As advertising revenues fall globally, music Web sites that allow free listening but not downloading are facing challenges from labels that demand a share of advertising revenues, advance royalties and investment stakes, The Financial Times reported Sunday. The crisis has prompted beleaguered sites to seek out new and more affordable licensing terms.

SpiralFrog and Ruckus are examples of two casualties. Similarly, Yahoo recently stopped showing popular music videos in the UK because of exorbitant royalties. Apple's iTunes will reportedly face the same predicament next month, according to the FT.

One of the biggest Web sites, Imeem, is axing jobs in a cost-cutting move. It is also tweaking its business model by encouraging users to "buy songs or ringtones for mobile phones," and by adding concert tickets, the FT reported.

Other Web sites like Last.fm and and Spotify have adopted alternate revenue generating schemes. Labels are now hoping for a collaboration with MySpace that could boost revenues, according to the FT.