ad-supported music download site. Free All Music. Co-founders Richard Nailing and Brian McCourt think their site will succeed because it’s monetized on a cost-per-action (CPA) vs. cost-per-impression (CPM) basis; users have to watch a 15-second online video ad for every DRM-free track they want to download. In other words, SpiralFrog but with MP3’s.
Now these people have years of experience, but not in the music business. They have invested $1.5 million of their own cash and have just closed on $990,000 of private seed capital. They claim to have closed a deal with one of the majors and are in final negotiations with three others. And they plan to launch a beta by December.
I won’t bore you with all of the reasons why they don’t have a prayer. But we all know that they don’t have anywhere near the amount of money that they’ll need and they certainly won’t get every label to immediately buy into the model, no matter what they’re claiming. They may think that they will, but we all know better. You have to show them the money—and big money to get uncontrolled MP3’s.
Not to mention that nobody will to sit through a commercial before they get a download, especially from a limited catalog. At least not enough people to make it worthwhile. Not when they can get it faster and free as well anywhere on the web.
And if they haven’t been getting calls from so-called consultants and entertainment attorneys offering to help them get licenses, they will soon. Fellas, save your money. You’re messing with your kids’ college fund. I’ve said it many times before—even under the best circumstances, with tons of money and even a big brand, the odds of making it in the digital music space are slim at best.
I’m sure that Brian and Rich are nice guys. Hats off for trying. Good luck to you and I’m actually rooting for you to make it. But I’ve been around the block a few times and have a little advice for you: don’t quit your day jobs.
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UPDATE FROM OUR RUBBER CHECK DEPARTMENT
And while we’re on the subject of failed ad-supported digital music models, if you’ll recall, we last heard from my hero, Allen “Honest Al” Kelpfish (also referred to by his acolytes as “AK”—don’t you just love that—it sounds so mogul-ly) in mid-August when CNet broke a story about the latest in a long string of lawsuits and judgments against Qtrax.
On August 17, “AK” was reached for comment by CNet reporter Greg Sandoval regarding a suit filed in NY State Supreme Court by Qtrax technology provider Millenium Information Technologies. (This story ran on the heels of Sandoval’s prior report of a lawsuit filed by database giant Oracle over a $1.8 million rubber check issued by “AK”). The CNet story read as follows:
As for Millennium, Klepfisz said there was more to the story than what was in the court documents.
“By and large, all our vendors have done an exceptional job,” Klepfisz said. “There are occasional exceptions. We feel we have a basis for this action (with Millennium).”
Klepfisz’s statement suggests that Qtrax was unhappy with the quality of service it received from Millennium. There were, however, no complaints from Klepfisz when he responded to Millennium’s demands for payment, documents show.
“Next wire I believe is Wed. I will confirm,” Klepfisz wrote Millennium representatives, who filed copies of the e-mails with the New York court. “I think by early July we can clear whatever is deemed to be outstanding.”
Klepfisz also wrote: “Sorry for the lateness. Will be in your account first thing in the morning. Another installment Tuesday. Thanks.”
One February 2008 payment that Qtrax sent Millennium for $26,250 “was returned, and not honored by the Defendant’s financial institution, citing ‘insufficient funds.'”
The very next day, Aug. 18, “AK” wrote the following in a deliciously paranoid blog post:
We have a somewhat dated lawsuit going on with a Company called Millenium. They provided services for our servers before our aborted launch at Midem. We paid them some. And frankly struggled doing it, at the time. I can’t say more than that most of our suppliers have been wonderful. There are sometimes, exceptions. The legal system can decide if this is one.
Well, “AK” was right. The legal system did decide and with no help from him. Not only did “AK” not bother making a case against Millenium’s claims in court, he didn’t even bother to show up! So last week the Court Clerk entered a default judgent to Millenium for $147,634.72 plus $15,977.75 in interest.
Good luck collecting, Millenium. I do have some very good advice for you though: if “AK” decides to settle, don’t take a check.
