Let’s reel this baby in, boys. Who cares if it’s a little stinky?

Last Wednesday a few people started tweeting that “Free and Legal Music Downloads now available from @Qtrax – Check it out: http://tinyurl.com/qtrax18”. At first most of these tweets emanated from Qtrax’s PR firm based in West Palm Beach, FL and from one of its attorneys, followed by some company insiders and acolytes. The tweet was immediately posted anonymously on an investors’ forum dedicated to Qtrax. Oddly there was no press announcement from the company or major labels. Qtrax would probably say “well this is a preview of the upcoming service”. If that’s the case, why start tweeting it and posting it in online forums?

Given Qtrax’s dubious history with launches and label licenses, not to mention a considerable number of lawsuits, judgments (including an Illinois judgment entered just last week in NY Supreme Court for over $1.3 million owed but never paid to John Fife and Chicago Venture Partners) and bounced checks, I was certainly curious to see what this was all about. The service has had numerous very public false starts and unkept promises over the last 8 years or so and has reportedly burned through at least $50 million in the process with little or nothing to show for it. Even though Qtrax is a publicly traded penny stock (BLLN.PK), company CEO Allan Klepfisz has not made any public statements to shareholders since a rambling paranoid blog post on Christmas Eve of 2009 in which he promised that Qtrax would launch in Asia in January 2010. Evidently it’s going to launch for real today. Again. At least temporarily. Break out the champagne, boys.

I went onto the “preview” site and downloaded the Qtrax Silverlight player. I then searched for and downloaded more than a dozen random tracks; all tethered wma-drm’d files. I found the content to be mostly deep catalog with no current releases available. However, much to my surprise, The Beatles and AC/DC entire catalogs were displayed, with links to tracks sending a message that “download for this track is coming soon”. To the best of my knowledge, services are not allowed to even display Beatles content without their permission. No service in the world has ever been licensed AC/DC’s recorded music. Period. Has Sony given Qtrax the first rights to exploit AC/DC catalog anywhere on the internet? Is anyone at Sony even paying attention?

Helter skelter

Highway to hell, anyone?

Surprisingly the links were live for Led Zeppelin, a band who has notoriously withheld their music from many online services. I successfully downloaded a wma version of “The Song Remains The Same” from the Houses of the Holy album. Was Zeppelin so impressed with Qtrax that they decided to license their music to a shaky start up with old, buggy technology and a less than stellar reputation? And for Qtrax to give Zeppelin music away for free at that? Did the band never hear about the 2008 MIDEM disaster where Qtrax spent well over a million dollars to celebrate their worldwide product launch, later to be humiliated when it was learned they never had signed licensing deals with the major labels? Who knows? Warner’s has repeatedly stated that they would not license to any ad-supported service. Have they changed their minds? If so, how come they’ve been so resistant to Spotify in the US? It just doesn’t make sense.

Somebody's very dazed and confused

Then I started looking for more Warner catalog and downloaded random tracks from complete albums by Madonna, Josh Groban, Linkin Park, Paul Simon, James Taylor, Fleetwood Mac, Rod Stewart, and Green Day. Industry observers I spoke with over the weekend who also checked out Qtrax had the same results, expressing surprise at the plethora of Warner catalog available on the service. I’m in the US and every Warner track I downloaded was owned or licensed in the US by WMG. Content is regularly licensed to foreign affiliates for use in their respective territories only. It’s impossible to casually explain this away as a technical glitch or some innocent misunderstanding.

I immediately started contacting the major labels and got a response first thing Thursday morning from EMI. It was the same comment that was sent the next day to news outlets saying “We apparently recently completed a short term agreement with Qtrax to enable them to distribute a selection of EMI content as ad-supported streams and conditional downloads”.  (I wonder if they saw the Beatles stuff on the Qtrax site. I guess they will now.) People in the know say that’s code for “they paid us upfront so we gave them a few old titles with tight DRM to test and for probably no more than 90 days”. Sort of like a pay-as-you-go mobile phone or a debit card–no credit. Fair enough. This was the most confirmation that anyone could get from the labels. They just didn’t want to talk about it. In their defense, I can’t blame them. It’s really hard to resist a sucker. They all need the money and take it wherever and whenever they can. It’s all about the money and any other rhetoric you hear is pure BS. This sure proves it. These guys would give Charles Manson  licenses if he put up enough cash.

It sounds to me like Qtrax has somehow gotten an unsuspecting investor to front enough cash for them to give the appearance of having a real operational product in order to attract more new investors. Good luck with that. As one former Qtraxer recently told me, “Their business model is so last century”.

At the same time I contacted Warner Music (I’m sure they were delighted to hear from me) and asked them if they had a deal with Qtrax and specifically for Led Zeppelin tracks. They also got back to me on Thursday morning but had no comment at that time.

Now here’s where the story starts to get interesting. On the above-mentioned investor’s forum, a user named “speedyrush” posted the following (deleted by forum administrators shortly thereafter):

WR <—— SO YOU ARE THE A$$HOLE

that flagged Warner and Warner woke AK [AK refers to Qtrax CEO Allan Klepfisz] up at 03:30 dark and early, only to then have to apologised to him once they realized that those particular tracks were NOT WB property. This will come back to haunt you. We were wandering who the prick was.

Yes, that’s me he’s talking about! And threatening. Young “speedyrush” must be a Qtrax insider who sleeps with Allan Klepfisz and thusly was also awakened by that 3:30 AM phone call as well (I don’t think that even the fiercely dedicated Warner staffers are working at that hour). Coincidentally, by Saturday morning the links to the Zeppelin tracks were still up but miraculously deactivated, replaced by the familiar and reassuring  “download for this track is coming soon” message.

Now I started to really get curious. Could it possibly be that these tracks really didn’t belong to Warner’s? No way. So I checked the files that I downloaded and found that there was no metadata attached to any of them! What the hell was this all about?

I spoke with several industry pros and asked them if they thought that this was unusual, and indeed it is. Anything’s possible, but this is certainly not the norm. When a service gets a label’s digital feed, identifying metadata is typically attached to each track. The Zeppelin downloads raised everyone’s eyebrows and all let out a gasp when told about The Beatles catalog being posted on the service, even with dead links. That’s a big no-no.

Let’s analyze what’s going on here. Either Warner Music has a deal with Qtrax or it doesn’t. If it does, then why the sudden support for the lamest ad-supported service to come along since SpiralFrog and not for a proven service like Spotify in the US? The label has licensed Spotify around the rest of the world for the past 2 years and even recently re-upped that agreement, but for some reason won’t play ball with the service in the US. After losing millions with their investment in imeem, another failed “free” music service, WMG has insisted they would no longer back  ad-supported models.

The bottom line is very simple. Warner Music is either being totally hypocritical (I know it’s a shocking thought) or their music is being distributed without the proper permission.

Well, Junior, you’ve got tiger blood and Adonis DNA. Which one is it?

Screen shot of the Qtrax player and the tracks that were downloaded through it. Included Warner Music tracks are: “You Can Close Your Eyes” by James Taylor from the Mudslide Slim album; “Welcome To Paradise” by Green Day; “This Old Heart of Mine” from Rod Stewart’s Atlantic Crossing; “The Song Remains The Same”, Led Zeppelin, Houses of the Holy; “My Confession” by Josh Groban; “Go Your Own Way” from Fleetwood Mac’s Rumors; “Hung Up” by Madonna; “Leave Out All the Rest” by Linkin Park; “Me And Julio Down By The Schoolyard” by Paul Simon from the Warner album Live Rhymin’.

UPDATE: Mar. 8, 2001, 9:39 AM EST

Within hours after posting this story, all downloaded Warner tracks were no longer playable within the Qtrax player and artist pages for The Beatles and AC/DC had disappeared from the site. When asked about this and other dead links to music files on the service, a Qtrax spokesperson would only say “Music will indeed be available upon launch”. When asked when that would be, she replied “We are in the final preparations for launch”.

Warner Music has repeatedly refused to comment.

© 2011, Wayne Rosso. All rights reserved.

The recent verdict in the Citi/Terra Firma lawsuit has been analyzed more than the federal budget in the media recently. Reporters I’ve spoken with who were present during the entire trial say that there was a black cloud hanging over the courtroom during Guy Hands’ testimony. He acquitted himself so poorly that a jury of average New Yorkers decided that a megabank was for once telling the truth. Of course the idea that Citi fooled Hands, a Master of the Universe touted to be Europe’s savviest dealmaker and turnaround artist, was hard to swallow at the outset.

The following week Queen yanked their catalog from EMI after 40 years. This is the latest artist defection the label has suffered, along with the Paul McCartney and Rolling Stones catalogs as well as Radiohead’s high profile exit. One could easily speculate that the flood is not over, as Pink Floyd has had its own legal battles with EMI and could very well bolt when their deal is up.

And many industry insiders have felt that the imminent departure of Robbie Williams is a foregone conclusion, thus putting an even bigger dent in EMI’s future revenues. Let’s face it, how many times can you recycle the Beach Boys catalog after its been ground into sausage?

I had the opportunity to speak with Robbie Williams’ manager, Tim Clark of i.e. music, the other day about the label. Tim has been very critical of EMI in the past, most notably a very public spat with Hands when he first took over the label. “We’ve been quite pleased with what EMI has done for Robbie’s Greatest Hits album. They’ve worked very hard and done everything that we’ve asked.” When asked what the future holds for Robbie at the label, Tim just said that they’re taking a wait and see approach.

Similarly Brian Message of ATC Management, Radiohead’s representatives, told me “”One of the artists we work with is Eliza Doolittle and she is signed to Parlophone/Capitol.  As such we’ve worked closely with their front line label staff and have found them to be an excellent, motivated and talented bunch. EMI, the corporate entity, has clearly suffered at the hands of aggressive financial engineering but the core competencies of the people working with Eliza has been nothing less than impressive.” Not bad.

Another former EMI senior exec said that he’d always been a Roger Faxson fan. “Hands should have gone with Roger at the very beginning. At least he has a clue about the music business.” But is it too little too late?

This all came as quite a surprise to me, as I’ve been very critical of the label in the past. Although I’m actually pleased to hear this, it unfortunately doesn’t change much in the scheme of things.

Let’s say that Faxson wants to re-sign Robbie Williams or Coldplay or any other major artist. He’ll have to come up with big numbers. The problem is that he’ll probably not only need Terra Firma’s approval but also Citi’s. Not exactly an optimal situation.

The latest news to break is that WMG is readying a $750 million bid for EMI’s recorded music division. This is very interesting in that all of Warner Music, including the publishing arm, has a market cap of around $870 million and $2 billion in debt.

So how could this possibly happen and where would Junior get the money? One insider laid out a possible scenario that has Citi loaning Junior the money to buy recorded music and folding it into WMG. EMI would shed freestanding labels Virgin and EMI/Manhattan with only Capitol Records in the US and EMI in the UK. Blue Note could be folded into Nonesuch with EMI Classics perhaps merged into EMI UK. According to this insider this would result in an instant 50% savings and what would be left would be a Warner Music Group consisting of Warner Bros. Records, Atlantic Records, Capitol Records and Nonesuch/Blue Note Records.

Faxson issued a memo last week debunking all of the rumors and speculation. I’m not really sure that it meant much other than a rally the troops, feel-good, everything’s going to be fine message. After all, what do you expect him to say? “Yes, the Huns are at the door and you’ll all lose your jobs and be homeless”. I don’t think so.

No matter what Faxson says, it really doesn’t mean anything. It’s all out of his hands anyway. But one thing we do know is that if EMI falls into foreign ownership under the aegis of a tax exiled British subject, there just may be baying mobs with torches and pitchforks at the gates of Guy Hands’ estate on Guernsey. If you think that the UK media has been tough on EMI thus far, just wait.

© 2010, Wayne Rosso. All rights reserved.

Hey Guys, Don't Take Their Check!

Yes, I’m back. Apologies for the long hiatus, but I was busy with some knucklehead who had the world convinced that he was going to buy the Pirate Bay. Oy vey. What a story.

I’ll get into all of the details in the coming months. It’s one of the weirdest chapters of my extremely unconventional life.

But in the meantime, check out my column in The Music Void about the latest legal woes of my hero, the Baghdad Bob of digital music, the one, the only Allen Klepshitz of Qtrax. Read about it here.

© 2009 – 2010, Wayne Rosso. All rights reserved.

Among 5-star Hong Kong hotels, Langham Place Hotel Hong Kong is unique…

Langham Place captures the vibrancy and buzz of local culture like no other. And presents it in a way that’s invigorating, engaging, fun! You’ll feel refreshed and inspired as soon as you step inside. You’ll also find every conceivable modern indulgence, including our luxury Chuan Spa.

Langham Place Hotel Hong Kong – the place to be in Hong Kong!

Sounds great, no? And looks pretty nice, as you can see from this link to a little photographic tour of the hotel. Now why in God’s name would anyone care about this beautiful hotel in Hong Kong? No one really. Except our man Honest Al Klepshitz who has been holed up there all week, dropping in on this site at least 40 times thus far. And it’s only Thursday.

Welcome back, Honest Al.

UPDATE: 49

UPDATE: 43

UPDATE: 41

© 2009, Wayne Rosso. All rights reserved.

But what is most interesting is that this particular case as well as the newly files case by Millennium Technologies and yet another case seem to establish a pattern of how Allen Klepshitz “settles” these matters. Two words: rubber checks. In the Alpha/Osher case, he had settled the claims at the last minute after dragging the case on for years. He gave the plaintiffs 2 post dated checks for $250,000 as settlement. But both checks bounced! So this latest judgment is a result of the plaintiffs new case to collect on the rubber that Klepshitz gave them. Are you following?

So as we see in the Millennium case, he bounced yet another check on them. But let me introduce to you a gentleman by the name of Peter Goerke. Mr. Goerke also sued Klepshitz and the case was evidently settled. Klepshitz paid Goerke with 2 checks, one for $88,900 and another for $12,700. And guess what? Both checks bounced. So Goerke had to file yet another suit, to which he was awarded a summary judgment, in order to collect on the bad checks. Not only that, but when Goerke got his summary judgment, Klepfisz had to be threatened with contempt of court in order to get him to pay up!

Is this man a serial check bouncer? You tell me. But one thing is for sure: if Kelpshitz owes you money, get it in cash and still make sure its real!

© 2009, Wayne Rosso. All rights reserved.

Qtrax CEO Allan Klepshitz, according to Qtrax "advisor" Robin Kent, "is one of the most honest people I have ever met".

UPDATE: Our man Al Klepshitz must not be doing that badly after all. In spite of all of the judgments and outstanding claims against Brilliant Technologies, Qtrax and or Klepshitz personally, he was seen not long ago in the First Class section of a Singapore Airlines flight (Klepshitz is know to have a great affinity and passion for the airline’s first class service). Klepshitz was last know to be hanging out in Australia. For the record, a roundtrip first class ticket on Singapore Air from JFL to Sydney is nearly $18,000. So what’s next? Well the good news is that we can rest assured that Klepshitz won’t be looking for some of those government TARP bailout funds as the government is pretty much demanding that CEO’s of bailout companies fly coach.

Yesterday there was a very interesting post in comment to the April 14 story on The Music Void titled “Qtrax Relaunching? What About all the Lawsuits it is Facing? TMV Drills Down on Qtrax”. The poster, named Jessica, is responding to comments made on the site by Robin Kent, an advisor to Qtrax, and a couple of other posters named Frank and Rod. I must admit, Jessica nailed it.

@Rod: I don’t think anyone is blaming Robin. As a matter of fact, there is no mention of anyone blaming Robin anywhere on here, other than your accusation.

@Frank: I agree that this blog is painting a negative picture of Qtrax, however, that is the reality of the situation. The lawsuits speak for themselves; (I’d suggest you read the information provided by Jakomi pertaining to the lawsuits.) Furthermore, Qtrax on countless occasions has made public promises related to their product only to recant them days, weeks, months later. Here’s a company who made a very public launch in 2008, only to have announced hours later, that in fact, they never had any deals with the four major record labels. Then finally, once they managed to get a product together, they announced a version compatible for Macs coming in March 2008. It’s now May 2009 and there is still no Mac compatible version. Anyone with any technical knowledge would know they could never deliver on such a promise because Qtrax is locked into Windows Digital Rights Management for protecting their songs, and Windows DRM is not compatible with Macs at all. Then in 2009, they announced they would provide portability for their songs at last saying April 2009, only to now push that date back to May 2009 (which is quickly coming to a close with no portability in sight). They’ve also promised launches in other countries, and so far, they haven’t lived up to that promise either.

Funny thing is, I haven’t gotten to explaining the obvious flaws with the technical aspects of their product yet. The most likely deal breaker for anyone comes from the fact Qtrax makes use of Windows DRM to protect their songs. Thus, even if they ever enabled portability, you could only transfer the songs to Windows DRM compatible devices, which right there, excludes the iPod and Microsoft’s own Zune. As a result, they’re now catering to a niche market that is ever shrinking as Apple and Microsoft’s share is growing. If they ever wanted to be compatible with the iPod or Zune, either they would need to change or eliminate their DRM (like most of the major digital music services are now doing) or their customers would have to violate the Digital Millennium Copyright Act to remove the DRM from their files. Also, should Qtrax ever go out of business (like in the cases of SpiralFrog, Ruckus, MSN Music, etc.), their loyal customers would no longer be able to play the songs they downloaded since Windows DRM requires a license check every couple of days. As a result, their vast music collection is quickly wiped out with no recourse except to once again violate the DMCA to remove the DRM.

Lastly, from a business perspective, the core premise of Qtrax trying to appeal to illegal filesharers is flawed. As savvy minded individual, why would an illegal filesharer give up downloading songs for free, a method that doesn’t involve watching advertisements, doesn’t restrict how, when, or where they can use the songs, for DRM-laden versions of them which have many Draconian restrictions? It’s just madness if they think they’ll ever make in-roads into that market ever, especially since all of their predecessors haven’t been able to any great extent. Also, they are cheap alternatives, like iTunes and AmazonMP3, which provide the same library of songs but without any of the Draconian restrictions.

Sorry to burst anyone’s bubble here, there’s a reason Qtrax/BLLN is still a penny stock, valued at roughly 2 cents. It’s just not a viable business or product in its current form, and without any significant innovation to try to address these issues, I wouldn’t be surprised in the slightest if it joined the ranks of the defunct SpiralFrog, Ruckus, and MSN Music, in the very near future.

What Jessica, and many others for that matter, is not aware of is that Brilliant Technologies (the owner of Qtrax) and CEO Allan Klepshitz have had a few more minor issues pop up since April 14. First of all, looks like Mr. Klepshitz took a default judgment on April 20, 2009 totaling  more than  $516,000 including interest in the NY Supreme Court case #603243/08, Alpha Capital Anstalt and Osher Capital, Inc v. Brilliant Technologies Corporation and LTD Network, Inc. For those of you who don’t get it, it means that Klepshitz didn’t bother showing up in court or filing any responses to the claim. For your reading pleasure, you can download the judgement here.

But that’s only the beginning. Klepshitz took another default judgment in Maricopa County, Arizona a few weeks ago as well. This time for about $250,000. Plus I understand that yet another $1 million suit was filed against Brilliant in US Federal Court in late April. So now we’re at about $750,000 in default judgments and counting. The new federal suit, plus several other complaints still in the pipeline. I’ve found many in New York State alone and God knows what else is out there in New Jersey, Connecticut and California. But there’s more.

Now here is some interesting new reading. On April 16 a lawsuit was filed in NY Supreme Court titled MILLENNIUM INFORMATION TECHNOLOGIES v. QTRAX a/k/a QTRAX, INC., LTD NETWORK, INC., BRILLIANT TECHNOLOGIES CORPORATION, and ALAN KLEPFISZ. Millennium claims that they were hired by Qtrax in December of 2007 provide services to the defendant for “the initial implementation of Oracle RAC Software to launch the defendant‘s music download site” Qtrax. Then  on January 04, 2008, “Brilliant Technologies retained the services of the Plaintiff to complete a Storage Configuration project at California, as the defendant’s previous contractor was unable to get the infrastructure ready. The Plaintiff sent their engineering team to California to implement the project pertaining to Storage Configuration, and the project was duly completed by the Plaintiff. Further work in relation to the final stages of the Oracle RAC Implementation project was possible only on the completion of the ‘Storage Configuration project’ that the Defendants had been in the process of executing”.

Don’t fall asleep. It gets better. On Jan 15, the Millennium guys then have to send some techies to London to implement the project and supply 24/7 web site support. Now what’s really interesting is the timing of all of this. If you’ll recall, it was last January, 2008, at MIDEM in Cannes when Klepshitz spent over a million dollars to “launch” Qtrax, announcing to the international media (and making monkeys of same media) that Qtrax would launch the next day with licenses from all 4 major labels. Of course it didn’t even take 24 hours for each label to publicly state that they did not have deals with Qtrax. Thus we were given the greatest launch fuck up in history. So it looks as though Klepshitz got a bunch of money in to pay for his big MIDEM launch party and had to scramble to meet his deadline as he had nothing to launch. So he hired Millennium for a bunch of money so that he would have a software client that he could presumably go live with.

OK. So now it’s Feb. 1, 2008 and the MIDEM fiasco has passed. Millennium sent Klepshitz a bill for $26,250. Klepshitz issues a check. The check bounces! More invoices go to Qtrax. More promises to pay. Millennium collects about $85,000 of their invoices over a four month period, but that doesn’t cover even half of the outstanding invoices. After a while Millennium claims that calls to Klepshitz and his attorneys go unanswered so they finally file suit for $147,634.72 plus 9.9% interest and attorney fees. Could it be that Klepshitz blew his wad on his big MIDEM prom and decided to stiff his technology guys? Once again, for your reading pleasure, you can download a copy of the complaint here.

And poor Robin Kent. Robin had commented on the above mentioned The Music Void post that “… I’m an advisor to Qtrax, but I have to defend the founder. He is one of the most honest people I have ever met and smartest.” Robin, I would consider walking that back a bit. But you surely have to give Klepshitz credit for one thing: he has one big set of balls.

© 2009, Wayne Rosso. All rights reserved.

Wimp Rock Band Coldplay Accepts Grammy Award For Their Allegedly Purloined Hit "Viva La Vida". Don't They Look Cute In Their Faux Sergeant Pepper outfits?

Former Pop Star Yusef Islam, aka Cat Stevens

I’m sure you recall that pablum rockers Coldplay have been accused of plagiarizing their biggest hit “Viva La Vida” not by one other songwriter, but two. Guitarist Joe Satriani filed a lawsuit and Brooklyn band Creaky Boards also accused the band of stealing their stuff. Well, according to a report in the Brit tabloid The Sun, yet a third person has now accused Coldplay of ripping him off. Yusuf Islam, formerly know as Cat Stevens, claims that “Viva La Vida” is a direct rip off of his 1970′s composition “Foreigner Suite”. You  just gotta love this.

So what do you think?

© 2009, Wayne Rosso. All rights reserved.

Freedom Fighter Lawrence Lessig

Everyone loves author, professor, freedom fighter and all around copyright egghead Lawrence Lessig. Everybody except Warner Music. Lessig posted one of his presentations on YouTube that evidently contains some Warner Music content. This is certainly within the bounds of the fair use doctrine. Larry surely thinks so. But it appears that some bonehead lawyer at WMG doesn’t. Warner filed a DMCA takedown notice and Lessig vows to fight. The lawyers at Warner are about as tone deaf as the Republican Party. Whoever came up with this idea was probably the same guy who authorized the Air Force One Manhattan flyover the other day.

The bad news is that Warner will probably wimp out and withdraw the takedown notice thus denying us the enjoyment of watching Lessig humiliate them publicly. Who says that lawyers are ruining the music business? Hogwash!

© 2009, Wayne Rosso. All rights reserved.

© 2009, Wayne Rosso. All rights reserved.