Qtrax CEO Allan Klepfisz Says Company Has Licenses With Three Majors
Qtrax CEO Allan Klepfisz Says Company Has Licenses With Three Majors

Qtrax music service CEO Allan Klepfisz told Billboard.biz today that the company now has deals with three major labels. He declined to identify which ones, but it seems that Warner Music Group is the lone holdout. Billboard has been told EMI has a deal and music from Sony Music and Universal Music Group are currently available for download.

"We have three out of four of the majors currently licensed" and the rights to "the complete digital catalog for those three," Klepfisz tells Billboard. In addition, Qtrax is finalizing negotiations for a "large indie aggregator." As for the lone, unsigned major, he says Qtrax is "in productive talks" with the company. Klepfisz also said the company plans to integrate ticketing and merchandise.

That information, however, was less surprising than the fact that the conversation was happening at all. Qtrax -- now available in 10 countries, including the U.S. -- launched early this month, over three years after its first launch attempt. And frankly, the service looks like a bit of an anachronism. It relies on DRM-based downloads when streaming is the focus of new startups. It launched without a mobile play. Its design and layout is more suited for 2001 than 2011. And it seeks entry into markets around the world when the most successful services have first focused on a single market.

So why has Qtrax pushed onward? Billboard spoke with Klepfisz about the company's long absence, his belief in the ad-supported business model and foreign markets' need for an alternative to piracy.

Q: Let me start off with an obvious question, but I have to ask it: What took so long?

A: You're right in saying it's an obvious question and it's a good one. I think, first of all, we have done what nobody has done to this date, which is manage to acquire global license for free and legal downloading. They take a long time because they're a departure, obviously, from what licensors normally do.

Secondly, obviously a lot of people went out of existence. The flipside of what took so long is at least we didn't go out of existence. I think somebody published a list of 100 music companies that had gone out of existence (Editor's note: Qtrax is #24 on Digital Music News' "100 F---ed Music Companies" list http://www.digitalmusicnews.com/stories/111210onehundred). I think we may have been on that list. Thankfully, the news of our death was premature and we're still here.

The third thing is this is something you have to be in for the long haul. It takes a lot of money. It takes a lot of time to raise the money. It does take a lot of negotiation and licensing. All in all, that added up to the amount of time it took.

Q: How has the product itself changed over the years? Or is it the same product that you originally started out with?

A: The answer is it's changed quite a lot. Obviously there are some similarities. First of all, technically it has changed a lot. We went through a lot of technologies. We're now using Silverlight technology, which is cross-platform and I believe, if the press is correct, it's going to be a lot more cross platform soon -- including a lot of mobile devices.

Second, the actual business basis has changed quite a bit and that's reflected in the product. I guess we started out with a purer ad model. We now have a multiple revenue model. So I think that's an important change also.

Q: What is that multiple revenue model you mentioned?

A: Not anything we want to reveal. We don't want to signal our competition before we're fully up and running.

On the ad side, we think it can be done a lot better. It was fairly standard for technology companies to believe that somehow they could miraculously sell advertising around the world. They need to have the advertising expertise. Nor can advertising be effortlessly sold around the world no matter how much expertise you have. Without going through all the details, we are relying on partners in various places and we think we've got a better model.

The second thing is there are opportunities for music fans in terms of things they are really prepared to spend money on that we think haven't been properly provided. One of the sad things is because a very large percentage of music is consumed on illegal sites, those people with a legitimate offering -- people who want to sell tickets, people that want to sell merchandise -- related to the music fan have stayed away from those illegal sites with good reason. When you have a free and legal service, you can bring those all under one umbrella. We will have tickets available, merchandise available, and we'll be doing increasingly localized versions of those offers because, obviously, Ticketmaster is not available in every country, Amazon is not available in every country, etcetera.

The other source of revenue is business-to-business. I won't go into detail on them, but we think there's a lot of business-to-business opportunities also. What we think fundamentally it's not necessary for the fan to pay, there are others that will pay for the privilege of the fans to enjoy music.

Q: Can you talk about your approach to mobile? I haven't seen anything about mobile in the information recently. Is there anything going on there?

A: Absolutely. We have extensive licensing for mobile and obviously we don't want to squander it. So we have mobile plans. They'll take a little while to roll out. Within roughly the next two or three months you should expect to see something there.