lastfm Ever since CBS acquired social music service for $280 million last May, we’ve been wondering what they intended to do with the service and how it would be beneficial to CBS. Now we know.  The blog entry posted today titled ‘Free the Music” explains it all and how they have a business model, a method for bringing in revenue which is something that will ultimately benefit CBS. Now they will be offering “the biggest legal collection of music available to play online for free.” The big four labels including Sony, BMG, Universal, Time Warner and EMI have all joined in and users can listen to all of their favorite songs for free.

With over 3.5 million songs available to users, why are the record companies supporting this move? That’s part of the whole business model we mentioned above.  Artists will get paid every time someone streams a song.  The revenue will come from advertising on the site. The best part is, all of the songs are available on demand, go try it for yourself.  And it’s not just a short little clip, it’s the full version which users are going to love.  And while it is ad supported, the ad itself isn’t obtrusive by any means.

Before you run off to try it, there are a few “rules” that come with this new service.  You didn’t think you could get away with no rules when record labels were involved, did you? Really, it’s not that bad.  A user can listen to a song for three times without registering, but then they must either log-in or register for a subscription (coming soon)  if they’d like to listen to the song again. Another aspect of the service that many of you will appreciate is that they also include 150,000 independent labels. Unsigned artists can also take part in their “artist royalty” program in which they will be able to upload their music and then get paid directly for every song played.

It’ll definitely be interesting to see if and how these changes at impact other music services, including iTunes.