There is really nothing that would change my opinion about Qtrax as I believe that it is realistic. There are so many reasons why that it would take way long to enumerate them. But let's start from a 50,000 foot view.
To begin with, there is no way that any professional investor will invest millions of dollars in a venture that has over $2 million in money judgments against it plus an outstanding $2 million suit from a major company like Oracle for, of all things, writing a bad check. It means, just for starters, that about $4 million of whatever they invest immediately goes out the door to take care of those issues. And I promise you that no investor in his right mind will allow that. Then of course, the investor will look at any management that got the company into such a situation rather askance. It would be rather suspect.
And an investor would dig very deeply into management. The DD process that professional investors typically utilize is akin to having a colonoscopy. They look up management's $$$ like you wouldn't believe. They want to know about any judgments, litigation, personal debts, credit history, criminal record, medical history, etc. It's pretty thorough. And management has to be squeaky clean.
Another issue is the number of failed and launches and, especially in the MIDEM case, questionable judgment in spending. That will tend to scare off legit VC's. Don't forget: VC's use Google too. There really isn't any viable excuse. To say that "we were made promises that were not fulfilled" just doesn't wash with investors. Remember, VC's are hard core business guys and you have to jump through dozens of hoops before they will write a check. Its just fact. In short, I just don't believe, based upon my experience alone, that Qtrax can pass rigorous DD.
Then you have to look at the credibility factor with the content owners. They may have taken the company seriously5 years ago, but they certainly don't now, in my opinion. And one of the reasons is that they just don't believe in the ad-supported model any longer. From their point of view they've tried it and it has failed on every occasion. That is a factor that has held up Spotify's entry into the US--resistance to the model in this territory. The model itself is extremely flawed and personally I don't think that it can work--period. There are so many reason why I believe this--scale, catalog, ad-rates, etc.--but I really don't want to get that granular at this time. When Robin left SpiralFrog I had a chat with him. He told me his numbers and assumptions and, based on my own calculations that were heavily vetted by Virgin for months, there was just no way that his numbers were on this planet, let alone in this galaxy. I knew right then that the SF model would never work. In essence, Robin took the SF model to Qtrax.
Mind you, I like Robin. I call him occasionally just to have fun torturing him. He takes it with great humor. And I chide him constantly for sullying his reputation by association. My feeling is that he's starting to get it, but one never knows what goes through another person's mind. But he's a fun guy and I enjoy talking to him. I sincerely hope he does well in whatever he chooses to do next.
I've know Rick for over 30 years. He's a very sweet guy. But I think that he may wish that he had never gotten involved with Qtrax. Just a hunch. And I have know several other people who have passed through the Qtrax wake and there are not a lot of warm feelings out there. I really can't go into detail, but suffice to say that its not a bed of roses out there for the company.
So aside from management, there is a real question as to the viability of the product. I don't believe that it is viable for many reasons, some of which I listed above. Let's briefly look at FreeAllMusic. They seem like nice guys and are trying to do some innovative things. But I don't believe that there business will scale--primarily due to in difficult of the service to handle catalog and the user experience. I won't go into great detail here, but I do believe that it would be fine for bespoke marketing campaigns but not mass consumer acceptance. I honestly don't believe that Qtrax can even be a supplier of bespoke services.
You must remember, as I am sure you know, that DRM and portability are huge issues. With DRM'd tracks, Qtrax offers little more than a beefed up streaming service. I say beefed up because theoretically tracks can be moved to windows based DMP's. But exactly how much of the market has those players? Very little. It is a given that you cannot succeed unless you have ipod compatibility and that means that if you're not Apple, you have to have mp3's. And there is absolutely no way, no how, that Apple will allow anyone to crack their software and get away with it. In your heart of hearts you must know that. There just is no way that Qtrax or anyone else is going to reinvent the wheel.
I could go on for quite a while here, but I must cut this short. I hope that this helps to answer your questions. I'm sorry if any of this disappoints anyone, but you asked for an honest assessment and I'm attempting to do that. I've been around the block a few times in this business. I started out 40 years ago in the music business and have been in the digital realm for more than 13 years. It’s a very difficult business even in ordinary times and in the digital age getting a music service off the ground is immensely difficult.
