More grim news from SpiralFrog, the cash-burning machine that’s supposed to offer consumers free, ad-supported music. The company’s newest filings show that it’s lost another $3.3 million in the last quarter; it went through $12 million in the preceeding 2.5 years. The company has stayed afloat so far via debt financing, but that won’t last long — it’s still looking to raise another $25 million. Anyone?
But though SpiralFrog’s music offering is of little use to consumers (because the company doesn’t have the cooperation of most music labels, because its music is tethered to the PC, and because it won’t work on Apple’s (AAPL) iTunes/iPods); the company is providing a useful service to would-be investors in the digital music business.
That’s because SpiralFrog’s SEC filings help explain why it’s so expensive to run even a non-working music service. At least part of the problem stems from the onerous licence fees the major labels charge. While SpiralFrog has only signed 5 major deals to date (and still hasn’t signed on three of the four major music labels), it’s already generated $7 million in deferred fees — and generated all of $20k in revenue last quarter. Brutal details are available here.
Related: SAI’s SpiralFrog Coverage
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