Spiral Frog Shuts Down, a Blow to Free Digital Music

Pioneering online ad-supported digital music service, Spiral Frog, fails to make its debt payments and goes under. The company's demise is a blow to the free music download model.

Spiral Frog is no more. The questionable business model fell victim to a bad economy and the knock-on effects the bad economy has had among businesses that rely on advertising revenue. The promise that Spiral Frog inspired in its August 2006 debut generated a significant buzz around the company. The music industry was keen on stopping consumers from downloading songs for free on file-sharing sites, and the Spiral Frog model offered a seemingly sound compromising alternative: the site would reach out to advertisers to underwrite the download fees - and that revenue would be passed on to the music industry. It was an interesting premise, but one that did not prove to live on. According to the report in CNET News, Spiral Frog's "operations and assets have been surrendered to creditors. To keep operations going last year, the company issued secured notes in order to borrow at least $9 million from several hedge funds and others." CNET notes that the demise of Spiral Frog is the second this year among ad-supported music download properties. Ruckus also ceased operations earlier in the year. "In SpiralFrog's situation, the company couldn't overcome 'a macro-economic perfect storm,'" CNET reported, citing a close company source. "The sagging global economy, combined with 'the collapse of the capital markets' and 'rapid compression of the ad markets,' led to the company's demise," the source told CNET. There were questions before on the viability of Spiral Frog, as the service was not fully embraced by music enthusiasts. But as these businesses go under, the free music download platform goes with it.