SAI: The Labels Will Kill Ad-Supported Music

Silicon Alley Insider raises a good question—can ad-sponsored streaming music services ultimately survive?—investigates it, and then answers it: They can’t.

The problem is a basic mismatch—on the scale of an order of magnitude—between what advertisers are paying for the ads, and what the sites need to charge in order to compensate the labels properly. Here are some of the numbers, quoted from the report:

“The basic economics: A song lasts 3.5 minutes. The majors have been asking for a penny each time one gets played.

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