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Ads and labels deal double blow to music sites
- 30/03/09 | Posted in category : News
By Joseph Menn in San Francisco and Tim Bradshaw in London of the Financial Times
Published: March 29 2009 18:54
Tumbling advertising revenues are laying waste to another wave of internet entrepreneurs as they struggle to satisfy promises of free music to users and cash flows to the labels that own the copyright.
Two popular services that allowed free listening, although not downloads, while providing a share of advertising money to record labels, have been forced to close down in recent weeks.
SpiralFrog shut down on March 19 after borrowing millions from private investors, while Ruckus, another free service aimed at college students, pulled the plug in early February.
Larger rivals are struggling too, raising questions about advertising-supported businesses and leading some to blame the record labels for demanding millions of dollars in advance royalties, investment stakes or both as hedges in case their split of the advertising revenue comes up short.
Michael Bebel, who ran Ruckus says: