The model is that the music companies and artists will be paid for the content from advertising revenues, not that they will give it away for free. That said, it doesn’t seem like a model that will generate enough revenue to work for very long.
Has the potential to fail massively because the labels will likely want way too much $$$ - probably with guarantees.
The thing about Internet advertising is that it ain’t worth squat unless you’re generating major traffic volume. Any startup like this would take a while to ramp up and get the word out before the traffic volume would get to the level needed to pay the label’s bill.