Photo (cc) by Teeejayy

Earlier this month, digital music service Rhapsody announced it would purchase the other big, familiar name in the industry: Napster.

Remember Napster? Remember the lawsuits over illegal downloads – and how angry the Recording Industry Association of America (RIAA) was about not being able to make money from digital downloads?

Almost a decade later, many new brands are showing they’ve figured it out: They host the music themselves and offer it free, along with some ads. (Then offer a premium ad-free version with perks like unlimited listening on any device.) Spotify, which launched in the U.S. this summer, is the latest impressive option among a field of services for streaming or storage of music.

And “free” is music to consumers’ ears. A survey by Insight Research Group released last month found 74 percent will stream music for free, but wouldn’t pay for the service. (Spoiled by radio, aren’t we?) It also predicts only 14 percent will increase their use of paid streaming services, and that 39 percent will store their digital files in a cloud-based locker service so they can keep a personal collection and listen anywhere.

In the video below, Money Talks News reporter Jim Robinson takes a look at some of the most popular free services. Check it out, and then read on for details…

Jim mentioned two things that make these free services superior to the filesharing methods of the past: They’re legal, and they pay proper royalties to musicians. Here are eight options…

1. Online radio. Traditional commercial radio is still broadcast over the air – but it’s also nearly always available online. Just search for the station’s website. This also means you can listen to stations you like from where you used to live, or that you might come across on a road trip. Want to really explore? Try Live365, which has been around as long as Napster and streams thousands of stations across 240 genres, with options to buy the tracks you hear. There’s also RadioTower.
2. Pandora. One of the most popular music services (with 80 million users) allows you to find new music based on tracks or artists you like. Type in a name and it’ll generate a custom playlist of music it thinks is similar – although it will rarely play the exact track you requested. It works more like a smart radio service. You can tailor these stations by rating tracks up or down, and merging different stations or genres together. The catches: audio and visual ads, a “skip” limit for free users (which can be circumvented by creating a new station out of a similar track), and the music stops after about a half hour of inactivity, meaning you have to maintain some interaction with the website.
3. Jango. This service has a similar structure to Pandora (the selections get “smarter” based on your feedback) and is restricted similarly by the Digital Millenium Copyright Act: You can’t pick specific songs, and there are limits on how often certain songs or songs from certain albums play.
4. Last.fm. More social than the services above, this one lets you build a record of everything you listen to across multiple media players. Based on your record, it starts recommending songs to you. You can also search for music, but it can be a bit of a tease – some songs only have a 30-second preview and others are just unplayable listings (pulled from others’ music histories). In that sense, it’s more of a recommendation service meant to expose you to new music, rather than a replacement for your digital media collection.
5. Spotify. The new kid on the block is making some noise, mainly because it lets you listen to exactly what you want to hear. (They spent years negotiating deals with the major labels.) On top of that nifty feature, you can create collaborative playlists – meaning your friends get to help pick the songs that play. The catch? After the first six months (once you’re addicted) you can only listen to 20 hours per month for free. At that point, you’ll have to pay $5 a month to get back unlimited access.
6. Turntable.fm. If that “collaborative playlist” feature sounds interesting, you’ll want to check this out – you and your friends can take turns DJ-ing with music in Turntable’s library or tracks that you upload. (Or you can listen to random people DJ-ing.) You can vote DJs up or down, and the bad ones get their turn skipped. You’ll need a Facebook account to get started.
7. GrooveShark. This is similar to Spotify (and older, too) in that it lets you pick the songs you want and create playlists, but it has a more clunky interface. It’s also similar to Pandora in that you can listen to genre stations without picking specific tracks or artists. You can upload your own music too.
8. Google Music. It’s still in beta, but Google Music lets you port your own collection onto their servers – one of the “cloud-based locker services” mentioned above. They also offer you some free songs you can keep, though there’s an overall limit of 20,000 songs. For now, you can’t re-download your collection – but you can stream it through any device with Web access, and make your favorites available offline. This is sort of like Apple’s new iCloud, except it’s free.

Got other recommendations, or want to share your pro/con experiences with these? Head over to our Facebook page.