'Free' Music-Sharing Service May Be Bogus

A revamped online file-sharing service that promised to offer unlimited, free music downloads from all the major record labels hit an apparent snag Sunday after three of the Big Four companies denied they had given the service permission.

Qtrax touted in a press release Sunday morning that it was the first Internet file-swapping service to be "fully embraced by the music industry," and boasted it would carry up to 30 million tracks from "all the major labels."

New York-based Warner Music undermined that claim, declaring in a statement that it "has not authorized the use of our content on Qtrax's recently announced service."

Universal Music Group and EMI Group PLC later confirmed they did not have licensing deals in place with Qtrax, noting discussions were still ongoing. A call to Sony BMG Music Entertainment was not immediately returned.

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Music services such as Qtrax must secure licensing agreements from the record companies, which own the rights to master recordings, and music publishers, which control the rights to song compositions. Each of the major recording companies also operates music publishing units.

Allan Klepfisz, Qtrax's president and chief executive, acknowledged Sunday that the deal with Warner Music had not been signed, but said he expects to reach an agreement on terms "shortly."

"With everybody else, we have agreed on all terms," he added, noting that in some cases, deals had yet to be formally signed.

Qtrax had been scheduled to make its online debut on Monday, a day after its splashy coming-out party at the annual Midem music business conference in Cannes, France.

The development marked an inauspicious start for Qtrax, the latest online music venture counting on the lure of free music to draw in music fans and on advertising to pay the bills, namely record company licensing fees.

The service was among several peer-to-peer file-sharing applications that emerged following the shutdown of Napster, the pioneer service that enabled millions to illegally copy songs stored in other music fans' computers.

Qtrax shut down after a few months following its 2002 launch to avoid potential legal trouble.

The company said its latest version of the service still lets users tap into file-sharing networks to search for music.

Downloads however come with copy-protection technology known as digital-rights management, or DRM, to prevent users from burning copies to a CD and calculate how to divvy up advertising sales with labels.

Qtrax downloads can be stored indefinitely on PCs and transferred onto portable music players, however.

The company also promises that its music downloads will be playable on Apple Inc.'s iPods and Macintosh computers until April 15. That's unusual, as iPods only playback unrestricted MP3s files or tracks with Apple's proprietary version of DRM, dubbed FairPlay.

In an earlier interview, Klepfisz declined to give specifics on how Qtrax will make its audio files compatible with Apple devices, but noted that "Apple has nothing to do with it."

Apple has been resistant in the past to license FairPlay to other online music retailers.

That stance has effectively limited iPod users to loading up their players with tracks purchased from Apple's iTunes Music Store, or MP3s ripped from CDs or bought from vendors such as eMusic or Amazon.com.

Phone and e-mail messages left for Apple on Sunday night were not immediately returned.

Rob Enderle, technology analyst at the San Jose-based Enderle Group, said he expects Apple would take steps to block Qtrax files from working on iPods.

Last fall, the company issued a software update for its iPhones that created problems for units modified by owners so they would work with a cellular carrier other than AT&T Inc. As a result, some modified phones ceased to work after the software update.

The move prompted antitrust lawsuits on behalf of some consumers.