Ad-backed Music Services

Lisa Namerow, the general manager of AOL Radio, tells me:

“The royalties have gone up significantly. We had to reevaluate our business. We needed to partner in order to monetize radio better. We have grown advertising year-t0-year 100 percent, but with the increasing cost of royalties, we need to do a better job by leveraging local markets and advertisers. CBS has a string foothold in that local sales market, with over 140 sales teams.”

That statement is an eye-opener for any music service hoping to make money from advertising. If AOL Radio, with three million unique listeners per month (according to Namerow), is having a hard time, how are smaller ad-supported music startups supposed to survive? And affiliate links are not going to cut it. Every song on AOL Radio has a link to iTunes or Amazon, yet Namerow cautions that “those commerce links are a very minor revenue source.”

From Techcrunch