It Has a Beat, But Can You Sell to It?
Music piracy doesn't appear to be going away any time soon, as visits to peer-to-peer (p-to-p) download sites doubled from March 2007 to March 2008, according to site analytics firm Compete. But other options for acquiring music online have become far more popular.
Compete's recent survey found that legal music download sites received nearly three times as many visitors in March as p-to-p sites, while free streaming music sites received more than eight times as much traffic.
And the market still is changing. Companies offer free music files that can be loaded onto portable music players; streaming sites are striving to differentiate themselves through personalization; and nearly all site operators want consumers to use them, not just as a means of acquiring music, but also as a source for new and undiscovered songs.
Best things in life are free
There's no such thing as a free lunch, or free download for that matter. Streaming music sites, which usually play songs through a program embedded in Web browsers, may give music away, but the providers still have to pay the licensing fees on the songs they play. In many cases, that means sites make their money by running advertising next to their music players.
Internet radio station Pandora.com, for instance, has a constant stream of visual ads surrounding its free tuner. What makes the ads unique, however, is tied directly to the hook of the site itself. Pandora's tuner takes a listener's favorite song or artist and generates a playlist of songs that are similar to the original song based on 400 different points of comparison, says Tim Westergren, founder and chief strategy officer of the Oakland, Calif.-based site. Listeners, who must register with age, gender, e-mail address and ZIP code after about 20 minutes of using the site for the first time, then can further customize their playlists -- or stations, as Westergren refers to them -- by giving each song a thumbs up or thumbs down.
The customization gives Westergren and his team a robust set of listener data, which is used to deliver targeted advertising in real time. While it's a no-brainer that Pandora shows ads for alcoholic beverages only to consumers who indicate they're 21 or older, Westergren notes that the company also can show an ad for the Academy of Country Music Awards specifically for users listening to country music.
"Many companies really are conscious of the audio brand for their product," Westergren says. "The folks at Toyota have a pretty good idea what music Prius customers are listening to, and we're able to deliver ads based on that information." For some campaigns, Pandora lets its advertisers create and brand stations that reflect the sound of their products.
SpiralFrog.com uses an advertising-based revenue model to offer completely free music downloads to its members. And while banner ads are the most prevalent form of advertising on SpiralFrog, the New York-based site also lets advertisers integrate ads within those advertisers' larger marketing campaigns. Matthew Stern, vice president of marketing and public relations at SpiralFrog, notes one such campaign: Credit card company Capital One paired a "What's in your mixlist?" feature on SpiralFrog with its "What's in your wallet?" campaign.
Discover and download
Inherent in Pandora's service is the discovery of new music similar to what listeners already know and love. But the discovery and acquisition of music hasn't always been linked. Sure, hard-core music junkies search the discount vinyl, cassette or CD bins at local record stores to find some undiscovered gem, but the average music listener likely hears something on the radio or reads a review before purchasing new tunes.
"It's stating the obvious that everybody is talking about the evolution of the music space and how people discover and purchase music," says Reid Genauer, vice president of consumer marketing at online music retailer eMusic. "And our ultimate goal is to have both of those events occur fluidly, simultaneously, in the one place." To that end, Genauer says that eMusic has built a multifaceted editorial approach to new music discovery.
Various content nodes update daily, weekly or monthly. It offers not just music reviews, but also blogs written by everyone on eMusic's staff, as well as such seasonal features as interviews with indie rockers' moms and lists of their favorite songs released by their kids' bands, and a riff on celebrity playlists called the eMusic Dozen -- 12 albums available on eMusic, with explainations of why the music is meaningful to the artist who authored the piece.
Pandora's Westergren says editorial provides another level of interaction with listeners. Pandora features blogs as well as audio and video podcasts. While the cost of video podcasting is slightly offset by the ads shown as part of the preroll, Westergren notes that the value of editorial is worth taking a loss. "We'll accept it not being profitable if we think it's really valuable content and people like it," he says.
An infectious beat
A relative newcomer to the online music business, SpiralFrog limited its customer acquisition marketing from its launch last September until about mid-May of this year. The site went from zero to more than 1 million members in that time, fueled through word of mouth, basic search engine marketing and a short-lived banner ad campaign, Stern says.
Its first major marketing push, a viral site called SpiralFrogClub.com, launched on May 19. The concept: an exclusive club playing free, downloadable tracks in 12 genres, with each genre represented by a dancer getting down in its own particular style. The user clicks on the dancer to see a 15-second animation, then is presented with the choice to proceed to the main site and download the playlist, or forward the dancer to a friend, either as is or with his or her own face superimposed on the animation.
Traffic to the club is generated by rich media banner ads, send-to-a-friend e-mails and an e-mail campaign to influencers identified by SpiralFrog's ad agency. At press time, SpiralFrog had sent about 20,000 e-mails to these influencers, with a 75 percent open rate, according to Stern. Previous e-mail campaigns to the site's member database with a concert sweepstakes garnered a 7 percent open rate. Banner ads to the viral site received double the clickthrough rate of SpiralFrog's previous foray into online display ads.
SpiralFrog chose a viral campaign because a demographic study showed its average member is 18 to 24 years old.
"We're convincing people that steal music -- who are typically in that college-age range -- that Spiralfrog is a better place to get music than the p-to-p networks because we're free, virus-free and legal," Stern says. "Introducing a guaranteed playlist that you can get for free is a quick and easy way of being introduced to those benefits, and we hope we've done that in a sustainable, viral way."
Matt Griffin is a Philadelphia-based freelance writer and former associate editor for eM+C sister publication Catalog Success. Reach Matt at email@example.com.