Universal Music is putting its money on free, legal music downloads with the launch of SpiralFrog, an ad-supported service due to hit the U.S. and Canada in December. Universal is making its entire catalogue available for the service, and will split revenues from contextual advertising with SpiralFrog. Perceived by some as an iTunes rival, the site targets users between the ages of 13 and 34 who don’t mind what CEO Robin Kent calls non-intrusive, contextually relevant advertising. Kent: “This is the core audience we will attract by building a music-centric experience and destination that is second to none, legally delivering what the majority of users want—content they pay for only with their time. It’s content that advertisers are willing to pay for on their behalf.” Release.
Times Online: Senior Informa analyst Simon Dyson said the service might be more of a rival for Microsoft’s Zune than for iTunes: “Microsoft might be more worried. They’re launching their rival digital music player and store and the last thing they want is someone saying ‘come here and get it free’.”
Reuters: An unnamed source said SpiralFrog has paid Universal upfront for its music rights, but wouldn’t expand on figures.  Both EMI and Warner have had negotiations with SpiralFrog. Gartner analyst Mike McGuire said SpiralFrog’s challenge will be generating enough ad revenue to drive sales volume: “And as we know in online music, if you don’t have all four of the majors plus a significant number of independents then you don’t have a thriving store.”
Red Herring: Ovum analyst Michele Mackenzie predicts the introduction of a paid-for premium service: “In our view the key value of the advertising model lies in using it to transition users to paid-for services. This may be introduced later.”
Related: Music Firms Form Collective For Tracking Online Sales And Rights