Record Industry Caves - Download MP3s Legally FREE with Qtrax

After years of consumer-targeting lawsuits and a constant decline in the levels of CD sales, the music industry has switched tactics and decided that all music downloads should be FREE and LEGAL.

This is not a joke.

Qtrax, a subsidiary of Brilliant Technologies Corporation (oddly enough a technology company also known for development of a proprietary resealable metal beverage can), has raised $30 million to set up the online music service. What sets Qtrax apart is that it claims to be fully sanctioned by the major record labels and works without membership or fees. Whether they truly have licenses from all four major lables seems to be somewhat up for debate, according to Peter Kafka at Silicon Alley Insider:

“Warner Music Group has not authorized the use of our content on Qtrax’s recently announced service," WMG spokesman Will Tanous told SAI via e-mail. Universal Music Group, the world's biggest music label, doesn't have a deal with QTrax either but is in talks with the company, says a person familiar with the situation. The LA Times quotes an EMI pr person saying that they're not in either. We haven yet to hear back from Sony-BMG, the fourth big major.

Here's the QTrax response, as of 9:57 pm eastern Sunday night: ""We are in discussion with Warner Music Group to ensure that the service is licensed and we hope to reach an agreement shortly."

Over the weekend, QTrax officials were still trying to convince Warner and UMG to sign on. On Saturday Robin Kent, who handles marketing for the company, allowed that its paperwork with labels might not be up to date. QTrax had "the blessing" of all four majors, he told SAI, but "two of the four are more happy about it than the other two."

Qtrax actually began over four years ago as an Australian-based illegal file-sharing service run out of Melbourne. It was shut down within six months, before the record companies filed any lawsuits. This cooperation apparently paid off since the system is now the basis for the Qtrax download service.

From the user’s perspective, Qtrax works much like any file-sharing program, and it will search the Gnutella P2P network. But Qtrax will only display files that it has permission to play (those wrapped in its Windows Media-based DRM), then bring up relevant advertising, much as Google does for search terms. Although advertisers will not be able to have their messages appear with the name of only one particular artist, they would be able to associate ads with a particular genre.

At first, Qtrax will have a revenue-sharing arrangement with labels. Eventually, though, it will have to pay the labels a royalty for each time a user plays a song, which could cost quite a bit relative to ad sales.

What has yet to be seen is whether the system will integrate well with MP3 players and, in particular, Apple's iPod. As of now there would be no foreseeable compatibility unless Qtrax bypasses Apple's DRM scheme or Apple licenses it out (both highly improbable long-term solutions). It will also be interesting to see whether free downloads will truly provide a curb to illegal downloads and satisfy consumers, or whether this will be an open doorway to yet another round of consumer-demands for DRM-free music. One thing Qtrax does not provide is DRM-free usage of files, and there remains a large market of users who want to buy their files and use them wherever and however they want.

We also will look forward to this evening, when the system goes online and we can sample the encoding resolution of the system and how well the Qtrax music management and playback schema works. Mac users will need to wait until April according the the Atrax website.