This Wednesday’s New York Times reports on a startup called FreeAllMusic.com, which went into beta last week and expects to launch in January.  FreeAllMusic.com will let users download a free and DRM-free MP3 music track for every ad they watch.  Two of the four major music companies (we won’t know which two until launch) are licensing their catalogs for this service.

Two years ago, I characterized the “pay what you wish” offer that the rock band Radiohead made with its album In Rainbows as a race to the bottom for the price consumers pay for music.  I said that people’s perception of the value of music will go to zero along with the price.  The next lap in the race to the bottom was led in early 2008 by Google, which began to give away Universal Music Group MP3 downloads in China in order to compete with Baidu.

Then MySpace began to offer free on-demand streaming in hopes of garnering ad revenue, an effort that is widely acknowledged to be a failure.  The widely-hyped startup SpiralFrog tried offering DRM-protected music files in exchange for watching ads; it folded earlier this year.

When Google expanded its Chinese free-downloads program this past March, I asked: “which online service provider will be the one that … offers the record companies enough money to provide free downloads in the US and other markets — and when?  Will it be Google, Yahoo, AOL, FaceBook, or some unknown but well-funded startup?”

Now we know the answer: FreeAllMusic.com.  Welcome to the next leg in the race to the bottom.

My original “race to the bottom” article drew some criticism, led by a TechDirt post by Tim Lee, whose flawed analysis betrayed both his biases and his lack of knowledge.  This post drew many comments, the majority (though not all) in favor of Lee’s opinion, which could be summarized as “Competition happens; get over it.”  One commenter even accused my former site DRM Watch of being “supported but [sic] the recording industry trade association” (sorry, not even remotely true).

Folks, it looks like I haven’t been clear enough, so let me try one more time:

• Music is not widgets, or even music players (which Tim Lee used as his comparision).  It is culture.  Economic analysis can and should be done about content in a business context, but the distinction must remain. Anyone who insists on treating culture as widgets has no appreciation for culture.
• Music is made by musicians, and musicians should be able to make a living.  This should be the case regardless of whether there are record companies (major or otherwise) involved.
• When people no longer perceive music (or other content) as having value, then it ceases to have value as culture.  This is the danger we face.

As for FreeAllMusic.com, here is what I predict will happen: the site will eventually attract a reasonable audience of people who can wait for 15-30 seconds while the ad plays (while looking at something else on their computer screens) in order to download songs legally, as opposed to downloading the same songs illegally without having to wait.  The site will lose lots of money, just like MySpace Music and SpiralFrog.  It will eventually cease operations and/or be acquired by one of the aforementioned big fish.

But by then, the public will have come to expect free and legal permanent music downloads.   At that point, the race to the bottom will be over.  There will be many losers; in the long term, I can’t think of very many winners.  Certainly not actual musicians.