Qtrax inks deal to pay royalties

Middle ground created to compensate artist

HOLLYWOOD — New peer-to-peer service Qtrax has signed a deal with BMI to pay artist royalties on songs illegally downloaded on the Internet.

Unusual relationship creates a middle ground that allows music downloaders to compensate artists at the same rate they receive for radio performances each time they play a song downloaded from Qtrax on their computer. At the same time, they’ll be vulnerable to lawsuits from the RIAA for downloading songs without paying.

Songs put onto the Qtrax service, scheduled to launch in the third quarter of this year, will be translated into a new format that tracks playback and prevents users from burning them onto CDs or transferring them to portable devices. Singwell Intl. and LTDnetwork, the companies behind Qtrax, are hoping to sign deals with labels to allow users to purchase the right to burn or transfer those tracks.

“Our view is that free music downloads aren’t going away and somebody ought to attempt to find a middle ground between the needs of record companies, artists and consumers,” LTDnetwork CEO Allan Klepfisz said.

Royalties will be funded by contextual ads related to searches. When users search for songs from Madonna, for example, they’ll be presented with links to purchase CDs, DVDs and books by her in addition to pirated tracks of her songs.

If successful, Qtrax will be the first service to provide some compensation for songs on peer-to-peer networks without user payment. Its model is similar to one long championed by P2P supporters who want artists to receive standard royalty rates for playback of downloaded songs.

It remains to be seen, though, whether other performing rights groups and labels will partner with QTrax or whether BMI will instead find itself allied with another P2P service scorned by the rest of the music industry.

“By signing the BMI agreement, Qtrax is breaking new ground for a new breed of licensed peer-to-peer services,” said Richard Conlon, BMI veep of business development and marketing. “We hope that the BMI agreement will be the first in a series of agreements that Qtrax and others will enter into to create totally licensed services.”