The great success iTunes has been enjoying coupled with the music studios’ decision to renounce DRM has lead to the emergence of a new business model: online distribution of digital music.

Last.fm, SpiralFrog, Imeem and Qtrax are only a few of the companies that have launched websites over the past six months where music is provided for free, either to be listened to or to be downloaded.

The new business model is generally quite simple. The website wishing to become a distributor signs a series of contracts with music studios, agreeing to give back part of the publicity revenues. In return, they provide users with albums and tracks that they no longer have to pay for.

The approaches are different though. Imeem for example allows its users to save tracks on personal web pages. Last.fm allows users to listen to one song three times, after which they are invited to purchase the track from iTunes or Amazon MP3.

Qtrax and SpiralFrog give users the possibility to download songs, however these continue to be protected through DRM technology. For example, users will also have to visit the SpiralFrog website once a month to watch more ads. Otherwise, digital locks on the music will make it inaccessible.

Indeed, the tunes can be transferred on a digital player (obviously all except the iPod) but the users are allowed to copy the songs to no more than two portable music players or compatible mobile phones at a time.

SpiralFrog itself is mostly browser-based, but requires you to download a 'download manager' which is about 1MB in size. You are required to provide information about your age, gender and ZIP code, which will be used to determine what kind of ads you will see while browsing through the music catalog. In order to keep their users busy, SpiralFrog has included on its site lots of reviews and info on the artists.

Qtrax offers all the music available on the various P2P websites, but DRM-protected. The songs you download can only be played on a Qtrax ad-supported player. The player expands to fill the user’s screen, but don’t fret because you can still surf the web with a Mozilla-based browser inside of the player.

Qtrax may have rushed with its launch, as there are recent reports according to which there were still contracts to be signed. Other than Qtrax’s problems, which are probably just temporary, the practice of offering music for advertising seems to have caught on.

According to the INTENT MediaWorks-sponsored "P2P Usage Survey" conducted in May 2007, nearly three-quarters of US Internet users are willing to view ads in exchange for free or discounted downloads. The study was fielded by InfoSurv among Internet users ages 16 to 40, all of whom used multiple online services for searching, downloading and sharing music.

A few days ago, SpiralFrog announced in a press statement that the site has already hit one million unique monthly visitors and is expected to exceed 1.2 million uniques by the end of the month, according to Google Analytics.

The site is proving to have strong visitor engagement numbers with an average of about 10 minutes per visit and double-digit page views. SpiralFrog has also achieved a marked number of registered users with more than 400,000.

“We are thrilled to see the traction we are getting in the 13-34 demographic. SpiralFrog is at the forefront of ad-supported music, and our advertisers recognize the powerful attraction of music as a marketing vehicle to reach active and engaged users,” said Joe Mohen, founder and chairman of SpiralFrog.

On the other hand, this business model is advantageous for music companies as well, since they are currently pressured by the decline of CD sales to find new distribution models.

Should services such as Qtrax and SpiralFrog begin to gain some ground, we may just witness a spectacular decrease of piracy levels in digital music. What would be the point of taking a risk for something that is free anyway, even if with some small restrictions?