Music revolution as firm allows free downloads

Universal Music, the world's largest music company, has shaken up the record industry by announcing that it will make its song catalogue available as free internet downloads.

Backed by Universal, Spiralfrog will become one of the first sites to offer free music legally. Fans will be able to download songs by the record company's roster of artists, including U2, Gwen Stefani and The Roots.

The service - which will be supported by advertising, unlike other legal download sites that charge for music - will launch in the US and Canada from December. It will become available in Europe in early 2007.

The move is expected to have a dramatic impact on the digital music industry.

A source in New York said Spiralfrog was also "in talks" with EMI, Song BMG and Warner Music to sign up more labels.

The revenue for providing free music to customers will be gained by placing advertising on the site, although questions still remain over how the artists featured on Spiralfrog will be paid.

Its launch has been viewed by some as throwing down the gauntlet to the current market leader, Apple's iTunes service, which charges 79p per song. Downloads from Spiralfrog will not be compatible with iTunes service and iPods.

Spiralfrog's chief executive, Robin Kent, said the idea was partly motivated by the desire to provide a "legal alternative" to pirate music sites. "Offering young consumers an easy-to-use alternative to pirated music sites will be compelling," he said.

He added that the service would also be "compelling" for record labels.

"Offering legally-authorised audio and video downloads in an advertising-supported environment works, as our business model is based on sharing our income streams from that advertising with our content partners like Universal," he said.

Mr Kent said market research had revealed that the site's target customers - aged between 13 and 34 - would be willing to endure adverts of brands and products in return for free music.

But Gennaro Castaldo, the spokesman for HMV, said while Universal's support of Spiralfrog had to be seen positively in terms of enriching the digital industry, it might confuse customers.

"We would broadly welcome any new service to the market because it has the effect of helping to expand it and demonstrates to customers that there is a life outside of the 'Apple garden'. The more people realise there are lots of different services and more MP3 players than just iPods the more it increases the market.

"What is a little concerning is that for a long time now, the trade body, BPI, has been anxious to put across an anti-illegal or piracy message, which suggests that music is of intrinsic value and people should be prepared to pay for it, so this may give a conflicting, mixed signal."

In June EMI licensed its catalogue to the Qtrax site, which provides free access to digital music files, as well as the option to subscribe to a premium version of the service for a monthly fee. The company said it hoped the two-tiered business model would attract "a broad base of consumers to try out the service, and then graduate those consumers to purchase music permanently or subscribe".

When Napster and iTunes led the launch of legal music downloads in 2004, there were around 14,000 download sales per week in the UK. There are now over one million downloads a week.

Additional reporting by Dan Montalbano