The Qtrax Announcement: Here We Go Again

For all the nail-biting going on leading up to Super Tuesday on February 5, you’d think that the Super Bowl is happening that day rather than on February 3. Even with Mitt Romney hailing from Massachusetts, the home state of the New England Patriots, the northeastern-focused "almost subway series" Super Bowl is commanding less attention than stories of political intrigue and economic stimulus.

Alongside those stories, though, are several that have captured the attention of the masses in an equally intriguing way. These stories of business models that surround streaming media are getting lots of attention, backed by a report from the International Federation of the Phonographic Industry showing that the number of songs downloaded via illegitimate means is almost 20 times greater than the download of legitimate paid songs.

Consider, for example, the company still known as Qtrax. Starting as a peer-to-peer network several years ago, but now starring as a poster-child for the all-you-can-eat-if-you-watch-an-advertisement business model, Qtrax had a roll-out party at MIDEM, the annual music industry trade show and conference in Cannes, this week that cost the company just shy of $1 million. The company’s press release claimed that it could offer something every music fan ever wanted: free songs that could be streamed or downloaded.

The national and international media jumped all over this story. Here’s a typical lead-in from a news article posted on the Times Online UK site on January 28: "After a decade fighting to stop illegal file-sharing, the music industry will give fans today what they have always wanted: an unlimited supply of free and legal songs."

The story goes on to say that the free song downloads would be available if users would watch advertisements and that it was endorsed by the big music labels.

Except, in the case of Qtrax, the ink wasn’t exactly dry. Later in the day on the 28th, the story emerged that not one of the four major labels had completed deals with the site, EMI, Warner, Sony BMG, and Universal all confirmed they had not signed deals, although Warner and Universal acknowledged they were in negotiations to consider an advertising-based solution. "Warner Music Group has not authorised the use of our content on Qtrax's recently announced service," said a Warner spokesman.

When the Times chased down the story, they got conflicting information from Qtrax CEO Alan Klepfisz, who claimed a competitor tried to damage Qtrax’s reputation but offered no proof. "We are not idiots," Klepfisz told the Times."We wouldn’t have launched the service in front of the whole music industry unless we had secured its backing. Everyone is very upset. . . . We do have industry agreements including the major labels. Even today we are working on more deals."

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