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This is a guest post by Gerd Leonhard: Music & Media Futurist, author of “Music2.0“, co-author of “The Future of Music”, CEO of Sonific.com, speaker and advisor.

Last week I wrote a response to the now (in)famous Paul McGuinness speech at MIDEM in Cannes. In his otherwise quite misdirected talk, Paul briefly referred to the so-called ‘digital music flat rate’ (Ed. something we’ve been calling a “music tax”) and so I wanted to make sure I specifically address this topic in a separate guest post here at last100.

Paul’s MIDEM speech sadly reflects the current situation: a music industry still run by yesterday’s managers, executives and (mis)leaders that are still obsessed with control, more than with anything else. Many of them (with some notable exceptions) still can’t seem to face the fact that despite a long, hard struggle to desperately (re)gain some kind of control over what people do with their music, the industry has in a most spectacular fashion in fact totally lost control over the distribution of its product. And good riddance: this development is neither new nor does it need to be the cause of doom and gloom. Rather, the bizarre part is that the most popular and widespread uses of music are still not blessed with permission i.e. a LICENSE. 10 years after Napster and still no real progress – this amazing ineptitude of the music industry to actually adapt has now led to a ‘music is free, period’ attitude among the Digital Natives and the Net Generation.

The longer the likes of Paul McGuinness wait to accept the basic fact of control-loss, the less likely they are to survive this shift to a new ecosystem or maybe even prosper in a Music 2.0 world – and the less likely the artists and writers are to get paid anytime soon.

So why would the flat rate for digital music solve the rampant music sharing ‘problem’?

If, according to industry heavyweights such as Rick Rubin, music subscription services are the future, why is that Yahoo Music is closing down its subscription-based offering?

The AP reports that subscribers to Yahoo Music Unlimited are to be transfered to Real Networks and Viacom’s Rhapsody America service during the first half of this year. “Yahoo subscribers’ music library and payment plans will remain the same for a limited time after the switch, but those wishing to remain on Rhapsody eventually will be required to sign up at Rhapsody’s rates.”

The catch? Yahoo’s subscription rate was as low as $5.99 a month for users willing to pay for a full year in advance, compared with Rhapsody’s $12.99 a month.

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.

U2’s longtime manager Paul McGuinness, a man highly respected in the recording industry, got his speech today at Midem ass backwards.

He called for Internet service providers (ISPs), telecom companies, and hardware manufacturers to help in the fight against music piracy on the Web. That’s good.

But then he said, “I suggest we shift the focus of moral pressure away from the individual P2P file thief and on to the multibillion dollar industries that benefit from these countless tiny crimes.”

No matter what I think of Microsoft, Google, AOL, Yahoo, Comcast, Vodafone, Facebook, and Apple, it doesn’t seem to me that they are at fault for the recording industry’s woes. Yet McGuinness rubs their noses in it, saying “their snouts have been at our trough feeding for free for too long.” (Financial Times account.)

SeeqPod, the novel and handy playable music search engine, is being sued by Warner Music for violating the Digital Millennium Copyright Act (DMCA), only there’s a twist. SeeqPod isn’t necessarily doing anything wrong: It is not hosting any copyright infringing music.

With SeeqPod music fans can search the Web for artists they are interested in, turning up not only official recordings from bands but EPs, rare tracks, and music recorded by fans at concerts, with varying levels of quality. Users can browse the results, create a playlist, save it, share it, and listen to the tracks right in the browser.