Before huge music conglomerates like Infinity Broadcasting and Clear Channel Communications started buying radio stations and dictating playlists in the late 80's and 90's DJ-driven freeform radio from the mid-seventies had already been bled dry from heavy formatting. Now, online companies like Alley based ClickRadio are hustling to capture a new Internet music space through licensing deals that allow users to legally download music.

For three years now executives at ClickRadio have been working out a business plan that allows them to tap into an audience of over 22 million broadband users, most of them young collegians and fenced in cubicle workers. This week the company is launching a Web site that offers 30 channels ranging from Jazz to Pop that tags the 20-something set with deep innovative programming and smart advertising plays.

The pillars of the plan are unique licensing agreements that the company has announced over the past few weeks with Universal Music Group and BMG Entertainment, respectively. The agreements allow ClickRadio to sidestep the legal snares that have trapped MP3.com, Napster, and other music online music distribution players in recent legal disputes concerning royalty payments and copyright violations. Financial terms have not been disclosed, but the agreements are said to be unique because ClickRadio is a sort of hybrid technology somewhere between the radio-like streaming players (Radio Sonicnet and Spinner.com) and the download companies (Mp3.com et al.).

Unlike online radio applications such as Spinner.Com and Radio Sonicnet, ClickRadio allows users who download the ClickRadio software client to access playlists, programmed by veteran radio professionals, from pull-lists that include recordings from A&M Records, Decca Record Company and Deutsche Gramophone. Unlike Radio Sonicnet or Spinner.com, the music from the playlists is downloaded and stored on the consumers' computers a la MP3.com, but in a different encrypted format based on technology licensed from Lucent. By downloading the audio files to consumers' PCs, ClickRadio can offer a more stable, higher-quality listening experience than can streaming audio companies. In addition, for legal reasons, the company can allow users to more specifically program songs they want to listen to from within the downloaded playlists. But unlike traditional download companies like MP3.com, ClickRadio's proprietary format is designed to defeat digital copying.

In its first round of financing late last year, ClickRadio received $7.1 million, according to Pricewaterhouse Coopers' MoneyTree survey, from a group of venture capital firms that included Sierra, Telesoft and iHatch. The company has about 80 employees.

Of course, to get started, consumers will have to download an initial package of client software and a song library of 300 songs, meaning that consumers without broadband access, and even those that have broadband access, might prefer to load the package from CDs which ClickRadio plans to distribute. After that consumers can constantly refresh their playlists by visiting ClickRadio's servers.

To avoid other legal and business pitfalls in its arrangements with major labels, the company refreshes a user's download deposit if the user doesn't use the service over a period of time. As of launch time the company said songs would also be swept off a cache list after a fifth play.

But like the streaming players, ClickRadio's business model is advertising driven. The company isn't selling downloaded music to consumers.

"We're not a merchant," said Hank Williams, CEO of ClickRadio. "We bring value to the food chain by bringing a person to the right advertiser."

How does the company work with advertisers? ClickRadio aggregates user profile information for advertisers to target ads to specific groups, streams ads two times every hour in the audio content. The company charges an advertiser every time an ad is heard. Typically, offline radio charges advertisers on a cost per thousand basis that Williams said could range from the teens to over 40 dollars per thousand ads. Offline, radio stations usually field 18 advertising spots per hour, which works out to approximately 15 minutes of airtime. The target base for conventional radio is much less scientific and profitable because it's based on perceptions about who likes pop and jazz instead of being based on the answers to definitive questionnaires like the profiles ClickRadio intends to generate. The company intends to keep an eye on ad play to discourage users from turning down the volume. Besides funneling ads through an audio feed, the company said it would offer more information about a product on-demand.

Besides offering legally downloadable music, the company has hired a slew of music programmers to recapture a restless radio audience that includes former WNEW program director Charlie Kendell. Kendell and others have been busy in the last several weeks; they've sifted through bundles of music licensed from UMG and BMG and cued up scores of digital downloads for users to put on computer hard drives. The music is CD quality and free of the hiccups that accompany streaming music. However the company is faced with challenges from heavy hitters like AOL-owned Spinner.com and MTVi's Sonicnet.com who have already been branded in the marketplace.

Before California-based Spinner.com was acquired by AOL last May in a $400 million roll-up, that included MP3 music player Nullsoft, the company had about 60 employees. Since then 20 more people have come on board. Like ClickRadio, Spinner.com offers music channels programmed by former radio heads and presents information about artists on-demand. Spinner.com currently lists over 120 channels. Both companies make money through undisclosed advertising deals. And Radio Sonicnet is receiving a heavy advertising and promotional push from its corporate parent MTVi, which is planning an IPO soon. Companies like MyPlay.com are gaining traction offering surfers a sort of music locker where they can store, and from which they can playback, copied files of music they already own. Companies like Sony are selling downloadable songs direct to consumers as are start-ups like eMusic.com. And finally, the growth of free, albeit legally questionable services like Napster and Gnutella suggest that the market for free music online continues to outstrip the market demand for paid or even ad-supported online music systems.

Still, Williams is undaunted, noting the sound quality, consumer choice and advertising opportunities that ensures his company's staying power and user loyalty.

Ironically, even though ClickRadio gives listeners a break from heavy advertising and stamps out the stagnant playlists of highly formatted, traditional radio, it can't replace the anticipation that keeps people hitting the radio scan button looking for a favorite song. The last time I heard Etta James belt out "At Last" on the radio I was driving along the Rio Grande and up a canyon to Taos. While ClickRadio makes my cubicle work day existence endurable it's not the same as fighting a hill in the middle of a New Mexican summer and enjoying it, but it doesn't pretend to be.

* Christine Gordon (cgordon@internet.com) is Assistant Editor of atNewYork.com.