Free challenge to iTunes

Vivendi Universal has signed a deal to make its music catalogue available for a free download service. Vivendi is the world’s biggest music group and this new model could be the biggest challenge to Apple’s paid for iTunes services to date.

Under the agreement Universal’s songs will be available to a start up Spiralfrog, with the service launched in December. Spiralfrog will make its money by placing adverts on the site.

The challenge is how the revenue will be split by artist, and if the adverts can generate the required revenue to pay the expected fees. Secondly, details of the DRM approach are yet to be outlined. We suspect that this won’t simply be an advert on the download site, but some form of intrusive adverts injected into the songs themselves, either before or at the end of the song – similar to radio stations in the 50’s. Worse still, the DRM may require you to ‘charge up’ you viewing rights by subjecting yourself to adverts to release the DRM periodically.

If it’s simply a case of running an ad on the download site then its already been done and the ‘pay back’ is too low to pay the artists fees. Also, this kind of model would expose the company to too much competition – let’s not forget that both Apple, Google and MySpace already have millions of customers – and could do this in a few days, killing off any advantage Spiralfrog has.

Microsoft is preparing to enter the market itself, so Spiralfrog is in for a competitive time over the next few months, let’s hope they have deep pockets.