Music industry tries carrot after years of stick

Mon Jan 28, 2008 1:00pm EST
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By Kate Holton

CANNES, France (Reuters) - Away from the headlines of job losses, grumbling artists and falling global sales, the music industry is trying new business models to boost digital sales and offset the decline in CDs.

At the annual industry meeting on the French coast this week, much of the talk was dominated by a new service called Qtrax, which plastered all available space with huge posters declaring the CD dead and estimating that over 1.2 billion illegal downloads would be made during the event itself.

Qtrax plans to offer millions of tracks for free with the backing of the music majors, though on Monday it was still in talks for deals with the four big music groups.

It plans to act as a legal online file-sharing site, funded through advertising, and it is one of several services that have been launched after criticism that the music industry has been distracted by the fight against piracy, when it should have been developing alternative services.


Janus Friis, who once terrified the media industry with file-sharing network KaZaa, told the Midem conference that the industry was beginning to move from the "stick" to the "carrot" approach, citing legal online services and Imeem as leading examples.

"You have the carrot and you have the stick, and you kind of need to use both, but the carrot has become much more important," he said. " and Imeem are beginning to be great Internet services."

London-based has more than 15 million active users and is known for its song-recommendation system among fans. It announced a deal last week to allow users to stream a song free, up to three times, while a link connects a user to a legitimate music store such as Amazon or iTunes.   Continued...

<p>People listen to songs at a music fair in Germany in a file photo. REUTERS/Juergen Schwarz</p>