Maybe a nail in the coffin for the advertising-supported music download business model.
A website which promised to give music lovers the world’s first legal file-sharing service was forced into a humiliating climbdown today after it emerged that the company had not secured the backing of the record industry.
Qtrax, a New York firm, unveiled its service with a glitzy £500,000 launch in Cannes at the weekend, hiring stars including James Blunt, LL Cool J.
Today it emerged that none of the four major labels had done deals with the site, putting a large dent in the promised catalogue of 25 million songs and prompting allegations that the site’s founders had misled fans.
EMI, Warner, Sony BMG and Universal all confirmed that they had not agreed deals with Qtrax which would allow fans to download their music for free in return for being exposed to advertising on the site. Warner and Universal said that they were in negotiations with the site.
I wonder what the future really holds for ad-supported services like Qtrax or any of the many others out there.
Look at what’s happening when companies like Amazon launched a service in the US last year that lets you purchase and download music in the open MP3 file format as opposed to a restrictive DRM-enabled format like WMA that is the format of choice for the ad-supported services.
There’s also iTunes, the market leader by far. But music files are encoded in a proprietary file format, just as with the DRM-enabled WMA file format, which restricts what you can do with the music you purchase and download.
If you want your music to be mobile, the only choice with iTunes for most people is an iPod.
"Play anywhere DRM-free music downloads" is Amazon’s message about the music you can acquire from artists signed to the four major labels – the same ones Qtrax didn’t quite conclude deals with, apparently – plus thousands of independent labels and artists.
You can play that music on any device that plays MP3s.
Now Amazon is planning to launch internationally during 2008, once they’ve signed new deals with the various labels. So no word yet on when that will be.
Still, your choices are quite clear:
- Legally purchase music you can download from a trusted supplier (Amazon), and play that music on any device you want, as many times as you want and whenever you want.
- Go to a website, watch ads while music files legally download to your PC via a slow download manager, free of charge but which has some bothersome restrictions on what devices you can play that music on, how many times and when. Plus, you typically have to log in to the service’s website every 30 days or so or your music will stop being playable.
Another way to put those choices: You want free legal music? Fine, but put up with the restrictions.
I’m sure there is a market for ad-supported free music. I just don’t think it’s one that has a sustainable future.
So, where is the “pr desaster” part as indicated in the headline? There’s close to nothing in that story that would justify this misleading mention of PR.
Markus: When the CEO of a company claims at a major industry conference that four major labels are partners when they in fact are not, that could easily qualify as a disaster.
Neville: I’ve always said that true music lovers are the ones who are hurt by DRM. DRM causes them to buy less music. So removing DRM will increase purchases and the Amazon MP3 store and iTunes Plus will greatly contribute to increased digital sales.
I think you’re more likely to see kids involved with free download services that add all sorts of restrictions. I’m not sure there’s going to be enough revenue there to a) satisfy the labels and b) keep those companies afloat.
The smart companies will market to those who are willing to pay a fair price for untethered music that they can own.
Just commented on Neville Hobson’s post about Qtrax. http://tinyurl.com/2n4536
Markus, how Rob described it is spot on. Don’t you think what Qtrax did (big announcement, event, then a climb down) qualifies as a PR disaster? At the very least?
Although I quoted the detail of this from The Times’ story, my post itself isn’t about that as the headline suggests (“More than just a PR disaster”).
Or do you really think the connection just isn’t there?
Rob, I think so much has changed over the past 12 months in particular re major labels’ attitudes to online music distribution, the Amazon deal being just the most prominent change as I see it.
I agree with you re untethered music.
Now everything would change if ad-supported also meant untethered. Don’t see any signs of that, though.
As far as I can tell there has been a premature announcement by the Qtrax CEO; this may not be very professionally, but it doesn’t necessarily constitute a “PR disaster”. Where’s the damage done, and to which publics? Maybe you have more detailed information on this, then why not share it?
Markus, when I see media reactions like this, it sure looks like a PR disaster to me:
That link goes to results on Google News searching on the keyword ‘qtrax.’ Almost every news report is negative about Qtrax.
Clearly you have a different view on what ‘PR disaster’ means!
As a Melbourne company this received a lot of publicity here in Australia and it was all over the news on Thursday (with the launch), then all over the news on Friday and Monday (with the rebuttal statements from the labels).
The company has been made to look stupid, unprofessional and full of cr*p. Investors are probably very displeased, the labels could be thinking Qtrax a bunch of upstarts, and the public just shake their heads and say, “right, I’ll stick with iTunes, thank you…”
Of course, the worst may yet come. If the labels sign on to Qtrax then the company may (may) have the last laugh. But with this error it could be dead in the water.
I think this quite easily fits the definition of a PR disaster, not to mention a collossal mistake. Who really celebrates, publicly, before the major parties have signed on the dotted line?
Markus, I suppose it depends on your definition of a “PR Disaster.” According to Gerry McCusker, who wrote a book called “PR Disasters” and blogs at prdisasters.com, “a PR disaster is an incident that catalyses sustained negative media coverage for an individual or organization, and which subsequently damages personal or professional reputation.”
Sounds to me like QTrax qualifies on all counts.