Advertising-supported free music downloads may help declining industry
By Satish Cheney, Channel NewsAsia | Posted: 02 September 2007 1919 hrs

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SINGAPORE: Record label executives are hoping to get a bigger slice of the emerging legitimate digital music market to help balance out the financial losses from declining CD sales worldwide.

Recent studies show that young people are four times more likely to visit peer-to-peer or p2p file-sharing websites than the average digital music retailers.

This year, around five billion songs were exchanged via p2p sites, while CD sales dropped 20 per cent.

Qtrax, an upcoming music service, is one of the first sites that allow free music downloads on a p2p platform legally.

But the free music downloads will come with some advertising, which is still being worked out, and the number of plays will also be limited.

Google, which is free to use, makes money from advertising linked to its search functions. And Qtrax hopes to do the same with its music downloads on a p2p platform with the blessings of artists.

"While the industry was... embracing these new technologies... the artists were completely losing out on royalties. We've already had early indications in the States and other places that artists will come out in true force in support of this," said Allan Klepfisz, chief executive of Qtrax.

Qtrax executives were recently in Singapore to speak to investors, and they hoped to get the relevant licences to provide their service in Asia.

"If you look at a market like China, certainly the record companies' view would be that inadequate CD sales occur… So the notion of giving free music to those sorts of massive markets paid for by advertisers, I think is a very attractive notion, both to the record companies and consumers," said Mr. Klepfisz.

Internet advertising has recently bounced back after the dotcom bubble burst in 2001. Analysts expect revenues from internet advertising to hit 31 billion US dollars this year, up from 10 billion US dollars in 2002. - CNA/ac