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UPDATE: 7:12 A.M. (1-28-08): Qtrax continues to delay the launch of its much awaited legal file-sharing site as more record labels confirm that the startup doesn't have permission to sell their music.

For weeks, Qtrax, an ad-supported P2P site, had promised to offer free and legal music downloads from all four of the major record labels when it opened for business.

But despite earlier reports, Qtrax's Web site will apparently not feature legal downloads from any of the majors when it debuts. On the eve of the site's launch, Warner Music Group and Universal Music Group said that Qtrax was not authorized to offer their music.

Both companies said they continue to negotiate with Qtrax, but emphasized that they don't have a done deal. A spokesman from Sony BMG echoed the other two companies by confirming on Monday morning that the label has not signed on to Qtrax either.

The Los Angeles Times reported on Sunday that New York-based Qtrax is also without a final agreement with the EMI Group. The blog, Silicon Alley Insider, was first to report on Qtrax's troubles.

Meanwhile, Qtrax has missed it's launch time of midnight Monday morning ET. More than eight hours later, visitors were still not allowed to download music. Robin Kent, a Qtrax marketing executive said that it might be another 24 hours before the company can enable downloads.

Qtrax CEO Allan Klepfisz acknowledged in an interview with CNET News.com late Sunday evening that his company may not possess agreements "written in stone," but that it doesn't mean Qtrax is without the labels' consent to feature their music.

"This is a tempest in a tea cup," Klepfisz said from the Midem music conference in Cannes, France. "It's true, some of the deals may not be locked in ink, but it's also true that we had understandings. In some cases, we had endorsements."

Klepfisz said it was likely the Qtrax Web site would debut featuring music from all four labels despite the public comments by UMG and Warner. Is he worried about a lawsuit?

"The answer is nobody has threatened us with a thing," Klepfisz said. "We plan to release music the way we said we were."

Qtrax's business model is based on offering people an attractive and legal file-sharing site.

The company's music offering sits on top of the Gnutella file-sharing network. Once a user downloads Qtrax's software client, they can look for songs with the help of the company's finger-printing technology.

Qtrax guarantees to protect customers from spyware or viruses that plague illegal sites. The way Qtrax makes money is by placing ads on its Web pages. The company then splits the ad revenue with the labels.

Recently, the labels have embraced ad-supported models. What they don't seem keen on are ad-supported sites that offer downloads.

For example, services such as Imeem and Last.fm, which stream music to listeners but don't allow them to download it to a computer or portable device, offer songs from all four top labels.

SpiralFrog, one of the best known services and one that enables people to download to a PC and some portable devices, has been toiling in the sector for nearly two years and has only managed to land one of the biggie labels: Universal Music Group.

It's a full hand of cards for Amazon: the Web's mega-retailer announced Thursday that it will be selling music from Sony BMG Music Entertainment in its Amazon MP3 store. This means that Amazon MP3, which only sells "naked" tracks without any digital rights management (DRM) protection, now has deals with all four major music labels. Because of the lack of copy protection, any song from Amazon MP3 can play on virtually any media-playing device, from PCs to music players to cell phones and PDAs.

The DRM-free songs from Sony BMG will be available for purchase on Amazon MP3 later this month.

Sony BMG announced earlier this week its intent to drop DRM from its music, making it the last major label to do so. Amazon MP3, which launched in September, already sells music from the other three major labels--EMI, the Vivendi-owned Universal Music Group, and Warner Music Group--as well as over 33,000 independent labels. Currently, there are 3.1 million songs for purchase.

A full catalog of DRM-free music files means that Amazon is legitimately poised to take on Apple's iTunes Store, the industry leader by far in digital music sales. Most of Amazon's songs, which range largely from 89 to 99 cents, outprice Apple's 99-cent standard. And as the result of disagreements with Apple, Universal Music Group has not licensed its DRM-free catalog to the iTunes Store.

In the meantime, Apple dropped the prices of its DRM-free songs from a premium $1.29 to the regular 99 cents, a sign that it was starting to feel the pressure from Amazon.

Amazon doesn't yet have the market share to start boasting, but it finally has the upper hand in a culture that has increasingly turned against digital rights management. User experience reviews of Amazon MP3 have been mixed, but there's little doubt that this poses the most formidable threat to the iTunes monopoly yet.

Call it a mix-and-match approach to music retailing.

Sony BMG's Platinum MusicPass

Sony BMG Music Entertainment, one of the top four music labels, is the latest to meld an offline-online sales strategy. The record company said in a press release it will soon offer gift cards through brick-and-mortar stores that can be used to redeem music from the Web.

The best part of the offering is that the music is available in unprotected MP3s, more proof that Sony BMG is easing away from copy-protection software. Citing unnamed sources, BusinessWeek reported last week that the label is preparing to strip digital rights management software from at least part of its catalog. The other three large record companies have already begun dropping DRM.

The gift cards, called Platinum MusicPass, can be purchased at Best Buy, Target, and other retail stores starting Jan. 15. The way they work is this: fans of Alicia Keys, Bruce Springsteen, or other Sony artists can purchase the cards, scratch the back off to reveal a PIN and then punch that number into Musicpass.com to retrieve full-length albums. Initially, 37 titles will be offered.

It's important to note that the music is "anonymously watermarked," which means that it can't be used to identify users or where the music was purchased, according to the company. The watermarking is intended to help the label learn whether songs are being shared on peer-to-peer networks.

Considering Sony's history with privacy, it's likely that some users might get spooked.

Sony ignited a major controversy two years ago when it was discovered that the company had used "rootkit" technology to embed copy protection software in its CDs.

The gift cards feature artist images and album information and represent the latest effort by a record company to spur people to buy complete digital albums. The Internet has rung the death knell for albums but the labels continue to look for ways to boost sales.

Other efforts by some of the company's competitors include music-loaded USB drives. Warner Music Group, which recently reported that it's the only major record company to grow unit sales in 2007, released an album by the band Matchbox Twenty on a USB drive fitted into a bracelet.

A nice idea, but the public has yet to show much interest in buying digital music attached to physical packages. Why not just buy a CD and rip the music later?

To everyone who has ever griped about music locked up in copy-protection software, it appears that the technology is on its way out.

Sony BMG Music Entertainment, one of the top four music labels, is preparing to offer part of its catalogue without Digital Rights Management software, according to a story in BusinessWeek.com, the online publication of BusinessWeek magazine.

According to BusinessWeek, Sony BMG plans to reveal its plans sometime in the first quarter. Citing an unnamed source, the magazine reported that Sony BMG, a joint venture between Sony and Bertelsmann, will participate in a song giveaway as part of a promotion for the Super Bowl on Feb. 3. The DRM-free music will be distributed via Amazon's download service.

Representatives from Sony BMG and Amazon declined to comment.

The move by Sony BMG is significant because it means that all four of the largest record companies are at moving towards digital music unencumbered by copy-protection schemes.

DRM was supposed to safeguard music but has done little to prevent widespread file sharing. But too often only the people who purchased songs legally were affected by DRM.

People who bought music at legitimate online music stores, such as Apple's iTunes, couldn't listen to their music on just any device. There was often confusion about which songs played on which devices.

Last year, Apple CEO Steve Jobs called on the music industry to do away with DRM.

Many of the top music-subscription services, such as Yahoo Music and RealNetworks' Rhapsody service continue to use copy-protection software.

More Britney, coming soon to Yahoo Video.

(Credit: Jive Records)

Yahoo announced on Tuesday that it has expanded its partnership with music mega-label Sony BMG to bring the company's music videos to its Yahoo Video platform.

The two companies already have an existing content deal, but this expanded agreement will add more video to Yahoo's catalog and allow Sony BMG artists' audio to be used in user-generated Yahoo audiovisual content. Additionally, Sony BMG media on Yahoo will be available in more regions across the globe.

Sony BMG artists include Bruce Springsteen, Alicia Keys, Bob Dylan, Britney Spears, and Avril Lavigne.

This is the latest in a series of music video deals that Sony BMG, a joint venture between Bertelsmann and Sony Corp., has made. Last month, the label announced that it would be offering videos on MySpace.com, and it already has a deal in place with Google and its YouTube subsidiary, as well as several social-music sites like Imeem.

(Credit: BMG)

Sony BMG, one of the top four music labels, will begin offering music videos from the likes of John Mayer, the Dixie Chicks and Beyonce.

On Tuesday, the companies said that they will stream the videos from the artists' profile pages. Sony also said that it will also include some audio tracks available as well.

The companies will split the advertising revenue, according to a statement. MySpace has also agreed to promote Sony artists throughout the site.

Record labels are looking to expand into different distribution outlets outside of Apple. Independent bands have flocked to MySpace to promote themselves, but Sony provides MySpace with legal music content from established artists.