If you were skeptical about whether a startup could make money by selling free music, you were right to be so. SpiralFrog, which made a big splash in 2006 by offering free music, has shuttered its doors, according to CNet.

It's the second-ad supported free music site to go down this year, after Ruckus. SpiralFrog issued secure notes in order to borrow at least $9 million to to keep the operations running last year, according to CNet's source. 

Apparently, SpiralFrog was also shopping itself around this spring, according to Media Memo.

SpiralFrog raised nearly $12 million in VC and debt financing since its five years in existence. It had deals with Universal Music and EMI.

One of the worst economic downturns in our time and an advertising recession have made it extremely difficult for any company to survive. But that's not the only reason SpiralFrog went under.

Here's more from CNet:

That only tells part of the story, however. In truth, the service never caught on with music fans. SpiralFrog's downloads were locked in Digital Rights Management at a time when most of the front-running music services, such as iTunes and Amazon, were freeing songs from copy-protection software, enabling them to play on numerous devices.

In addition, SpiralFrog's music library was always much more limited than iTunes, Imeem, or other competitors. After signing a licensing deal with Universal Music Group, the largest of the four major record companies, in the summer of 2006, nearly two more years would pass before the start-up signed a second top label: EMI.

This meant that SpiralFrog never was able to offer songs from Sony Entertainment Group or Warner Music Group, which account for a large chunk of overall music sales.

(Image source:  anythingbutipod.com)