Is free ad supported music the future of online music?

The Wall St Journal has an article this morning saying that Google will launch an ad-supported music service in China.  This is in part a response to Baidu’s lead in the Chinese market (where a large share of the searches are for music on the web) but could also be a harbinger of things to come in other geographic markets.  If this indeed has been blessed by the majors it is an interesting step for the music industry.  In some ways, the nature of the Chinese market may have forced them into this.  Note that the majors are also suing Baidu so the timing is a little strange here. 

However, the tracks that Google (together with Top100.cn) will be providing will be watermarked to allow download tracking although it’s not clear how this will work exactly.  Somewhere in the download chain something/someone will have to inspect the files for the watermark for this to work.  This therefore implies that whoever is providing the pipes will be inspecting all the content which seems like a serious problem.  As I mentioned before the music industry is already pushing for ISPs to snoop on internet users and this is most likely already going in China where the internet is not really open.  So while the business model here is interesting, I don’t much like what is going on behind the scenes:  Google (“do no evil”) and music labels using the fact that the Chinese government (“not open”) already is snooping on internet connections to further their own economic good.  Of course Google has already agreed to censor their searches in China so I suppose this move should not be a surprise.

I think Google and the majors could have been more innovative because the ad-supported music sales angle has legs.  But I don’t think it requires intervention by the government and ISPs of the world to work.  Perhaps I have this wrong but it does smell funny.  And lastly we should all work to prevent ISPs and our governments from routine 24/7 monitoring of our internet connections.  This is just plain wrong.  Additionally, when (not if because I think it will happen) someone comes up with a non-evil scheme for ad-supported music sales, it could potentially alter the internet music landscape in a big way.

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3 responses to “Is free ad supported music the future of online music?

  1. Stop ADdinng Music!

  2. The latest attempt at new music distribution is to give the music away free…. see SpiralFrog or QTrax. Unfortunately, this is completely unsustainable from a cost perspective. The digital ad industry is simply not big enough to support the digital music industry.

    Digital music market is now at $30 billion and rising (including illegal downloads). While digital advertising is only at $20 billion and slowing.

    There’s an excellent analysis at Brooding Savage blog.
    http://www.BroodingSavage.com/journal/2008/2/7/ad-supported-music-1.html

  3. Bill, I guess I used “ad-supported” euphemistically. What I really meant to say is music that is supported by other revenue sources. Bands/acts are really entertainment brands. One asset is the music but there are other revenue streams. I believe the fundamental structure of the music industry has to change eg bands have to connect more directly with their fans and this creates new opportunities for the bands to make money. I believe strongly that bands should be able to make a living from their work. But again the current structure is really set up to reward the mega hit bands. Hope this makes sense.

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