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Music Industry Ready To "Give Away" The Songs?

Illegal downloading outpaces legal downloading alternatives by 20-to-one. Record companies may have grown their digital music revenue by 40 percent over the past year, but that's so far from enough to keep up with the death of the CD business.

So guess what, the music industry is embracing the scary alternative and is now talking about giving away music free and legally. It's the big trend at this year's annual MIDEM music business conference in Cannes.

The big announcement coming out of the world music market: The launch of Qtrax, a legal, free downloading service. You can download songs for free as long as you watch commercials. Sounds similar to what sites like Spiral Frog offer. But Qtrax is distinguished by the fact that it's already done licensing deals with all the major record labels, giving it more than 25 million tracks, which is four times the size of Apple's iTunes library.

Advertisers including Ford,Samsung, and Burger King , are on board so far. But it's taken Qtrax a while to get up and running since it struck those licensing deals, so there are some questions about kinks in the system. The real issue will be whether the ad model works--will people actually watch the ads? Or will they tune out (no pun intended) while their song downloads?

CBS isalso pushing the free music through Last.fm. Last.fm has been CBS CEO Les Moonves' baby since CBS bought the London-based company for $280 million last summer. The site has basically been Internet radio until now. But it'll be a lot more like music on demand--you can listen to any of the site's 3.5 million songs on your computer, up to three times per song.

If you buy a monthly subscription you can listen to songs as many times as you want. It even benefits indi mucians as you can upload your songs to Last.fm and get a piece of the ad revenue. Here's the catch: You can't download the songs to a player like an iPod.

It definitely speaks to a trend. Pay-per-song a la iTunes seems like old news. The big trend is free, ad-supported music, and for full access, subscription models. I'll be really curious to check out the interface of these two systems--are they as quick and easy as iTunes? And I don't know about all those people who listento music at work, but I'm an iPod gal myself. The ability to listen anywhere will be key.

UPDATE:A correction.Though Qtrax claimed its service will be endorsed by the four biggest music labels--distributing music from all of them--three of the four big studios have denied signing any deal. So Qtrax's announcement of broad music industry support--which would have been unprecedented --doesn't seem to be true at all. Warner Music, EMI and Universal deny having licensing deals, and the fourth, Sony, isn't commenting.

I mentioned earlier in this post that it's taken a suspiciously long time for Qtrax to get up and running, raising questions about kinks in its system. But--full disclosure--I had no idea that Qtrax's announcement was false and was wrongly representing its relationship with the labels.

Still, free, ad-supported music does seem to be a growing trend, though certainly not as popular as free and illegal, pirated music.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.