Ad-Supported "Free" Music Plays On: SpiralFrog, Imeem, QTrax

[qi:005] As Apple (APPL) and Amazon (AMZN) duke it out in the MP3 price war, music publishers are still trying to figure out how to cash in on a crowd that will go to great lengths to get its music for free.

Imeem, a San Francisco-based music discovery startup, said it has signed a content agreement with Sony BMG Music Entertainment that gives users access to the Sony(SNE)-Bertelsmann joint venture’s digital catalog of music and video for ad-supported, “free” streaming of these files.

The company, which competes with Project Playlist, makes a customizable music playlist that can be embedded into MySpace and Facebook profiles. This is its second deal with a major label; it inked a similar partnership with Warner Music Group (WMG) earlier this summer.

SpiralFrog, which has a partnership with Vivendi’s (V) Universal Music Group, also offers free music downloads, but of course there’s a catch (actually there’s about 20 catches).

Launched earlier this month after lengthy delays, SpiralFrog makes money through site ads, and then splits these profits with the music publisher.

The good: Users have access to over 800,000 MP3s from popular and lesser-known artists available for free download.

The bad: To keep these files playable, the user needs to sign in to the site once every 30 days. Downloading takes about 90 seconds per song, and SpiralFrog forces users to download songs one at a time so the user stays on the site awhile and has time to view all of those lovely ads.

The really bad: While SpiralFrog supports portable players, it doesn’t support iTunes (or Macs at all, for that matter) at this time.

Meanwhile, LTDnetwork’s legal peer-to-peer (P2P) service QTrax, which has yet to launch, has already signed deals with Universal, Sony/ATV, Warner Music Group, The Orchard, EMI Music Publishing and EMI Music, TVT Records, Go Digital, ASCAP and BMI. They plan to make money through advertising in a P2P client that helps users find legal content.

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