Following this week’s Qtrax fiasco, ad-supported music download services are very much in the spotlight. UK-based We7, backed by Peter Gabriel, is one such offering, enabling users to download free MP3s that have a short (and targeted) audio advert embedded at the start of each track. The ads then auto-expire after four weeks of listening, allowing users to re-download the same tracks ad-free.

Earlier today I caught up with We7 CEO Steve Purdham (over IM) to find out more about the company’s mission, and to discuss issues such as DRM, resistance by the major labels, new business models and more.

What is the problem that We7 is trying to solve? Tell us a bit about your model and why you started the company.

The problem is simple: if music is free who pays the artist? Our model tries to create a relationship between fan, band and advertiser. Fans gets free music, advertiser gets listened to, and bands (and We7) get paid.

[I] got involved when I met the original founders John Taysom and Gareth Reakes, initially just as an investor but the idea is irrationally seductive so I also decided to run and build the business as well as invest.

Watching the Qtrax PR fiasco unfold over the last few days (“we have all four majors on board, err, no we don’t”, “we’ve launched, err, no we haven’t”) provided a great lesson in what not to do when launching a new product i.e. lie to reporters. However, a ton of questions remain unanswered, not least of which being: is a free and legal music download service on the scale of Qtrax too good to be true?

But first, a recap of what Qtrax claims to be offering.