Qtrax, ostensibly the first free and legal P2P service, went live yesterday to all sorts of questions. If there record labels didn’t sign any deals with the service, whose music would it be serving? Why would it make such a hullabaloo about its launch if the man behind the curtain was asleep? Will the source code for its main software component be released? (Qtrax is based on Songbird, which is GPL’d.) If so, what’s to stop “hacked” builds from connecting to the service?

This phrase I’ve read on many forums pretty much sums it all up: “Gnutella with DRM? Awesome!”

Good luck, bro.

Qtrax jumped gun on online deal, labels say [Los Angeles Times]

In what may be the dumbest business move of the year so far, Qtrax announced its free music download service this weekend before bothering to sign contracts with three of the four major labels. Now the music companies are saying, “Wait a second, there is no deal yet. We’re just talking to Qtrax.” Without the labels on board, there is no service.

We jumped on this story just like many other blogs and media outlets. Michael got a little excited about the prospect of ad-supported music downloads, and threw up a post while changing planes on his way back to the U.S. from Davos. The Times of London and many others bought the story as well. Maybe it was because the company’s CEO, with a straight face, told an audience at a music conference in Cannes and members of the press that all the major labels had signed on. That was clearly a misrepresentation, possibly a fraudulent one. Hyping your product is one thing. Telling an outright lie is another.

Qtrax is a subsidiary of Brilliant Technologies Corporation, which trades as penny stock, has not filed a 10Q with the SEC since last May), and has raised $30 million to launch this service. Its next move had better be more brilliant than its last one.

There’s some controversy regarding the music industry’s latest band aid, Qtrax, which is touted as the world’s first free and legal P2P service. The idea is you’ll put up with a limited number of ads on the Qtrax Web site and that you’ll tolerate the software “phoning home,” giving the company information like play counts. The music download service is set to launch at midnight tonight (which is weird because its Web site said the same thing last night around 10pm—maybe they’ll keep that “available at midnight” button on there forever) and supposedly has all sorts of record label support.

Supposedly.

The first article I read about the service, from the UK Times, said that Qtrax had the full support of EMI, Universal and Warner. Yet articles have popped up since then refuting that claim. Warner says it has nothing to do with Qtrax. Same thing with EMI and Universal. Makes you wonder just how viable Qtrax is after all.

Another oddity—iPod playback. Qtrax says that the files won’t initially be playable on the iPod because of the Windows-based DRM it uses on the files to track usage information (again, like play count). (The DRM doesn’t otherwise restrict your usage of the files.) The key word there is “initially,” since Qtrax says its files will soon be playable on the iPod. It says it found a way around FairPlay.

Unless that way around FairPlay is totally free, plane jane MP3s, then you can expect the next iTunes update to break Qtrax. It all sounds like smoke and mirrors to me.

Oh, and the Mac client won’t be available for another month. Really, is it so hard to code a Mac application?

Qtrax — Ad-Supported Music With iPod Compatibility? [Slashdot]

Qtrax, which has signed all four major labels (EMI, SonyBMG, Universal Music Group and Warner Music Group), launched yesterday with 25 million songs (compared to around 3 m for Amazon and 6 m for iTunes). Note: See update below.

It isn’t pretty – the downloaded songs are not compatible with iPods and have to be played via a proprietary player built on the Songbird platform. Ads are displayed during playback, even on music devices. For now the service is Windows only, so Mac users are left out. And right now the service is down completely from all the attention it’s getting.

For most people, BitTorrent and the music search engines are all they need for their illegal-but-highly-convenient music needs. Any additional hurdles means not a ton of usage. And since services like Imeem and Last.fm provide free on demand streaming music with ads, there is already real competition out there for Qtrax.

But the trend is clear – labels have given up on DRM completely and are willing to experiment with ad supported free downloads. Once they give up on the ad supported part of the model and just realize that recorded music is nothing more than marketing collateral for other revenue streams like live performances, we’ll have gotten somewhere. But my guess is that one of the labels has to go out of business first for that to happen.

Update: based on emails we’re getting, it sounds like Qtrax hasn’t actually signed all four labels – at least one or two remain on the sidelines. Silicon Alley Insider says three of the four labels have confirmed that they AREN’T in, making Qtrax look like a bit of a joke right now (I won’t use the word “fraud” until this all sorts itself out and I’ve had a chance to talk directly to the company).