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Rebuttal: The Future Of Ad Supported Music

WWW MUSIC & ADS (Hypebot) — We posted a guest commentary by Bill Houghton which concluded that ad-supported music is not scalable. Marc Cohen who blogs at Ad Supported Music Central disagrees and we invited him to share his thoughts.

The logic of Bill’s analysis is inherently sound. However, it proceeds from flawed fundamental assumptions that render his conclusion meaningless.

The first incorrect assumption is that the success of ad-supported music should be measured by whether it can “fully subsidize music”. No one who advocates ad-supported music believes that it will, or should, be the revenue strategy for all recorded music.

The new world of recorded music is one where the hegemony of the CD is gone. In its place will be many ways to obtain and pay for recorded music. Ad-supported music will be only one of those forms – albeit a significant one.

Bill Houghton’s second assumption error is the fatal one and illustrates the blinders that most…

…observers of ad-supported music wear. This assumption is that ad-supported music is an Internet application and so will share on-line ad inventory, valuation and revenue.

Ad-supported downloaded music is not an Internet application – it is a new and distinct medium. Successful implementations of ad-supported downloaded music will dynamically integrate ads into the audio stream of music played from device memory. The Internet is merely the channel for getting the music and ads into memory.

In this way, ad-supported downloaded music monetizes the time spent listening to recorded music. This approach opens up a mother lode of untapped ad inventory – tens of billions of hours in the United States alone. This inventory, and how it is valued, has as much to do with Internet advertising as outdoor has to do with direct mail.

Ad-supported downloaded music is not only scalable, but by monetizing the huge, and growing, amount of time spent listening to recorded music this new medium could propel recorded music revenue to new heights.