Record Labels Balk At Ad-Driven Downloads

    January 26, 2007

Earlier this week, Baidu announced a partnership with EMI to bring streaming music to Chinese users by implementing an advertising supported free digital music network. There are other companies eager to take this sort of approach, but the major record labels are reluctant to embrace such practices.

Of course, it’s the same record companies that subscribe to the ridiculous idea that DRM is the answer to the rampant piracy epidemic.

In response to this type of statement, label executives love to flash gaudy download figures from iTunes, claiming that the practice of downloading DRM laden tracks is catching on like wildfire.

What they will neglect to mention, however, is that the music market as a whole is losing ground, as revenues from digital music sites are failing to offset the consistent decline in CD sales. In 2006, total music revenues fell by nearly four percent according to IFPI estimates.

Another tidbit that conveniently gets swept under the carpet is that illegal file sharing accounts for up to 100 times as many downloads as those from iTunes.

This type of data supports the assertion that the record industry refuses to accept; DRM has absolutely no impact in discouraging digital music piracy.

There is a solution, however, should the greed infested fat cats at the major record labels choose to listen. Companies like SpiralFrog are looking to engage the consumer demand for free music by implementing an ad-supported framework, which provides a new outlet for monetization.

AP Business Writer Laurence Frost has more:

SpiralFrog and other embryonic ad-supported services promise a new approach to tackling piracy. Proponents see massive demand from peer-to-peer users who, they believe, would gladly put up with commercial messages in return for the peace of mind that legality brings.

If you can’t beat them, the theory goes, then at least make some money out of them.

I wonder how much money and manpower that the major record labels flush down the drain by pursuing ridiculous lawsuits and developing useless anti-piracy technology.

Perhaps if they had some vision, and stopped gouging their artists for every last nickel, music industry revenues might actually turn around.

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Joe is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.