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Advertising - Friday, December 28, 2007

Ad-supported Musics SpiralFrog Lands $2M Reprieve

While NYC-based SpiralFrog competes with another ad-supported music startup iMeem, SpiralFrog has been watching iMeem take off from behind. Today SpiralFrog announced that it had raised $2M in debt funding.

Most of SpiralFrog's content at launch is from Vivendi's Universal Music Group. The service boasts more than $1M songs and videos.

For example, PCWorld said this of SpiralFrog: "My biggest beef with SpiralFrog is that the service delivered far more error messages than music tracks to me. If the service worked as advertised I might recommend it and use it. When SpiralFrog did work the way it was supposed to (for about 10 minutes) I liked it. But sadly the service performed unreliably."

That said, at least SpiralFrog does not saddle users with spyware and adware.

SpiralFrog's greatest problems, however, have been with its investment group. To pay the record labels for licensing fees, SpiralFrog is burning through investor cash at a rapid clip. It lost another $3.3M in the last quarter (t earned just $20K in revenues during the quarter.) Moreover its burn rate was $12M in the preceding 2.5 years.

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