We7 Reports 1 Millionth Free Download, Raises FundingWe7 Reports 1 Millionth Free Download, Raises Funding

We7, the free music download site backed by musician Peter Gabriel, has surpassed the 1 million mark for its number of music downloads and it has raised more venture capital.

The site recently announced the milestone, saying the user who downloaded the 1 millionth song received a new iPod touch and a signed CD from Peter Gabriel. The user, David Ford, downloaded The Spinners' "Maggie May" in December.

We7 launched last May. Its original catalogue included 80,000 tracks. Now it boasts 500,000 tracks for free, ad-supported downloads. The site compensates artists through revenue sharing.

The site claims 90,000 registered users and says it was the first to deliver ad-funded downloads that are free of digital rights management, or DRM, restrictions. The ads are targeted, short, and air at the beginning of downloaded songs the first few times they are played. The site has completed ad trials with Microsoft, for Xbox 360, and campaigns for Sony Ericsson, Cafe Direct, and the documentary Sicko.

"We7 is one way to keep music free for consumers whilst maintaining some income for artists and content owners," Peter Gabriel, founder and investor of We7, said in a statement. "When advertising is smart enough to be a responsive information service, it is less intrusive for the listener and more effective for the seller. For example, if I am looking around for a eco-friendly car, that is the time when I am happy to be informed about what is available."

The site's success has drawn attention from investors. Last week, We7 announced the closure of $6 million Series A funding.

"Despite the significant challenges that face the music industry we've come a phenomenally long way in our first year with our subscriber figures and partnerships speaking for themselves," Steve Purdham, CEO of We7, said in a statement. "Having exceeded our one millionth track download, it shows there's a real consumer appetite for new ways to access music that delivers benefits to music fans, brands, and artists alike."