January 25, 2007 / 12:02 AM / in 12 years

UPDATE 1-SpiralFrog says to launch in early '07 despite CEO exit

(Adds details from company chairman)

By Yinka Adegoke

NEW YORK, Jan 24 (Reuters) - SpiralFrog said on Wednesday it plans to launch its free music download service in early 2007 even as the start-up company reshuffles management following the departure of its CEO.

The company made a splash in the media last summer when it announced a licensing deal with the world’s largest record company, Universal Music Group — seen as the first step to getting other record companies to back the new music service.

But a source familiar with the situation told Reuters earlier on Wednesday that New York-based SpiralFrog has since parted ways with its chief executive, Robin Kent, after missing a target to launch the service to the public in December.

SpiralFrog Chairman and Founder Joe Mohen confirmed Kent’s departure, and said the company is reshuffling its management team and board. He said they would confirm the new names over the coming weeks.

Mohen said Kent, a former chief executive with media advertising agency Universal McCann Worldwide, had made significant contributions to SpiralFrog, but the company now needs a CEO with core competencies in selling media to advertisers, in a manner not unlike the television industry.

“Our business is evolving more like a television station than a Web site,” Mohen told Reuters. “So we need to have executive and board talent that understands how to run a medium both from the programming side and from the advertising sales side.”

Kent could not be reached for comment.

SpiralFrog’s business model hinges on offering songs for free as long as users agree to watch advertisements while their music is downloaded.

The start-up had drawn more attention than other nascent music download services because of its backers. Besides Kent, other board members were long-time players in the music industry including Jay Berman, a former head of the International Federation for Phonographic Industries.

Jordan Levin, a former chief executive of the WB Network, is one of the first new appointments to the board, Mohen said. Levin, who helped launch TV shows including “Gilmore Girls”, “Buffy the Vampire Slayer” and “Smallville”, is expected to help advise the company on developing the site for young adults.

Mohen denied a report in the Times of London on Tuesday that a lack of deals with other major record labels, as well as a shortage of cash, may have been reasons why Kent left.

The chairman said SpiralFrog has “millions of dollars” of big brand advertising, aimed at consumers under 30 years old, in the pipeline.

SpiralFrog said in August it had secured more than $10 million worth of funding. A source close to Universal told Reuters that SpiralFrog paid upfront for the licensing deal. It had also signed a licensing deal with the publishing arm of EMI Group EMI.L and a few small independent music companies.

That still left a large share of recorded music and publishing companies, including EMI Music, Warner Music Group WMG.N and Sony BMG, that had yet to license music for the service.

“We raise money from time to time as a matter of routine for specific reasons such as if we want to acquire a catalog,” said Mohen. “We will continue to do that till we’re profitable later in the year.”

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