New music site hits false note
2008-01-29 10:08
Cannes - A ground-breaking move to launch a new free global music download service that could help overcome the music industry's cash crisis faced uncertainty on Tuesday.
Qtrax, a website offering free legal downloads supported by ads, was launched in fanfare on Sunday at Midem, the music world's biggest trade get-together, where record industry leaders are desperately seeking how to overcome revenue falls caused by a slide in CD sales and rampant piracy.
But barely 24 hours after promising to usher in a new era of free and legal peer-to-peer (P2P) music services, New-York based Qtrax hit a false note when industry sources questioned whether the company had secured licensing agreements with big record labels.
Shortly after the launch of its file-sharing service offering unlimited free music downloads, sources said the company had not yet signed deals with the big four music "majors": EMI, Universal, Warner and Sony BMG.
"We are finalising agreements with the major record labels here at Midem," a Qtrax executive Richard Schineller, told AFP, adding that the company would issue a statement shortly.
"We chose Midem to launch so that we could do it with the full awareness of the key players in the music industry," he emphasised.
No officials from the big four labels were immediately available for comment at Midem, but one source close to a record major told AFP they were currently in talks at Cannes with Qtrax on a possible new licensing deal.
A licensing agreement had been in place between the label and Qtrax but this had lapsed, said the source, who declined to be identified and who gave no further details.
Unprecedented response
In a statement released late on Monday, Qtrax responded that since the service had been launched, it had registered 61 000 users-per-hour, a potential 1.5 million users-per-day.
"The response to the service is clearly unprecedented. We launched at Midem, the leading music industry conference, precisely because of the degree of support we have had and continue to enjoy from rights holders," said Qtrax President and CEO Allan Klepfisz.
"We believe the exact nature of that support will be publicly clarified within a very short time. As the world's first free and legal P2P service that has chosen to spend 4-5 years on licensing and not to violate international property rights, we have decided that we will provide activation keys shortly upon final execution of all pertinent contracts," Klepfisz added.
If Qtrax promises hold true, new ad-supported music services could prove a boon to the global recording industry that is struggling to find ways of turning bits into bucks in a digital world that has ushered in massive illegal downloads and a deepening slump in CD sales.
This crisis in the music world has had major fallout for the industry heavyweights.
EMI recently announced sweeping staff cutbacks. On top of that, it is also facing walk-outs by some of its biggest stars including Paul McCartney and Robbie Williams, who believe the company has failed to respond to the rise of the new digital music world.
But there was growing support for new ad-financed music services among the thousands of top music and digital execs gathered here this week.
As rock icon and digital innovator Peter Gabriel told a packed conference here on Monday: "Advertising isn't the first choice I would have made for artists to get paid for their music but it's better than nothing."