Announcing the debut of Last.fm’s “unprecedented” on-demand music streaming platform, Jones–in a moment of Zuckerbergian grandiosity–proclaimed:

Today we’re redesigning the music economy.”

Which will no doubt come as a bit of a surprise to Apple, and Real, and Amazon and, above all, Imeem, which announced a similar ad-supported service last month.

To be fair, Last.fm’s free on-demand service seems a bit more compelling. Certainly, the CBS-owned site is the only one among the few to offer access to music from all four major labels and a host of independents to anyone willing to stare at an ad for while. And providing complete album streams on a “try before you buy” basis is truly a nice touch.

Still, Last.fm does have one significant limitation: You can listen to a track no more than three times unless you agree to pay for the subscription version of the service or purchase it from an affiliate. Will that be a deal-breaker for the average music fan or a good reason to buy your music through Last.fm, rather than iTunes? Hard to say. “The free-music-on-demand field has been a tough one, with many announcements but few real entries (consider, for example, the often-delayed Qtrax and vaporous Mashboxx),” notes the Los Angeles Times’s Jon Healey. “With CBS’ backing, Last.fm might be able to search longer for a workable formula than the typical start-up. But at some point, it has to find a way to pay the bills.”

Really, an album that someone worked on for two years–is that worth only $9, $10, when people pay two bucks for coffee in Starbucks? People never really understand what’s happening to the artists. All the sharing of the music, right? Is it correct that people share their music, fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go. That’s what happened to the record business.”

–UMG CEO Doug Morris, Wired, Nov. 27

Offering its entire catalog of digitized video and music for free to the 19 million users of an upstart social-networking site was once about the furthest thing from Universal Music Group’s mind. Now, with the Internet rejiggering the music industry’s economic structure, it’s at the very top of it.

And so this morning, UMG said it would allow members of social network Imeem to stream its music for no charge, in exchange for a cut of the revenue from advertising aired while songs are playing. “Imeem has developed an innovative way to make our artists’ music a central part of the social-networking experience,” UMG CEO Doug Morris said in a statement. “They’ve done so the right way–by working with UMG to provide an exciting musical experience for consumers, while ensuring that our artists are fairly compensated.”

And ensuring that UMG is fairly compensated as well. As part of the deal, the company will get an equity stake in Imeem and is rumored to have received an upfront payment of more than $20 million.

UMG is the last of the ‘big four’ major labels to ink such a deal with Imeem, following in the footsteps of Warner Music Group, Sony BMG and EMI. All four majors–quite an achievement for a company that this past summer didn’t have a deal with any of them. Seems the music industry isn’t quite as wary of advertising-supported business models as it once was. “2008 is going to be the year of music labels trying to put themselves in front of everyone, no matter what business model it takes,” Forrester analyst James McQuivey told CNNMoney. “The labels have realized that you have to be everywhere on the Web, because the customer is everywhere. You need to put yourself in front of them when they make their entertainment decisions.”