• by Wendy Davis , Staff Writer @wendyndavis, February 28, 2008

Despite its disastrous debut last month, Qtrax's CEO Allan Klepfisz is continuing to tout the company's upcoming music download service as if nothing is amiss.

Speaking at the Digital Music Forum East in New York on Wednesday, Klepfisz boasted about the upcoming service -- which he repeatedly characterized as the first free, legal peer-to-peer music download service.

Klepfisz officially launched Qtrax at the Midem conference in Cannes last month, at which time the company said it had licensing agreements with the four major record labels. But hours later, it came to light that the company didn't have agreements with any of the major labels.

When Marty Lafferty, CEO of the Distributed Computing Industry Association, who was questioning Klepfisz Wednesday, brought up the debacle, the Qtrax CEO said the controversy was "inspired by competitors" and blamed the press for misinterpreting the situation.

But even now, four weeks after Midem, Qtrax has no licenses to announce.

"Soon enough the world will know what licenses we have," he said after an audience member asked him about it point-blank. We'll see. Meantime, it seems clear that much of his claims are overblown.

Obviously, Qtrax isn't the first legal peer-to-peer service, since there's nothing illegal about peer-to-peer technology. In fact, media companies are themselves using peer-to-peer technology to distribute their programs at sites like BitTorrent and Joost.

Also, calling Qtrax a download service is misleading because, at launch, users will only be able to play back the tracks if they're connected to the Web. In other words, unlike the case for tracks downloaded at iTunes or other sites, users won't be able to listen to tracks if they're at a WiFi-less coffee shop, on a train or anywhere else without ready Web access.

In that sense, Qtrax doesn't seem much different from other radio-on-demand services, like the rumored upcoming offering from MySpace, or other sites that stream music.

Also, Klepfisz said that while the service is free to users, it won't be 100% ad-supported. That's because it also comes bundled with a browser, which will track user purchase activity, such as purchases at sites like Amazon.com. In some instances, the company will get a cut of the revenue when users purchase DVDs or ringtones.

But this model, based on tracking user activity through their browsers, has the potential to be highly intrusive -- certainly more so than what users bargain for. In fact, depending on Qtrax's disclosures to users, the company could well find itself on the defensive with privacy advocates.