Vivendi Universal, the largest label in the record industry, has signed a deal to make its catalogue available for use on a free, legal downloads service. Songs will become available online in the US and Canada through Spiralfrog, a New York based service whose aim appears to be taking on iTunes, and they might actually give the digital download leader a run for its money.

Competition with Tunes aside though, the deal is a smart step for Universal. With more and more artists and indie labels offering their music up for free streams and downloads, it’s only a matter of time before the standard format for delivery of music files is solely online, and we’ve already seen this from some labels and artists over the last couple of years. Gnarls Barkley, for example, became the first group in history to top the UK charts with a digital-only release. Parisian duo Justice’s Waters of Nazareth is only available in digital format. The statistics speak as well. The IFPI Digital music report for 2006 states that 60 million MP3 players were sold in 2005 and 420 million tracks downloaded. It seems that the rest of the industry is going digital whether the majors choose to follow or not, and Universal’s decision will almost certainly prompt the Sony BMGs and Warners to follow suite.

It remains to be seen how the artists will actually get paid for their work that ends up on Spiralfrog. It’s suspected the company will do this with revenues generated from advertising, but it looks like the logistics of this have yet to be fully realized. Stay tuned for a projected launch in December, and if you haven’t gone digital yet, now might be a good time to think about doing that.