Digital biz on upward spiral

SpiralFrog to offer ad-supported downloads

The booming digital music biz shows no signs of slowing down, as new player SpiralFrog is laying the groundwork to enter the market, while AOL relaunched on Tuesday the MusicNow service it acquired last year.

SpiralFrog has signed its first label, Universal, for an ad-supported service set to launch in December.

In return for watching ads at least once a month while they browse and download songs, users can download songs to their PC or portable device for free but not burn them onto CDs.

Company is betting that a captive aud of young music enthusiasts will prove valuable enough to advertisers to cover licensing fees it will pay to labels.

Musicstore Napster already offers free streaming music along with ads, but SpiralFrog is looking to be the first to offer ad-supported downloads.

In addition, AOL is making its first major push into digital music with its relaunch of MusicNow, the musicstore it bought from Circuit City in November.

Like Napster, Rhapsody and other subscription services, MusicNow offers unlimited songs for $9.95 per month, or unlimited downloads to a portable device for $14.95 per month, along with permanent downloads of songs for 99¢ per track.

Netco is hoping to differentiate MusicNow by offering musicvideos as part of the subscription package, though it currently has vids from only one of the four majors, Sony BMG.

Subscribers can also access several XM Satellite Radio stations.

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