Former RIAA chief tries to save Qtrax image

Qtrax missed another deadline.

The would-be ad-supported music service once again failed to meet a self-imposed launch date. The company said barely two weeks ago that it would roll out in Australia and New Zealand on November 5.

For most start-up services, launch delays are embarrassing, but not unexpected. For Qtrax, this is only the latest installment in a year-long run of embarrassing misfires, lawsuits, unpaid bills and broken promises.

Within the halls of the top recording companies, Qtrax's setbacks have begun to take a heavy toll on the company's already battered reputation. To make matters worse, the ad-supported model has lost a lot of credibility in the music industry after the collapse of Ruckus and SpiralFrog. Several of the other top competitors in the sector, including Spotify, Imeem, and iLike have begun gravitating towards other revenue sources.

"Qtrax is an absolute disaster," said one music industry executive who asked to remain anonymous. "It's an embarrassment."

What's noteworthy about the most recent Qtrax setback is that typically Allan Klepfisz, the company's founder, will do damage control with the media. This time, however, a music-sector heavyweight is out in front.

"It's a difficult environment to get capital in this industry," Jay Berman, a Qtrax adviser and former chairman of the Recording Industry Association of America told The Financial Times this week. Referring to Qtrax's claim that the company hopes to raise $50 million and Qtrax said last week that it has a deal with Baidu, one of China's top search engines, Berman said: "Is it ambitious? Yes, it is. Is it doable? Yes."

Klepfisz declined to comment. Berman could not be reached for comment.

Berman was once the recording industry's top lobbyist and according to my music source he used his clout to help Qtrax secure licensing deals with the top labels. A year ago, New York-based Qtrax announced that Berman, who has offered consulting services to several digital music companies including Project Playlist, was added to the Qtrax advisory board.

"Every time something happens with Qtrax, Jay has to get on the phone and calm everybody (at the labels) down," said the music exec.

But the source said Qtrax, at this point anyway, is in no danger of losing its access to the labels' music. He said it has paid and the labels will most certainly accept Qtrax's money. "Why wouldn't they?" he asked. "But they haven't exactly created a lot of good will in the business or enthusiasm for their product.

"Qtrax hasn't instilled a sense of confidence that they can actually make something of what they have," the exec continued. "The only reason the (recording) companies have given content to them is because of Jay. If Jay didn't get on the phone, Qtrax wouldn't have its deals."

What the exec is referring to, specifically, are things like Qtrax's history of failing to pay vendors. Oracle filed suit against the company earlier this year and several companies have won judgments in New York courts against Qtrax. The latest came two weeks ago when Monarch Capital Fund won an award of $133,000 against the company.

According to court documents, Qtrax agreed in March to pay off a $200,000 debt in installments. Monarch told the court that after paying $70,000, Qtrax stopped making payments in May.

Clarification: Earlier reports by a number of other publications indicated that Qtrax's deal with Baidu wasn't completed. Qtrax does indeed have a signed agreement with the Chinese search engine, Qtrax said Wednesday afternoon.