BUSINESS 2.0:

Free music downloads, lawsuit not included

Peer-to-peer networks are going legit with pop-up ads embedded in MP3s. Business 2.0 Magazine reports.

By Michael Myser, Business 2.0 Magazine

(Business 2.0 Magazine) -- The next user to download a song from a peer-to-peer file-sharing service like LimeWire could be in for a surprise. Not a recording industry lawsuit, but a pop-up asking him to look at an ad--either text or video--in return for a free and legal copy of the music.

For that, the record labels, which have been trying to monetize illegally traded music for years, can thank a three-year-old company called Intent MediaWorks. Intent has figured out how to embed pop-ups in music and video files unobtrusively, and the company claims that 60 percent of users are willing to endure the resulting pop-up ads.

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Singer Avril Lavigne's publisher uses a service that lets fans download her songs for free in exchange for watching an ad.
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"Consumers don't want to rip people off," says Les Ottolenghi, president and co-founder of Atlanta-based Intent. "They just want to get music as easily as possible."

Intent is seeding the peer-to-peer networks at a rapid clip. In February its digital media files were downloaded 1.7 million times. By December it expects that number to grow to at least 10 million.

At a cost to the advertiser of $5.80 per 1,000 ad views for text and $30 or more for video, that's a healthy revenue stream. Intent shares the money with artists and their labels, which can also choose to serve up their own promotions within the pop-ups.

Intent's customers already include Nettwerk Music Group, which publishes Barenaked Ladies, Avril Lavigne, and Sarah McLachlan, and Chuck D's Slamjamz Records; the company also expects to sign at least one of the Big Four music firms by mid-2007. Advertisers thus far have included Audi and Coca-Cola (Charts, Fortune 500).

Since Intent follows users no matter what the latest popular file-sharing service is--FrostWire and Shareaza, anyone?--advertisers will pay to reach the eyeballs.

The peer-to-peer audience is made up of young, affluent, and technically savvy consumers, notes Mitchell Reichgut, a principal at ad firm Jun Group. "That's the kind of person you want to reach," he says. "If you do something on peer-to-peer and do it well, it's marketing on steroids."

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