Ad-supported online music service Spiral Frog suspended operations yesterday, nearly three years after its launch.

SpiralFrog launched in Summer 2006 to much media fanfare, painting itself as a free alternative to .99/song iTunes, and as a legal alternative to illegal file-sharing sites. At that time, SpiralFrog CEO Robin Kent said, “Offering young consumers an easy-to-use alternative to pirated music sites will be compelling…. SpiralFrog will offer those consumers a better experience and environment than they can get from any pirate site.”

Kent was fired in early 2007, however, and the site finally officially debuted in September 2007, announcing a loss of $3.4 million (on revenue of $20,400) by November of that year. Subsequent rumored acrimony between staff and founder Joe Mohen did not advance the success of the music site.

Building the SpiralFrog business on ad-supported Windows Media DRM’d music never quite caught on with listeners – or advertisers.

CNET reports that “SpiralFrog has ceased operations and assets have been surrendered to creditors. To keep operations going last year, the company issued secured notes in order to borrow at least $9 million from several hedge funds and others.”