Now we know why Peter Gabriel skipped out on that Genesis reunion tour--other than perhaps his lack of interest.

The legendary singer has been busy readying his latest business venture, which he unveiled this week. We7 is an ad-supported digital music service that offers a slight tweak on the other much-hyped ad-based services that have failed to get off the ground over the past year.

We7, which plans to launch in July, plans to offer users free downloads that are MP3-encoded and unencumbered by DRM, meaning that there won't be restrictions placed on how many times someone can listen to a song or a prohibition against burning songs to a CD or transferring them to an MP3 player.

Instead, the songs will have 10-second advertisements "grafted" onto them. Once a user listens to the songs, and accompanying ad, between three and five times, the user will gain access to a download of the song without a commercial.

That stands in contrast to SpiralFrog and Qtrax, two ad-supported services that have struggled to capitalize on the early hype surrounding their promise of free music for users who watch advertisements.

Those services attach DRM to the music in their catalogs, and amount to more of an unlimited rental services in exchange for ad viewing as opposed to ad-supported downloads.

"We7 provides artists--even across the more experimental or minority genres--with the opportunity to build a new source of income from their music," Gabriel said in a statement. "Ad funded downloads are the way to provide free music to the consumer without depriving musicians of their livelihood."

The ads on We7 tracks will be demographically targeted on age, location, and gender, but the option will be there for fans to pay for tunes sans-sponsorship from the get-go if they want; the rep said that 320Kbps was under review for these customers.

Gabriel has teamed with entrepreneur Steve Purdham and financial expert John Taysom on the project. Gabriel previously launched and funded OD2/Loudeye, the download infrastructure firm that was sold to Nokia last year for $60 million.