Hoping to succeed where its predecessors have failed, ad-supported music site Guvera launched in the U.S. in late March. The Australian-based startup, along with US-based Free All Music, is part of a new breed of business model that aims to reduce piracy through brand-sponsored media.

Billboard spoke with CEO Claes Loberg about the company’s business model, potential as an investment and plans for the future. An industry desperate for new ideas can appreciate Loberg’s vision. He aims to create a platform that’s attractive to both advertisers and consumers. Users follow different channels – branded pages with music that fits the advertiser’s identity – rather than watch video advertisements. The goal behind the channels is to more seamlessly integrate the advertisers into the site.

The ad-supported business model is vastly different beast: The need to have visitors interact with brands necessitates a different user experience. And because the company’s expenses are constrained by the number of advertisers on board, the number of songs a user can download must be kept in check. But the music is the same as elsewhere. Guvera offers a limited number of DRM-free, high-quality MP3 downloads – a huge improvement from the tethered downloads of failed predecessor Spiral Frog.

Guvera currently has songs from the catalogs of Universal Music Group, EMI and IODA. In spite of the high risk in launching an ad-supported music site, the company landed $10 million in funding in 2009 and followed that with another $20 million in January.

Billboard: Do you think you’re going to attract pirates? Do you think you are going to attract people who are already interested in legal music?
Loberg: Rightly or wrongly, we're in a world where 95 out of 100 people are going for that free option even though there are legal components. For the ones who blatantly just want to [illegally] download, they'll always do that. We have to create a tool that works for the advertiser that isn't just another series of banner ads or another series of disruptive ads you have to watch before you get content. We don't have to be all things to all people. If we can convert a small percentage of people we generate advertising to support that and then we start adding differing media and start growing and growing. The ultimate goal is to create a new process for advertisers to fund media.

What if that percent of two of people becomes really large? How many users can you sign up? Do you have a number in mind right now?
It’s a catch-22. If we had two million people that registered tomorrow, we would activate about 100,000 of those people. That would fit with the plan of where we’re going over the next few weeks. The rest of them would be sitting there waiting to get access to it. But the catch-22 part is all the advertising agencies we’re speaking to and all the brands we’re speaking to are asking for numbers of people. Each time we come back and say, “We have this many people,” they increase their interest and their amount of spend they will allocate. Right now we build our entire business around a sustainable model. We’re not trying to accept 20 million people and then figure out what to do with them after that.

You got $30 million in funding at a time when there’s a lot of risk in digital startups. What do investors see in Guvera?
The conversations I’ve had with investors has been about the bigger picture concept of Guvera, not just what you see on the Web today, is the ultimate goal of what we’re trying to create. Guvera was created five years ago, in concept, as a result of the ad industry. It’s not that we’re a music site trying to figure out how to monetize this. What we’ve come up with is this model where instead of you being the disruptive and annoying ad, how then can you become a useful channel. So we’re providing them with this perfect tool that consumers will use and advertisers will actually want to pay for to get access to those consumers.

Investors see the bigger picture part of it. At the moment we’re launching in Australia and in the U.S. with music downloads. When we make announcements for film and television you’ll see that extra video component come into Guvera and the option of Guvera looking at different platforms as well.

You’re offering download instead of streams. What led to that decision?
We have streaming on the site as well. Even though cloud delivery of music will become more involved, people still want to be able to download, listen in their car or put it on their iPod. Not just the music you get on the streaming services, but stuff you can actually use to build your own playlist, structure it any way you want, carve it up 100 different ways.

I’m wondering if Guvera has any mobile aspirations.
All that Guvera is right now is Guvera on the Web as a search engine to search and download to your computer. The mobile side of should definitely progress. We’re about to do something quite cool in the mobile space where you can get access to the channels you set up on Guvera. That doesn’t exist at the moment, but we definitely have huge aspirations in the mobile space.