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Downtown Records has teamed up with technology entrepreneur Peter Rojas to form a new company called Rcrd Lbl, which plans to give music away for free - and without DRM - supporting its business model entirely via advertising.

In a move that will be keenly watched by the entire music industry, Rcrd Lbl (pronounced 'record label') has arranged contracts to offer free downloads of songs by some 40 to 50 artists, including Cold War Kids and Mos Def, two of Downtown's biggest hitters. It's perhaps telling, however, that label's biggest hitter of all, digital download darlings Gnarls Barkley, will not be involved.

Functioning as a sort of blog-cum-record label, the venture will post tracks on its website for unlimited download, along with articles, internet radio stations and social-networking features. Rcrd Lbl has already signed up three big advertisers: Virgin America, Nikon and Puma.

The move comes at a time when record labels are struggling to get their heads around the economics of online distribution. The alternative-rock band Radiohead recently conducted the experiment of offering their music for free download, with 'customers' invited to pay whatever they felt was fair.

Some felt the move was a failure, with more than 60 percent of downloaders choosing to pay nothing. But the figures can be interpreted differently - some would say the fact that 38 percent chose to pay for something they could have had for free is a positive sign; others point out that 'In Rainbows' was downloaded by so many surfers that most of the non-payers wouldn't have bought it otherwise, meaning the band lost nothing and indeed got their music out to a larger audience without having to shell out for a marketing campaign or sell their souls to The Man (ie a major record label).

In any case, these are clearly interesting times for those who make their living from making and selling music, and the success or failure of Rcrd Lbl will be viewed as a test case for an industry with no clear idea of its future.