There may be some hope yet for ad-supported music downloads.
After an extended silence on the public relations front, Free All Music—a startup that dangles gratis song downloads to get consumers to sit through commercials—announced Tuesday closing $650,000 in “bridge financing” from private investors as it revives efforts to secure a long-anticipated series A round of funding. Habib Khoury, whose resume includes a stint as an executive at TheLadders.com, the job-search site for high-dollar execs, has replaced co-founder Rick Nailling as CEO.
The company launched in 2008 with investments from Nailling and co-founder and president Brian McCourt, and raised $990,000 in a late 2009 seed round, according to PaidContent. It was also gearing up for a series A round, GigaOm reported at the time. Both news outlets greeted Free All Music’s model with measured skepticism, comparing it to SpiralFrog, another ad-supported download service that had failed earlier that year, despite some $34 million in investments.
But Free All Music’s series A investment didn't materialize until now. That’s because the company was focused on shifting from a Web portal to Facebook, says Khoury, building out an app that trades users free downloads from Universal and EMI’s catalogs for social interactions with brand pages.
The startup is also quietly running campaigns with the likes of American Express and Budweiser to test the business model. In exchange for watching a beer ad, for example, users can own a tune of their choosing from artists including Kanye West, Katy Perry, and Coldplay. McCourt also emphasizes the app as a tool for marketers looking to keep users engaged beyond basic “likes”—and avoid falling out of the news feeds of fans who haven’t interacted with a brand’s page recently. That’s also an opportunity for advertising creatives, McCourt says, who might want to serialize content for viewing during consecutive weeks.
The small company (fewer than 15 employees) still faces questions of scale, though. When it comes to ad-supported music services, much-hyped streaming-based, rather than download-based, services like Spotify are attracting more attention—and money—from advertisers. And as AllThingsD’s Peter Kafka points out, the limited volume of Free All Music’s model—one song giveaways—puts it at a disadvantage.
Still, McCourt and Khoury are counting on the popularity of the download market (e.g., iTunes) as an indicator that they can get fans to spring for free tunes and advertisers to spring for fans. “We have our own money tied into this business,” said McCourt. “We feel like we’ve got what the marketplace demands: performance. The timing is definitely right for us now.”
If not, this may just be a swan song.