Qtrax: same old wine wrapped in a new bottle

This morning a lot of posts discuss the announcement that Qtrax has signed deals with all 4 major music labels for the peer2peer free ad-based music download service. Interesting enough, after everyone has started quoting each other on this “break through”, the Silicon Ally insider reports that 3 of the four labels claim they do not have a deal with Qtrax. Oops.

But let’s move beyond the “breaking” news and look at the service offering itself. Qtrax claims to offer 25 Mln songs which can be downloaded. There are a few nags though. First of all the songs are DRM wrapped, meaning they can’t be played on any devide you want. Second, you need a specific piece of software to be able to download and play the songs. Third, the songs are free but ad-based, meaning there are ads wrapped along with the songs.

Now let us compare this to the current offering for any user with a PC and peer2peer software. You have access to over 25 Mln songs, you can download them and play them on any device you want. They are DRM free. You don’t need any specific software for it, and there are no ads. It is illegal, but millions and millions of Internet users do not seem to mind that.

Fred Wilson doesn’t like Qtrax offering much. I don’t either. Qtrax is making the same mistake many web 2.0 services are making. They aren’t thinking in terms of user value, but instead focus on advertisement value. Now I realise that the music industry has been defending their totally obsolete distribution empire for years and that it takes a nearly impossible effort to get things changed there, but that still doesn’t put Qtrax in the clear. They are going about it the wrong way. The service really doesn’t provide the majority of the Internet users any value over existing practices. In essence, they are re-creating a walled garden service (using DRM and their music player) allowing people free stuff, but with restrictions to make the business model work.  The problem with that is that it locks users in, and they don’t want to get locked in. They are already in a situation that everything is free (illegal, but they don’t care) and now they are suddenly restricted in their usage (but legal).

I have serious doubts such a service will ever become really popular. Peer2peer networks have reduced the distribution costs of music, or any relevant content for that matter, to 0. It means that there is no money to be made out of the distribution game anymore, making the major music labels obsolete really. Trying to overcome that by restricting downloads and serving ads isn’t going to change the reality of today. It is a defensive move if any. It is enforced by the music labels that still do not want to give up their false hope of controlling the game. And Qtrax is falling for that pressure or they can’t distribute the content legally.

In my opinion this is not the revolution we really need in the music industry. The battle of paying for music has been fought and lost. Instead music labels should focus on things that still matter to the consumer. Instead of distribution of music the major music labels should be thinking about the distribution of emotions. I’m a big fan of Ian Rogers who works for Yahoo Music. He understands the need to open up the music industry and won’t invest any longer in services that try to leverage digital scarcity.  I think that Yahoo is getting back into the game the right way.

There are infinite possibilities to create relevant and great business models in the music industry. But it takes leadership and the willingness to burn old ships behind you to start changing this world. Qtrax is not a revolution, it is merely a new wrapping around an industry based upon old school thinking. It won’t work.

About vanelsas

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This entry was posted in advertisement, EMI, Music industry, p2p, Qtrax, Sony, Universal, Warner, Yahoo music and tagged , , , , , , , , , , . Bookmark the permalink.

One Response to Qtrax: same old wine wrapped in a new bottle

  1. d.weis says:

    as of 3 /12/08 qtrax has confirmed deals in place ,with emi ,sony atv tvt records ,beggars banquet and finetunes once universal and sony bmg come on they will have the roughly 25 million tunes.The music will be adaptable to aportable device and i think most people want to be legal i think the service will be a big success.

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