Former RIAA chief tries to save Qtrax image

Qtrax missed another deadline.

The would-be ad-supported music service once again failed to meet a self-imposed launch date. The company said barely two weeks ago that it would roll out in Australia and New Zealand on November 5.

For most start-up services, launch delays are embarrassing, but not unexpected. For Qtrax, this is only the latest installment in a year-long run of embarrassing misfires, lawsuits, unpaid bills and broken promises.

Within the halls of the top recording companies, Qtrax's setbacks have begun to take a heavy toll on the company's already battered reputation. To make matters worse, the ad-supported model has lost a lot of credibility in the music industry after the collapse of Ruckus and SpiralFrog. Several of the other top competitors in the sector, including Spotify, Imeem, and iLike have begun gravitating towards other revenue sources.

"Qtrax is an absolute disaster," said one music industry executive who asked to remain anonymous. "It's an embarrassment."

What's noteworthy about the most recent Qtrax setback is that typically Allan Klepfisz, the company's founder, will do damage control with the media. This time, however, a music-sector heavyweight is out in front.

"It's a difficult environment to get capital in this industry," Jay Berman, a Qtrax adviser and former chairman of the Recording Industry Association of America told The Financial Times this week. Referring to Qtrax's claim that the company hopes to raise $50 million and Qtrax said last week that it has a deal with Baidu, one of China's top search engines, Berman said: "Is it ambitious? Yes, it is. Is it doable? Yes."

Klepfisz declined to comment. Berman could not be reached for comment.

Berman was once the recording industry's top lobbyist and according to my music source he used his clout to help Qtrax secure licensing deals with the top labels. A year ago, New York-based Qtrax announced that Berman, who has offered consulting services to several digital music companies including Project Playlist, was added to the Qtrax advisory board.

"Every time something happens with Qtrax, Jay has to get on the phone and calm everybody (at the labels) down," said the music exec.

But the source said Qtrax, at this point anyway, is in no danger of losing its access to the labels' music. He said it has paid and the labels will most certainly accept Qtrax's money. "Why wouldn't they?" he asked. "But they haven't exactly created a lot of good will in the business or enthusiasm for their product.

"Qtrax hasn't instilled a sense of confidence that they can actually make something of what they have," the exec continued. "The only reason the (recording) companies have given content to them is because of Jay. If Jay didn't get on the phone, Qtrax wouldn't have its deals."

What the exec is referring to, specifically, are things like Qtrax's history of failing to pay vendors. Oracle filed suit against the company earlier this year and several companies have won judgments in New York courts against Qtrax. The latest came two weeks ago when Monarch Capital Fund won an award of $133,000 against the company.

According to court documents, Qtrax agreed in March to pay off a $200,000 debt in installments. Monarch told the court that after paying $70,000, Qtrax stopped making payments in May.

Clarification: Earlier reports by a number of other publications indicated that Qtrax's deal with Baidu wasn't completed. Qtrax does indeed have a signed agreement with the Chinese search engine, Qtrax said Wednesday afternoon.

[nicmart]

We all know that, when it comes to integrity, the former head of RIAA is without peer. Except maybe a former KGB chief.

[tektaktyks]

LOL

[tektaktyks]

yea,another big FAIL!

[streamOG]

Greg,

Interesting piece for sure. It's not clear why Oracle is suing QTrax from the public's viewpoint. All I can say is that for BuyDRM, QTrax has been an excellent customer and paid every invoice we have ever presented them with.

It's not an easy task working to get free music online around the world. It's especially not easy when your catching so many arrows in the back. I know that Allan has taken the high road time and time again.

We aren't aware of a list of unpaid vendors either. Can you share more there? Beyond Oracle, who else has claimed they didn't get paid?

Regards,

Christopher
[e-mail]

[gerrrg]

No to DRM.

[MajorLAWLZ]

Yeah, Allan's taken the high road by trying to silence his critics with frivolous lawsuits against small-time blogs when they post something critical, and rightfully so, about Qtrax. Maybe you should have a look into the tons of lawsuits against Qtrax for failing to pay vendors for their services and failing to repay loans to investors.

[streamOG]

Greg,

By the way, the judgement above appears to just be a docket. Where's the full document. I think it's only fair that it be presented in it's entire form.

Regards,

Christopher
[e-mail]

[sandonet]

Hi Chris, all the stories about Oracle and the other Qtrax debtors can be found through our search and I also linked to some of them in our story, but here are some more links.

http://news.cnet.com/8301-1023_3-10310731-93.html?tag=mncol
http://news.cnet.com/8301-1023_3-10296693-93.html?tag=mncol;txt

[streamOG]

Greg,

I think it's poor taste to just provide snippets of documents. Most sites post or link to the entire document. I cannot comment on any of these other vendors but will say, as I have many times before, QTrax paid us every penny owed and these were 6 figure invoices.

I have to ask though... shouldn't you be supportive of a venture that wants to bring free music to the masses and not bagging on them? I know negative stories are what make the banner impressions go up but.....

Regards,

Christopher

[sandonet]

Chris,

I'm glad you got paid. It appears not everyone has. I've posted the document you requested. Sorry, it should have been up sooner. As for trying to be supportive, I don't think that's my role. I think reporting facts is more important. I have nothing against Qtrax. You've suggested that I'm writing these stories because I'm trying to attract hits, but the readership on Qtrax stories is very low. One of the other readers suggests I'm doing this to help Last.fm.

Believe it or not, if Qtrax were killing it and seeing profits and revenue growth and attracting lots of eyeballs I'd be writing it. If they had a big following, the readership might be higher. There's no axes to grind here. Hope you're well. GS

[Hammertime10012]

If you'll notice, the FT ran the story yesterday and the rest of the media is doing follow up. So does that mean that the FT is "bagging" on Qtrax? Is it the FT's duty to be supportive of Qtrax? Exactly who in the media is responsible for being the cheerleader for Qtrax?

[MajorLAWLZ]

LOL, it's the media's job to be supportive of a venture that's unproven and has a terrible track record when it comes to promises made in press releases time and time again?? Hello, is anybody home in your brain, Chris? Do you not realize how absurd that statement sounds? The job of the media is to report the facts, which in this case, Greg has done an excellent job. Furthermore, he's not editorialized his article at all.

I think it's hilarious that you want the media to help spin lies for you, and make your company sound grand when they have yet to accomplish a thing other than take people's money and **** it down the drain. Hell, if I'd known that that was the main criteria of a "successful" company, I would have started taking numbers for investors long ago -- so I could **** other people's money down the drain too!! Anyways, no one is holding their breath for your product to ever actually launch, especially since "coming soon" with you guys means over 2+ years and counting.

[luckybleu]

I couldn't understand the seemingly outright hostile attacks on Qtrax,after all they are just a startup co. trying to get off the ground.Then I realized that cnet's parent company owns its own streaming music service ,Last F.M. Now it all makes perfect sense.Protect your parent Co. against future competition,thus protecting your own interests.
Ever hear of a thing called full disclosure?

[MajorLAWLZ]

Hahaha, more paranoid delusions I see, luckybleu. I find it hilarious that it's always somebody else's fault that Qtrax screws up, but it's never any of their management's fault. The whole far-out mentality goes as far up as their own CEO, who enjoys blaming other people in his "official" Qtrax blog when he doesn't deliver on his promises (which is pretty much all the time it seems).

[FreeTunes34]

Unbelievable. Pile on the bandwagon, Greg. Your article mentions problems that any company might run into, but you don't even think to mention the positive strides made. And anyone writing an article quoting a big shot who wants to remain anonymous should not even write the article. If this expert feels SO strongly, why would he worry about giving his name. You have not been fair- you mention that you have nothing against Qtrax, and you report facts, yet I didn't see an article from you when Qtrax signed major deals with labels for GLOBAL FREE MUSIC. Or when Baidu signed a deal- that to me is huge news considering they are in a battle with Google. You mean that's not at least exciting? Come on, man.
The readership is not here, by the way, because nobody wants to read 10 stories from this site or TMV about a company they know nothing about. That's where your theory is flawed. You have not given the world a chance to learn a thing about what Qtrax is trying to do, so nobody knows anything about them. If you had, on the other hand, mentioned some of the positive things happening, you would have much more interest in your "bashing" articles.

[Hammertime10012]

I believe that Mr. Sandoval has been very professional in his reporting and seems to have stuck to the facts. There is absolutely no editorializing in the story above.

Getting global licenses is a matter of cash up front. No big deal. If you'll recall, when Universal made a deal with SpiralFrog, they had to pay Universal for every free track at full wholesale price in advance. It was Universal's view that if someone wanted to buy a million tracks from them and then give them away on a street corner it was fine with them. As long as they were paid in full in advance. It's the same here.

I'm sure that he would have written about any Qtrax positive strides, except there haven't been any. Qtrax has gotten every opportunity to make good on their claims. But when they lie to the world media, as they did in Jan. 2008, their credibility has to be questioned. Anybody's would. Unfortunately the company is a joke, an embarrassment.

Qtrax has been around for 7 years now, is far from being a start-up, and has yet to launch a product. Mr. Sandoval isn't keeping them from doing so.

[Hammertime10012]

I believe that Mr. Sandoval has been very professional in his reporting and seems to have stuck to the facts. There is absolutely no editorializing in the story above.

Getting global licenses is a matter of cash up front. No big deal. If you'll recall, when Universal made a deal with SpiralFrog, they had to pay Universal for every free track at full wholesale price in advance. It was Universal's view that if someone wanted to buy a million tracks from them and then give them away on a street corner it was fine with them. As long as they were paid in full in advance. It's the same here.

I'm sure that he would have written about any Qtrax positive strides, except there haven't been any. Qtrax has gotten every opportunity to make good on their claims. But when they lie to the world media, as they did in Jan. 2008, their credibility has to be questioned. Anybody's would. Unfortunately the company is a joke, an embarrassment.

Qtrax has been around for 7 years now, is far from being a start-up, and has yet to launch a product. Mr. Sandoval isn't keeping them from doing so.

[streamOG]

HammerTime,

The only tangible thing in your posting is the false statement that QTrax has yet to launch a product. Where have you been for the last 18 months? HELLO?

Give me a break. I am positive there are several unknown spinmasters up here trying to bash them. You are either from InterNAP or Oracle or some investment chop shop or your a former SpiralFrogger.

Let's go back to the focus of Greg's article but moreover let's talk about how QTrax has put it all on the line to get free music to fans the worldwide. Where is that headline?

Christopher
[e-mail]

[Hammertime10012]

Excuse me, sir. But Qtrax hasn't launched a real music service in 7 years. They were up and operating for 3 weeks in April of this year. And then gone. I don't know what kind of universe that you live in, but that is far from a launched product.

As far as my comments being "intangible", are you suggesting that Mr. Sandoval was not professional and editorialized? Are you suggesting that the SpiralFrog deal was not as described in my post?

Judging from your comments, it appears that you may suffer from a learning disability or a lack of reading comprehension. But then again, you are in the DRM business. That's clever.

[Hammertime10012]

Excuse me, sir. But Qtrax hasn't launched a real music service in 7 years. They were up and operating for 3 weeks in April of this year. And then gone. I don't know what kind of universe that you live in, but that is far from a launched product.

As far as my comments being "intangible", are you suggesting that Mr. Sandoval was not professional and editorialized? Are you suggesting that the SpiralFrog deal was not as described in my post?

Judging from your comments, it appears that you may suffer from a learning disability or a lack of reading comprehension. But then again, you are in the DRM business. That's clever.

And by the way, teh headline is "Music industry thinks Qtrax a joke". Mr. Sandoval buried the lead.

[MajorLAWLZ]

Chris,

People might actually believe what you were saying if it wasn't painfully obvious that you are biased, given your close ties to Qtrax.

"The only tangible thing in your posting is the false statement that QTrax has yet to launch a product. Where have you been for the last 18 months? HELLO?"

Um, hi! Where exactly have you been? Last I checked, the only "launch" was a beta version that only lasted a couple of weeks. I would hardly classify that as a formal launch of their service. Or are you referring to your massively hyped launch of vaporware back at Midem? If there's something else going on, you may want to enlighten the rest of the world, including your shareholders, because from the casual observer, you guys have produced squat in terms of tangible results.

"I am positive there are several unknown spinmasters up here trying to bash them."

Where's your proof of such manipulation? If anything, that sounds more like paranoia and a fictitious story to try to cover up Qtrax's obvious shortcomings and inexplicable behavior of making promises, only to recant them later. Would you like me to list all of the promised launch dates that never materialized? Or how about the promised compatibility with the Mac that was "coming soon" over a year ago now? Or how about all of the promised updates related to funding, licenses, portability, etc. in Qtrax's update this past July that never really happened?

"You are either from InterNAP or Oracle or some investment chop shop or your a former SpiralFrogger."

ROFL! Talk about your big fat whopper (the British term for lie) right there. Have you heard of a fallacy before, Chris? You may want to brush up on your logical reasoning skills, as you're committing fallacies left, right, and center. Just because someone is critical of Qtrax does not in any way mean that they are from any of those companies you listed.

"Let's go back to the focus of Greg's article but moreover let's talk about how QTrax has put it all on the line to get free music to fans the worldwide. Where is that headline?"

What exactly have they put on the line? For my standpoint, it appears to be nothing. If you're referring to their reputation/credibility, then I agree that they've done a bang up job destroying what little bit they had. Otherwise, I have no idea what you are trying to get at whatsoever. Care to enlighten us?

The bottom line here is that all you're doing is attempting to smear the good name of Greg Sandoval with a bunch of flawed arguments. Chris, you've failed to provide any shred of evidence whatsoever to back up your claims, and thus, any sane person would see through the garbage you're attempting to spew.

[FreeTunes34]

Hammertime, you mean, anonymous music industry exec who won't give his name because he is afraid of anyone knowing who he is, or may not even be an exec, said they are a joke? Give me a break. And comparing to SF? Come on.

[Hammertime10012]

Sir, first of all, if you look at the SF model you will realize that it was adopted by Qtrax. Secondly, did it ever occur to you that 2 of the main drivers behind SF are now execs with Qtrax? I think that there is an undeniable similarity between the two.

Record company execs always comment anonymously. Mr. Sandoval is very well respected in the digital media universe, with excellent sources at the highest levels at the major recording companies. You must realize that Sandoval is not some hack writer, but an accomplished reporter with a very respectable career that includes the Washington Post and the Los Angeles Times. He is a serious journalist working for a very serious organization. They do not print anything that is not true and verifiable. That's the way journalism works.

Just because you may not like the message, it does not give you the right to kill the messenger. It seems as though most everyone on this forum want to assassinate the character of the reporter. It is naive, ignorant and uninformed to do so.

[FreeTunes34]

While the models may be similar, I find it curious that these bashers of Qtrax never mention the key DIFFERENCES in Qtrax from SF, in that it's all about volume, size of audience, size of music catalog, etc. That is such a huge difference that sets them apart from SF and probably why the FORMER SF guys left to GO TO Qtrax. SF had major flaws in that it had no chance in keeping interest with no music and such a small potential of audience. They were constantly trying to play catch up. Instead, Qtrax is getting everything into place, FIRST, and THEN launching. I can't believe there is no critical thinking in this concept.... of why it is so much smarter to have all the pieces in place first- a massive audience, a massive catalog. This will bring the volume of potential users that SF NEVER had. Do you not see that difference? If not, you are missing so much- but if so, why aren't these guys pointing these issues out in their writings? It seems like such common sense. No, instead they write about bounced checks, and other start up problems that nobody that simply wants to see a legit free music site succeed, REALLY CARES ABOUT! That is why I have problems with the messengers- there is so many accomplishments... to at least mention them would be fair, no?

[Hammertime10012]

Sir:

Could you please point out the key differences between SF and Qtrax? You mention that one difference is that Qtrax is trying to do it right but fail to mention that Qtrax has issued innumerable launch dates and missed every one; that it can no way be deemed to be a start up as it has been trying to get a launch for over 7 years with millions spent and nothing to show for it except judgments and bounced checks; that SF actually launched and stayed up for a significant period of time.

You also mention Qtrax accomplishments. Exactly what are they?

The fact is that the media publishes Qtrax press releases, which have to date consisted of mostly false promises. These press releases are designed to put a positive spin on anything Qtrax does. It is the media's job to shine a light on the truth. This is when Qtrax is vilified.

[FreeTunes34]

I pointed out the differences between SF and Qtrax. Go read again. The models are similar, with a huge difference being the strategy in which SF put their model into action. You can't gain users slowly with a poor area of coverage and poor collection of music. It must be massive audience with massive catalog. That is all the difference in the world. With respect, you are obviously not getting the points I make, so I'm done trying. As for accomplishments, go look at the past year's worth of news for Qtrax- not the negative articles about launches- the news about their deals and contracts. They are making sure all of them are in place, first, not trying to operate on a 3 cylinders.

[Hammertime10012]

I don't quite understand. Every press release they have issued over the last year has been published, including any deals/contracts. Deals have been few and far between. Any negative press is a direct result of Qtrax's action, or in their case, inaction. These are the facts. People don't just go off and make this stuff up. If it weren't true, then Qtrax would be filing lawsuits against the likes of FT, Viacom, AP, etc. They have not. Furthermore they have not provided any credible reasons to dispute the negative stories.

I'm afraid that your argument just does not hold water. You have not given specifics as to differences between SF and Qtrax and Qtrax accomplishments. There really are none of either. I wouldn't call a launch strategy, or lack of one, a differentiating factor in the business model. They are essentially the same. And as I said before, SF at least launched. And it didn't take them 7 years to do it!

[FreeTunes34]

the point is they launched but their company failed because of poor deals and poor strategy. qtrax' strategy is what give them a much better chance to succeed because of the music they will have, the exposure they will have and the deals they have in place. i don't understand how you can't comprehend that. the differences in strategy allow them to make money where SF could not. the articles mean nothing. they will not shy one person in the world away from trying qtrax once they DO launch. free music is free music.
nobody will care about the bashing articles... nobody really knows about them now, in the bigger scheme.

and who cares if it took 7 years- as a user, i would much rather have it right than to launch in 3 years or 5 years if the service is worthless. you need to do homework on the achievements, technology put into place, and the highly successful team working with qtrax. do that before responding, please.

[Hammertime10012]

Sir, you are 100% wrong on every statement you've made here. I have done my homework, years of it, and have a very good unbiased grasp. I'm afraid that you have not made a very good case for Qtrax. Unfortunately, neither has Qtrax. The team is far from competent, otherwise they could at least launch SOMETHING. As far as your launch strategy goes, they have none. Following your logic, they should first launch in the US, the largest and most profitable market. Instead they choose to launch in countries that will no way in heaven give them the scale that they need to show proof of model let alone find and kind of small success.

And as far as your argument regarding their advanced technology, they don't even have their own technology! They use the open source Songbird browser and by every account the Qtrax client is absolute crap. It took me over 20 minutes just to install it!

It's just ridiculous and a poor excuse for music service or a technology company.

[FreeTunes34]

HAHA.. US , the largest market? 300+ MILLION internet users in China, and most use portable devices for internet and phones.. ones that will work with Qtrax? And you are saying to launch in the US fist???? Yeah, makes perfect sense- launch in the US... THEN the country with more internet users than the US has PEOPLE.... HAHA, sorry, talk about loss of credibility.. you just showed you don't know the market, the technology, or the future of music. Goodbye.

[Hammertime10012]

OK. So why don't they launch in China? Seems that they promised to do that on Oct. 29 and didn't. And BTW, China is an emerging market, in case you didn't know. And the local repertoire is what makes the difference there. I haven't heard any announcements of deals with Chinese music companies or a government mandated local partner. And don't say that that have partnered with Baidu. That's fuzzy at best and is not a true partnership in sense that it cannot meet the government requirements. It is most likely a pay per click deal and Baidu is working directly with the music industry to put together their own service similar to Google China's.

I doubt very much that Qtrax will ever launch in China, or anywhere for that matter.

[MajorLAWLZ]

Actually it's 300+ million internet users in China that currently get their music for free without it being DRM encumbered. Why on earth would they switch to an inferior product that would restrict how they could use their music? That's rich, dude. Quit trying to flog the dead horse already. DRM is dead ... Qtrax is too. They had their chance, and failed to deliver. Apparently, "coming soon" means 2+ years. LOL! The truth hurts, doesn't it?

Now for an anecdote:
Qtrax reminds me of an employee that my boss once had, let's call him X. My boss would assign X a task, which X promised to complete in a week. In a week's time, X came up with an excuse as to why the task was not completed. My boss, being a kind fellow, gave X another week to complete it. However, once again, X failed to do so. This time, my boss took a different approach and asked X how much more time he needed. X said it would take him another 2 weeks to get the task done, as he ran into some unforeseen difficulties. Finally, those 2 weeks past but yet the task still was not done. Naturally at this point, my boss was not pleased with X's behavior and fired him. It turned out that X had no intention or ability to actually complete the work in time like he promised; X was simply trying to buy himself extra time so he could try dig his way out of his lies.

[luckybleu]

Thanks for your comments Wayne, Stop, Hammertime, Can't touch this.
We're on to you. Don't be a hater , Can't touch this...
Whats the matter lost the stones to post under your real name now?

[MajorLAWLZ]

Hahaha, that's rich. Ever heard of the term "hypocrite", luckybleu? Or do I need to refresh your memory about this incident I read on another blog (see the comments section) where you impersonated another user.

http://www.themusicvoid.com/2009/08/qtrax-ceo-tells-the-truth-or-at-least-the-courts-do/

[ecbuck]

Freetunes -

Why can't I log into my US based Qtrax account. I have downloaded hundreds of tracks earlier this year but now can't access them.