March 20, 2009 at 5:14 AM (PT)
SPIRALFROG, the pioneering ad-supported music service, quietly closed down on THURSDAY. SPIRALFROG's site went dark at about 4p PT. A source close to the company told CNET NEWS that SPIRALFROG has ceased operations and assets have been surrendered to creditors. To keep operations going last year, the company issued secured notes in order to borrow at least $9 million from several hedge funds and others.
NEW YORK-based SPIRALFROG made a splash in AUGUST 2006 by attempting to offer music free of charge to the public while supporting the site through ad sales. Media outlets such as THE NEW YORK TIMES, REUTERS, and USA TODAY questioned whether the site might one day challenge APPLE's ITUNES.
Some argued that SPIRALFROG's business model was the answer to illegal file sharing.
But the model has yet to be proven. SPIRALFROG is the second ad-supported service to shut down in 2009. RUCKUS, which catered to college students, also shuttered operations.