The Silicon Alley Insider blog reported over the weekend, however, that Qtrax had not finalized deals yet with two of the four major labels--Warner Music Group and Universal Music Group. A Warner spokesman told SAI it had not authorized the use of its content on Qtrax, and Universal was said to be in talks with the company.
In response to the report, Qtrax issued a statement last night, saying: "We are in discussion with Warner Music Group to ensure that the service is licensed and we hope to reach an agreement shortly." There was no mention of the status of a Universal deal.
Not having licensing agreements nailed down, of course, throws into question the underlying premise of Qtrax being a free, legal music service.
In an interview earlier this month, Allan Klepfisz, chairman and CEO of Qtrax, said: "Our view has been strong from the beginning that the way to deal with illegal [music] sites is not through Supreme Court decisions or technology but by coming up with a better proposition for consumers."
Qtrax said its DRM system (which counts how many times tracks have been played) won't limit the types of devices on which users choose to download music. While songs will only play on PCs at launch, Qtrax will introduce a Mac-compatible version of its media player on March 18.
By mid-April, it also plans to release software that bypasses Apple's FairPlay DRM technology so songs can be downloaded to the iPod. In either case, users won't be able to burn songs to CDs via Qtrax.
In the last year, all of the major labels have dropped DRM restrictions on at least part of their digital catalogs, most recently Sony BMG earlier this month. But DRM-free songs have been offered so far mainly through paid outlets such as Amazon.com. Sales of digital music hit $2.9 billion last year, up 40% from 2006, according to the International Federation of the Phonographic Industry.
Besides downloads, Qtrax provides a Firefox-based Web browser and features including music videos, artist profile pages and interviews, and the ability to buy DVDs and concert tickets. Advertising will span the full range of formats including text ads, banners, rich media units and sponsorships, according to Lance Ford, president and chief marketing officer of Rebel Digital, which is handling ad sales for Qtrax.
Ford co-founded Rebel Digital last year with Robin Kent after the two left Qtrax competitor Spiralfrog in late 2006, after disagreements with company chairman Joe Mohen. Ford envisions advertising closely integrated with content on Qtrax. "The key for us is to be creative and wrap brand messages around content in what we call a lateral fashion," Ford said. Youth-leaning marketers signed on at launch include Burger King, Samsung, the Ford Sync, Boost Mobile and H&M.
Qtrax is hardly alone in pursuing an ad-supported music model online. Spiralfrog, which launched last September after a long delay, recently announced it had surpassed more than 1 million monthly visitors and 400,000 members. Meanwhile, sites such as Last.fm and imeem let users stream songs for free by running ads alongside content. Imeem, which has deals with all the major labels, draws 4 million monthly unique visitors, and was the fastest-growing social site for the year ending October 2007, according to comScore Media Metrix.
Qtrax announced its debut in connection with the Midem music conference in Cannes. Licensing issues aren't the only challenges Qtrax is dealing with. As of Sunday, its site was directing visitors to return in 24 hours because of "overwhelming demand."