QTrax.com will be launching soon thanks to the recent signing of a deal with Universal Music Group. Seeing as it’s nearly impossible to keep up with all the music websites out there, the basic idea is that QTrax will offer free and legal downloads and fund them with advertising.
Right away we can see a few hurdles for QTrax to overcome such as having to download software to use/play Qtrax music, will it transfer to your iPod? (71% of the market), and finally, “another music website, really, seriously?”
Let’s assume, for some reason, that St. Rene Gupil (Patron Saint of Anesthesiologists, and as of right now, Internet Startups) smiles on QTrax and people start downloading by the metric ass-ton of Coldplay (official unit of P2P, denoted MaT/C), that pesky “Math” comes in and spoils the day for QTrax.
Quickly now:
The going rate of impressions on the Internet is all over the place right now (and highly inflated, generally) but for a general interest site like this, let’s say they can get $5 CPM (very generous I think). Assuming that people only use QTrax to download songs (to assume anything else would make me an employee of QTrax), then that means that even at that generous CPM, QTrax is bringing in a whopping $0.005/download.
I’m willing to go out on a limb and say that Universal isn’t selling their MaT/C for half-of-a-hundredth-of-a-dollar.
So Let’s go crazy. Let’s say that QTrax sacrifices a few thousand virgins to St. Gupil and they bring in $30 CPM, that’s still only $0.03/download. With this model, to get anywhere near what a label makes from iTunes, Amazon, or any other digital retailer QTrax would have to be selling their impressions at $0.70, or $700 CPM – and that’s without taking any profit for themselves.
Since I’m assuming that the dudes behind QTrax know basic multiplication, they must be either after a Bubble-VC-Buyout game (scary) or think their “Reviews and Ratings” are going to get significantly (1000x) more impressions than the number of downloads they issue (wrong).
did you ever actually use the qtrax service? apparently not, or you have an agenda.
let me give you my calculations. CPM is per imptression NOT per download. there are 3 non-intrusive ads per page. that means on a $5 CPM, each page view is 1.5 cents. each time you click on anything on qtrax, new ads are served, another 1.5 cents & so on. if a user spends only 10 minutes browsing or streaming free music (download optional) qtraz can easily earn 25 cents. if qtrax can sign up 10 million users (very conservative, considerung limewire’s 80 million unique monthly visits) & each user brings in $10 a year, we have a company earning $100 million. also qtrax can serve targeted ads based on gender, age, geographic location, etc. this will bring high CPM. also qtrax software player is also a browser, so qtrax earns commission from that, similar to the deal firefox has with google, & others. qtrax also sells concert tickets & other artist related merchandise. qtrax actually has an excellent business plan. why don’t you download the software, or at least visit music.qtrax.com to verify a lot of what i’m saying above
@ Wow etc.
The problem with your calculations is that you haven’t paid for the music yet. “Legal” downloads means the rights holders are being paid, and with Labels searching desperately for new revenue streams, you better believe those labels are looking the be WELL paid.
So let’s use your numbers (which are very, very generous) and say they get 3 ads @ $5/CPM per refresh … that’s still only a penny and half per download; okay so lets say the average person visits 10 pages each time the download a track … that’s 15/cents each download… again, still nowhere NEAR the 70+ cents a label gets for selling on iTunes.
If, and this is a big GIANT if, QTrax, in this model, was able to bring in $100 Million in SALES (not earnings, get your terms right), they would be spending five times that on Cost of Sales.
Oh, and btw, I CAN’T download and try QTrax … because as of now, it’s not available for Mac, which, like everyone else under 40, I use exclusively.
To Wow,
I suggest you do research before posting, since it is you who is way off base. Qtrax doesn’t sell concert tickets or other artist related merchandise. It only serves up ads for those things by the Google ad service. Secondly, as c007km wrote, even if they were able to bring in 100 million dollars in ad revenue, they be spending at least 5 times that, maybe even more, in payments to the labels for royalties, etc. About the only way Qtrax is a good business plan is if it were owned wholly by the labels themselves (thus eliminating the middleman in the transaction).
Quite frankly, Qtrax doesn’t stand a chance in hell of being more than a flash in the pan … just look at the tanking share price. I’d be surprised if Qtrax still exists by the time January 2010 rolls around. And FYI I find it rather suspicious that they removed the online users counter from the app … seems like they are trying to hide the fact their membership hasn’t increased from the public. As well, they have a long string of broken promises when it comes to technical side of things (see failed launch at Midem and lack of promised Mac compatibility).