This free Spotify rival is offering artists a 30% stake in its company

A completely free digital music service, QTrax, is launching publicly in March and says it has a plan to ‘compensate songwriters and artists in a more lucrative and representative manner’.

If QTrax sounds familiar, that’s because it’s already made a stab at taking on the likes of iTunes: it collapsed in 2008 after the major labels at the time were forced to deny ever licensing its original iteration, as a free download service.

But now QTrax and its original founder, CEO Allan Klepfisz, are back. The second version of the service combines free downloads with ad-supported online personalised radio and a la carte streaming. It’s been in beta since 2011, has clocked up a million users and will soon become an App on the Apple and Android Stores.

Crucial to its marketing pitch, the company believes it’s found a solution to better the much-debated amount of money making its way back to creatives from streaming services.

Qtrax is promising to give artists and songwriters an interest in the company equivalent to an equity stake of 30%. Quite how this would ever be divided between potentially millions of rights-holders – and what’s in it for labels and publishers, if anything – is, as yet, not fully explained.

US-based QTrax says that such an equity allocation “is being enshrined in a legal entity called the Artist Trust which will be administered independently by a Publishing Rights Organization currently being selected”.

The idea, says the company, is that artists and songwriters will directly share in the profits and future growth of QTrax and also benefit from their stakeholding should any liquidity event such as an IPO take place.

The 30% equity allocation would be divested over a 10 year period following the liquidity event, says QTrax, and proceeds will be distributed to artists and songwriters based on the number of plays.

“Equity is the only real pot of gold from any of these digital music services, including our own,” said Allan Klepfisz, Founder and CEO of QTrax.

“It’s time that songwriters and artists became owners of these services rather than exploited providers of content.”

Allan Klepfisz, QTrax

In a thinly veiled dig at the likes of Pandora and Spotify, he added: “Songwriters and artists are being shamefully compensated with ridiculously meagre distributions while the value of some digital music services escalates to multi-billion amounts.

“Without the creative work of artists there can be no music services. None. An obvious fact but one that is not respected in the current economic structure. It’s not a question of laying blame. Perhaps it can’t be correctly attributed. But no amount of congressional pondering is going to alter the rates significantly enough.

“The base is so low that even a handsome percentage increase will not be good enough. Record companies were wise enough to request equity from music services. The songwriters and artists were not appropriately organised to do so. It’s time they became owners of these services rather than exploited providers of content.

“We invite all digital services, existing & in the future, to similarly contribute equity to the Artist Trust to be run entirely for the benefit of Songwriters and Artists under an esteemed Board of music industry leaders. Distribution of proceeds from equity post – IPO will provide substantial income to artists and songwriters.”

To give artists an idea of the benefits they will receive from the new QTrax – which bills itself as a ‘free and legal music service’ – its owners have created ‘The QTrax Manifesto’. You can read it below. QTrax says the Manifesto acts as an ‘Artist Bill of Rights with a sweeping set of initiatives that provide artists with far more input and control and compensates them fairly, respectfully and innovatively’.

Added Lance Ford President and CMO of Qtrax: “As QTrax builds towards a liquidity event over the next two to three years money can be contributed into the Artist Trust in the form of advertising and sponsorship dollars by brands that believe in the power of music to connect with young consumers.”

The QTRAX Manifesto

There’s a growing problem in the music industry – and it’s badly hurting the very people that provide the music – the Songwriters and Artists (“Artists”).

Artists have suffered globally from declining royalties from their art, as “pay per play” rates for Streaming Music are continually pushed lower and lower. Artists are losing control of their content, their income, and their livelihood.

Many Artists have voiced concerns that the royalty-based compensation model is unfair, and exploits their art with absurdly little compensation. They are right.

No one in the industry has offered a solution that actually helps the Artist, directly or significantly.

Until Now.

This is the QTRAX Artist Manifesto

Our Philosophy: Artists and Songwriters need to be much better compensated for creating the music that millions enjoy via digital music services.

How We Will Make it Happen:

  • Stake in the Company: We are allocating an Equity Stake equivalent to 30% of our company to Artists, which will make Artists globally the co-owners of the business, alongside other shareholders
  • Direct Profits: Consequently, Artists will share in the profits and future growth of QTRAX, and will benefit from any liquidity event such as an IPO or trade sale in the same way that our investors and stakeholders accrue wealth.
  • Independent Oversight: This equity allocation is being placed in a legal entity called the Artist Trust which will be governed by an independent Board of Directors made up of prominent industry people, and which will be administered independently by a Publishing Rights Organization (which is currently being selected).
  • Distribution of Proceeds: The 30% Equity allocation will be divested over a 10 year period following the liquidity event, and proceeds will be distributed to artists and songwriters based upon their number of plays.

Additionally, for Artists and Songwriters:

  • More for Streaming: An additional 10% revenue for streamed music (in addition to existing revenues from their individual music label contracts).
  • More for New Artists: New Artists will be entitled to retain 100% of the net revenue generated from their music via QTRAX for their first year on the platform.
  • More Control: Artists will have the ability to update, maintain and control their public profile within the QTRAX music platform, as well as being able to inform their fans how to best access their music.
  • More Sources of Income: Artists will be able to sell their own merchandise directly through the QTRAX platform, and be able to retain the net profits (after modest handling fees) as an additional source of income.

QTRAX is committed to implementing the Artist Manifesto and implementing the Artist Trust.

When artists lose income, the world loses artists, and when the world loses artists, the world loses music.

The time has finally come for Artists to be paid much more fairly for their valuable contribution.Music Business Worldwide

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