Qtrax has signed a monumental deal with Universal, the world's largest record label and home to big money making acts like Amy Winehouse, U2, Mariah Carey and Kanye West. The deal allows 25 thousand tracks available, legally online, for free for downloading and file-sharing. The agreement is widely believed to cause other major labels to follow suit.
Qtrax will piggy-back with existing illegal peer-to-peer services but will clear all the publishing rights with the various labels and cover the costs with embedded advertising. Qtrax has signed deals with Beggars, the UK's largest independent label, home to Dizzee Rascal and the White Stripes, as well as with Sony/ATV and EMI.
Qtrax is one of the only companies that has successfully made a profitable business by offering free ad-based downloads. The contract with Universal is the first with a major label that covers both the recording and the publishing rights and could mean that music by other artists could be available within a month or so. Initially, however the deal is believed to be available only to 'customers' in the US.
The music publishing industry has been busy of late with deals being signed left and right as labels seek to find ways to hang on to their acts while catering to the change in the new online business model of free! Earlier this year We7, backed by Peter Gabriel, began offering downloads with embedded audio ads, signed a deal with Sony BMG.
Other sites like Imeem and Last.fm have also signed deals with leading labels to act as a vast library of streaming songs, akin to a massive online dukebox wherein, ads are posted on screen while songs are searched and downloaded.
This side of the pond, Spiralfrog, out of New York has been striving to build a base in the US and Canada has also contracted with Universal.
Qtrax promises that the tracks will be owned by their 'customers' indefinitely in exchange for keeping up with rights management software upgrades. It will also enable iPod users to transfer music to their audio players, which could slow sales of downloads through Apple's iTunes Music Store.
Qtrax also plans to offer music related merchandise and concert tickets as a way to supplement the income from money generated from online ads.
Major labels are hoping this experimental alignment with the streaming and downloading medium with close the gap on huge revenues lost due to the collapse in CD sales and rampant online piracy. Long-term agreements though, still seem unlikely due to the minefield of licensing rights issues. The other viable model of bundling music into a Rhapsody format of a monthly subscription based model as with Nokia's Come With Music and MusicStation are all venturing into uncharted waters.
It will be interesting to see what the response will be to these collaborative deals, as much of the peer-to-peer file sharing community may still opt for the illegal download option, skipping out on those pesky pop-ups and audio ads.