Anyone relying solely on ad-funded business models to shore up the rapidly falling revenues in the music business might want to have a rethink. In a discussion at the London Calling music conference today on the digital licensing issues that writers and publishers currently face, industry players took a skeptical view that getting a cut of ad sales could ever amount to substantial sums.

Scott Cohen, co-founder and international VP of digital distributor The Orchard (NSDQ: ORCD), called ad-funded models more “meat than hype” noting that an 8 percent cut—which is what copyright holders get from digital sales of their music—of “not very much ad revenues” was not the greatest payment model. Cohen pointed out that figures thrown out for the total potential online ad spend for this year came in at $30 billion—“but that’s for everything, every single thing,” and not just for spending on a few online music sites. “This is not going to bring in $10 billion, it might bring in $10 million, but that’s a drop in the bucket,” Cohen said.

Ad-funded online music sites certainly haven’t had the smoothest entry into the market. After some management problems at the start, SpiralFrog has been burning through money as it tries to negotiate deals with the record labels. At Midem earlier this year, QTrax, embarrassingly announced that it had signed on all of the major labels, only to have to retract that claim a few hours later.

But not everyone is ready to give up on ad-supported models. Speaking to paidContent: UK, Shelly Taylor, CEO of All Dig Down a new online music site that has yet to launch and will be partially ad-supported, said the problem with ad-funded models wasn’t the actual idea, but that currently, no one is giving the consumer a good enough experience. “Ad-supported doesn’t mean throwing it in people’s faces,” argues Taylor, who notes that some ad-funded sites “force” consumers to sit through ads while their music downloads, or have a certain quota that they must view per month. It also most likely works best in conjunction with other payment models, rather than as the sole means of income.

All Dig Down, set to launch in September, will combine ad-supported video content, with a music download store. It will also allow users to create their own “music store,” from their “favourites” music list, in which they will get £0.005 for each track sold, and a 10 percent cut of revenues from ads served in their store. Taylor says that hopefully by giving something back to the user, and by having only some of the content be ad-supported, the site will offer a better experience.