April 30, 2009, 12:00 AM

Another free music services challenges iTunes, counting on ads to ring up revenue

Where others have already tried and failed, Qtrax has launched a free digital music service in a bid to take market share from Apple Inc.’s dominant iTunes.

Internet Retailer

Where others have already tried and failed, Qtrax has launched a free digital music service in a bid to take market share from Apple Inc.’s dominant iTunes.

Qtrax, located at qtrax.com, says it allows users to legally download for free millions of tracks onto most Microsoft Windows-enabled devices. It also says it has licensing agreements with all four major labels: Warner Music Group and Warner Music International; EMI Music North America and EMI Publishing; Sony BMG Music Entertainment; and Universal Music Group North America and International. In addition, it is working on a licensing agreement with Apple to enable downloads of music to iPods.

Qtrax is the latest in a string of companies offering free music to consumers. Internet radio station Pandora and streaming music service Last.fm are two, but they don’t allow users to download music onto their PCs or other devices.

SpiralFrog, a company with a business model similar to Qtrax’s, went out of business on March 13, owing investors $34 million. During its brief lifespan of a couple years, SpiralFrog offered nearly 1 million songs that consumers could download to their hard drives for free. Users also could transfer the tracks to most MP3 players that used the Windows Media Player, but the songs weren’t compatible with iPods.

Like Qtrax, SpiralFrog was dependent on ad revenue. Its downloadable tracks would stop playing if a user didn’t come back to the site and view more ads. After 30 days, users had to re-register before downloading more songs. After 60 days, they could no longer listen to the songs they had downloaded.

A source close to SpiralFrog says the company just couldn’t make enough money to stay afloat, and that, because the company only had deals to distribute music from Universal and EMI, the site lacked many popular songs.

Like SpiralFrog, Qtrax also plans to make money from displaying advertising while users search for and play music. The company says it will share ad revenue with labels and artists. Consumers also will be able to create playlists and share them with friends, as well as purchase music, tickets and related items on the site. The company plans to launch in 10 countries over the next month, followed by a phased global rollout.



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