You’ve probably read about We7 — the advertising-supported free download music site. Some are calling it the way forward, others see it as grasping at straws. I thought I’d ask.

Recently, one of the bigger independent record labels, V2 Music signed a deal with We7 to release their music for free to consumers through the service, recouping through advertising revenue.

I’ve had some dealings in the past with Beth Appleton, the head of Digital and Business Development at V2. She introduced herself once as a reader of this site, and I’ve since come to know her as one of the smartest and most proactive managers at that end of the game — so I decided to ask her what the story was.

She kindly obliged with some answers.

We7 — isn’t that something to do with Peter Gabriel?

Yes, Peter Gabriel has teamed up with technology entrepreneur Steve Purdham and financial investor John Taysom to bring advertisers a new ad delivery mechanism.

How does it work?
We7 uses free music downloads as a vehicle to communicate personalised advertising messages, allowing brands to intimately connect with consumers on- and offline.

Why have you decided to put V2′s catalogue on We7?
We7 are driving a new business model for the music and the entertainment industry. V2 are constantly seeking to involve ourselves in new models and explore how music fans embrace these new ways of enjoying music.

Online environments, such as We7, where music fans can enjoy music when they want, where the experience to the music fan feels free and fun but critically labels and artists are being paid is an exciting legitimate alternative.

You’re trying quite a few different approaches to digital content distribution aren’t you?
The best way to find out what will work and what music fans want is to embrace, learn and involve ourselves with new platforms, technologies and business models. This is an approach which works for V2 and also we hope adds the edge to as a label when artists are looking for leading label to work with.

What’s having the best result for you?
Digital sales as a la carte downloads are very encouraging at present. Subscription models, which are still in very early stages are increasing in terms of people understanding and using platforms such as eMusic and Napster to access music.

The last 6 months has seen a rise in mobile sales and mobile revenue is now a significant part of our business which will only increase as the number of smartphones in the market increase and customer services via phones impove.

Are you one of the labels dissatisfied with eMusic’s payouts?
Not at all. eMusic is a significant player for V2 in the US market and the European service is still in early stages, we need to give services the time to gain critical audience.

Where do you think digital music distribution is heading? Pay-per-download? Subscription? Advertising-supported? Some other system?
I believe there will be a whole host of services, and business models all working in tandem. The consumer will decide which experience they want and when and this may change depending on the use/experience they are seeking.

Subscription services will extend to mobile with dual delivery and possibly will be paid for as part of another subscription eg. Sky, Mobile contract, BT.

Ad-Supported models will hopefully enable P2P to become a legitimate platform and will enable wonderful discover services such as Last.fm, Pandora etc. to operate in a licenced and commercial environment.

Does it vary depending on genre?
Slightly — in the sense that genre can be associated with demographic, and demographics have different associated factors such as disposable income, time in the home/on the move, use of hardware (phone versus digital music player), and involvement in social networking sites — which will influence where they enjoy music and how that experience is paid for.

What advice would you give to smaller labels struggling with the online environment?
Prioritise where you spend your time and effort building relationships. Know who your key partners are for commercial revenues and where the important areas are for building community.

In most cases for a small label it is best to go through a digital distributor as then you don’t have to spend time and resource putting contracts in place and getting involved in the technical delivery problems. You can then concentrate on the marketing and promotion building the necessary profile and involvement with the fanbase to build the excitement.

What does V2 know that the major labels don’t?
We understand how music fans like to enjoy music digitally and ensure that we make our music available in this way. We distribute our music as MP3s and subscription services as well as ad-funded models.

We embrace P2P and new business models. We are forward thinking and are keen to explore what technology can do (as an art) rather than what we need to do to restrict and control.

And — quick plug: who’s your Next Big Thing?
Blood Red Shoes

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So… what do you think? Is watching an ad to get a free track a sustainable model? Will audiences sit through ads in order to avoid paying actual money, or is this just one more reason to head for the illegal download sites? Your comments please.