Ad-supported P2P service signs EMI

Qtrax gets on-track

By John Leyden • Get more from this author

Posted in Financial News, 6th June 2006 16:20 GMT

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EMI has agreed to release its music portfolio through an ad-support peer-to-peer service. The deal is a significant coup for Qtrax, which plans to begin offering music downloads supported by ads, as well as a more conventional ad-free premium service, in the US later this year. EMI is the first major label on Qtrax's roster. The music publisher will earn an undisclosed percentage of advertising and song sales sourced from its catalog and sold by Qtrax.

The deal, a sign that music publishers are beginning to embrace P2P technology, is unusual but not unprecedented in the entertainment industry. Warner Brothers, for example, began using P2P networks to sell TV shows and films in select markets (Germany, Austria and Switzerland).

"There's a lot of pent-up demand for advertisers to get onto peer-to-peer services, but up until now it's been illegal, and highly dangerous territory for them to wade into," Allan Klepfisz, chief exec of Brilliant Technologies, which runs Qtrax via its LTDnetwork e-commerce software subsidiary, told Reuters.

LTDnetwork aims to sign the other three major music labels (Vivendi's Universal Music, Sony BMG and Warner Music), in order to make Qtrax as commercially appealing as possible, before approaching potential advertisers. "We will not launch until all the majors have signed on," Klepfisz said.

Qtrax's ad-supported service allows users to download songs in Qtrax's proprietary .mpq format and play them up to five times (at least in the case of EMI tracks). Users will also have the option to purchase tracks. Site searches will also offer the chance to buy CDs (along with music related books and DVD) through shopping.com.

EMI hopes to use Qtrax to gain a better understanding of consumers' willingness to buy songs they've had a chance to listen to first online.

"We think that any ad-supported model should be offered in a way that maintains, or even enhances the value of music, and we believe Qtrax does that by offering a good consumer experience and significant up-selling opportunities. Our collaboration with Qtrax will give us great consumer insight and help us gauge the boundaries between sampling and purchasing music," said David Munns, chairman and chief exec of EMI Music North America. ®

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