There have been a lot of reports over the weekend about the demise of SpiralFrog. SpiralFrog was an ad supported music streaming and download service that never really took off.

Having raised as much as $12 million in VC and debt funding, the company made a splash in August 2006 (after 2 years in operations) when Universal Music made their entire music catalog available for free download through SpiralFrog, joined by EMI a month after. About a year after, SpiralFrog started handing out private beta invitations (what took them so long?)

Attorneys representing defunct music service SpiralFrog have notified investors not to expect any returns. Whatever money comes from liquidating assets will go to a group that loaned the company an “amount exceeding $34 million.”

Is this going to be the start of more ad supported music download and streaming services moving towards the deadpool? I can see Qtrax is going to now have a lot of trouble is this economic environment and Im sure they will be the next to be closing.