Guvera, a place for advertisers to give away music
After SpiralFrog's collapse and Qtrax's repeated misfires, I'm skeptical about any online music service that says it will give away advertiser-supported downloads. But Guvera, an Australian start-up launched by former advertising executive Claes Loberg, is different enough to make me think it might actually work.
Admittedly, I also liked Uplister, Echo and dozens of other ill-fated online music services. But Guvera, which is expected to announce a licensing deal this morning with Universal Music Group, has at least one thing going for it that SpiralFrog didn't and Qtrax has yet to demonstrate: a model that's friendly not just to consumers, but also to advertisers.
Guvera isn't due to launch in the U.S. until early next year, and its website offers little more than a vague outline of how the service will function. Loberg described it in an interview Tuesday as a tool that matches advertisers with the consumers most receptive to their messages. When users register, they're asked for the usual personal details (location, age, gender), as well as for insights about their tastes (their favorite music, movies, sports, holidays, countries, that sort of thing). They then enter the name of a band, song or genre to search for, and Guvera returns a list of advertiser-sponsored channels that provide the matching tracks. Once they pick a channel, they can stream or download other music paid for by that brand.
Advertisers can sponsor multiple channels, each with a set of tracks chosen to appeal to a different target audience -- for example, women ages 24 to 40 who like outdoor sports and comedies, or men in California who love fast food, computers and video games. Every time a song is streamed or downloaded from their channel, advertisers pay a fee that Guvera shares with the copyright holders. The amount of music played in a channel is limited by the amount the advertiser wants to spend per visitor.
The idea, Loberg said, is to replace the usual approach to advertising -- bombarding people with disruptive commercial pitches -- with a sponsorship model that encourages people to associate a brand with a type of music they like. "The brand becomes like a cool new tool or a way of discovering new content," he said. For example, if a visitor searches for a few tracks and finds they're sponsored by Levi's, the next time he uses Guvera he might skip the search and go straight to the Levi's channel to see what's new there. "They'll think of [that] brand when they're thinking of that type of content."
The matchmaking works in both directions. Guvera's algorhythms also help advertisers identify the songs they should sponsor in order to reach the audience they're targeting. Companies can also use Guvera to reward prized shoppers with extra music, concert tickets and other items.
The benefit for consumers is simple: free music. And unlike SpiralFrog's free tracks, Guvera's downloads are MP3s, untainted by DRM. And for advertisers, Guvera promises a way to connect with consumers who have become adept at skipping or tuning out commercials. "The whole model of ... trying to stick your ad somewhere and hoping someone will notice doesn't make any sense," Loberg said.
The major record companies have long been wary of services that gave away MP3s, fearing that it reduced the perceived value of music. But David Ring, executive vice president of business development & business affairs at Universal Music Group's eLabs, said the hope is that Guvera will attract people who simply won't pay for music online, rather than the ones who are happy to buy songs from iTunes or Amazon. "What I think is incumbent on us in the new world that we're living in is to make sure we try to segment the market," and have something to offer the segment that's getting its music free -- and illegally -- online, Ring said.
But given the track record of advertiser-supported download sites, why would Universal bother with another one? Ring said Universal doesn't try to judge whether a service will succeed, just whether its business plan is reasonable and capable of generating enough money to keep everyone in the value chain happy. "We want to err on the side of empowering new services to go out there and find various market segments to try to serve," he said.
Besides, he added, Guvera "found an innovative and new way of connecting brands with consumers." And there is evidence that consumers are much more receptive to ads when they have a say over what's pitched to them. The ultimate question for Guvera, though, is whether the audience it's trying to reach will find the sponsored free collections more compelling or convenient than the many other sources of free music online. That's assuming they find Guvera at all.
Loberg said the company has deals signed with one other major record company and a large independent label (both of which he declined to name), and that it planned to have all four majors signed by the time it launches in the U.S. Even if it accomplishes that feat, it will take time for Guvera to build up a library as broad as its more established competitors in the free-music market, including MySpace Music, iMeem and Lala.
The landscape is littered with failed online music services, and the recession has been tough on advertiser-supported businesses of all stripes. Yet Loberg is so confident about Guvera's chances -- and its backers, who Loberg said have put $10 million into the firm -- he's already in discussions with television and film studios to do the same thing with their content as he plans to do with music. The reality check starts Dec. 15, when Guvera's music service is scheduled to launch in Australia. It's expected to make its U.S. debut, Loberg said, at the end of January or in early February.
-- Jon Healey