Music Industry: Internet Advertising Is Really, Really Hard

clickz_ukandeu.gifAt ContentNext’s EconMusic conference in London last week, music industry executives gathered to discuss the future of the music industry, as physical sales nosedive and P2P sharing becomes increasingly commonplace.

The Social Media session threw up the most interesting ad-related insights, with musician Billy Bragg among the panelists, alongside’s COO Spencer Hyman and Index Ventures’ Danny Rimer.

billy.jpgBragg’s gripe, predictably, was that musicians aren’t seeing enough, if any of the ad-revenue generated from sites such as MySpace, Bebo and “How much does MySpace make from advertising, $800 million? And how much do they pay for content?” he asked. “In order for [musicians] to make a living, the industry has to recognize that the old model doesn’t work anymore, and has to be restructured,” he continued.’s Hyman suggested that it was almost impossible to pay artist royalties through models such as’s, stating, “We’re happy to share the advertising revenue we get, but what we can’t do is to give more than we’re getting in.” He added, “Internet advertising is really, really hard.”

Intriguingly, Index Ventures’ Rimer suggested that it was up to the artists themselves to be shrewder, thinking of themselves more as brands and giving their music away entirely free, monetizing it instead through endorsements and advertising.

Steve Purdham, CEO of ad-supported platform We7 was also present on the panel. We7 came to market with the concept of placing pre-roll audio ads at the start of MP3 track downloads. However, the company has seemingly seen little interest from major labels and advertisers, as it has since leaned more towards the ad-supported streaming model à la

Despite signing a deal with EMI earlier this month, tracks will only be available on We7 through ad-funded audio streaming and paid-for MP3 downloads, rather than the ad-supported MP3 downloads it had originally based its revenue stream on.

It’s an interesting model, but it seems at this point that labels are still clinging to higher revenues from paid-for downloads. However, material from a number of independent labels is currently available on the We7 site.

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