It’s make-or-break time for free ad-supported online music.
Now that such services as imeem and MySpace Music have secured the backing and investment of the major labels, they have to prove that free access to music can be a profitable business model.
imeem CEO Dalton Caldwell, one of the pioneers of ad-supported music, weighs in on the risks and opportunities involved.
Have things turned out the way you expected?
There are things that turned out better and things that turned out worse than I expected. Using standard Web-based ad models worked better than expected. There are other sites that do ad-supported music that have nonstandard Web ad units-those are much more difficult to sell. Taking the path of least resistance was surprisingly successful. As far as the downside, running an advertising business is a lot harder than people give credit for. You can’t just say you’re going to do ads and in two months have a business. It took a lot longer and it took a lot more skill to build an ad business than I ever would have thought.
Is there any deal point that ad-supported services should watch for when negotiating with record labels?
Both parties need to understand you need time to make it all happen. You can’t just do it overnight. From the music perspective, it’s not like us Internet guys can just turn on this spigot of cash and immediately have an ad-supported business. Patience is necessary.
As more ad-supported services go live with access to the same music as imeem, doesn’t that drive down advertising costs based on simple supply and demand?
Click here for the full article which includes Caldwell’s thoughts on striking a balance between music and advertising, imeem’s outlook for the next year and more.