Apple's iTunes Music Store got another competitor today, and this time it comes attached to the one thing that could give the vaunted digital download store a run for its money: free music.

SpiralFrog, a New York City-based company, said today that it struck a deal with Universal Music Group, the world's largest record company, to include Universal's catalog in its music download service, which will launch as a beta in December. Universal's label roster includes U2, the Killers, Mary J. Blige, Kanye West, and Keane.

SpiralFrog plans to launch as fully advertising-supported, meaning that it will offer free, legal downloads--with some strings attached--with advertising revenue paying the cost of the download. The songs would contain Microsoft's PlaysForSure digital rights management (DRM) technology, which applies usage restrictions to downloaded tracks and means the music won't play in iPods, which are not compatible with PlaysForSure.

Users would be able to download music and videos for free and could be transferred to one portable device but not onto a CD. Users would have to visit the site once a month to view the advertising in order to continue to use previously downloaded songs.

How much advertising there will be remains the big question, but the main goal of the service will be to compete with free by luring the millions of people who download music using illegal peer-to-peer (P2P) services.

"Offering young consumers an easy-to-use alternative to pirated music sites will be compelling," Robin Kent, SpiralFrog's chief executive, said in a statement. "SpiralFrog will offer those consumers a better experience and environment than they can get from any pirate site."

Competing with free hasn't been easy. In May 2006, the number of P2P users worldwide that were simultaneously logged on at any given moment was more than 9.7 million, up from 8.7 million in May 2005, according to P2P research firm Big Champagne. And according to the IFPI, the music industry global advocacy organization, for every song bought legally from the Internet, 40 are downloaded illegally.

But Kent, a former advertising executive, is convinced that an advertising-based business model will work. He said that clothing company Perry Ellis has already signed on as an advertisier, and that Levi's, Aeropostale, Benetton, and others have expressed interest.

Kent said that users--the service targets males and females ages 13-34--will tolerate ads that are customized to them. Kent must also convince the other three major labels--EMI, Sony BMG, and Warner Music Group--to sign on as well to avoid launching the service without a full catalog of content.

SpiralFrog is not the first digital download service looking to use advertising as a revenue stream, nor the only one hoping to offer free music with ads footing the bill. Napster launched a Web-based, ad-supported service earlier this year that allowed users to listen to songs up to five times for free, while Qtrax, a former illegal P2P looking to go legit, said last month that it would launch as an ad-supported service later this year.