Qtrax - in a pickle?

Music labels say no deal with Qtrax
Mon Jan 28, 2008 8:45pm EST
By Yinka Adegoke

NEW YORK (Reuters) - The world's biggest music companies, including Warner Music Group Corp and Sony BMG, denied that they have agreed to license songs for a free download service that was launched by Qtrax on Monday.

Qtrax told Reuters and other media outlets last week that it had deals with the major labels representing about 75 percent of all music sales, to let users download songs for free in a new service to be supported by advertising revenue.

But by Monday, Sony BMG Music Entertainment and Warner had publicly denied that they had agreed to back the new Qtrax service.

A source close to Universal Music, the largest of the group, said it also had not signed a deal for the new Qtrax service and is still in discussions.

And a source close to EMI Group said that while its song publishing unit has an agreement with Qtrax, its recorded music arm, EMI Music, does not.

"Sony BMG can confirm it has not signed a deal with Qtrax for the ad-supported service," said a spokesman for Sony BMG, a joint venture between Sony Corp and Bertelsmann AG.

EMI Music, Sony BMG and Warner all previously had agreements with Qtrax, which was testing a paid music download service. Sources say those agreements expired in the last year and did not cover the new free, ad-supported model now being promoted by Qtrax.

The first denial came from Warner late on Sunday and appeared to force the startup to backtrack on its earlier claims of having deals with all majors.

Qtrax said late on Sunday, "We are in discussions with Warner Music Group to ensure that the service is licensed and we hope to reach an agreement shortly."

Qtrax did not immediately respond to further queries about its agreements with other companies.

Qtrax is not the first startup company proposing a new business model for marketing music to run into licensing difficulties with major labels.

Social music network Imeem was sued by Warner Music before agreeing on terms with all majors late last year. A free ad-supported download service from SpiralFrog has struggled to sign any other major record company since launching last September with music from Universal Music.

Reuters/Nielsen