Due to the response (and recent mega-hit-count) to the article I posted about QTrax being a terrible business model I feel one of the comments deserved a follow-up post.
The gist of my argument is that to fund legal music downloads with advertising, and make any margin at all, a website would have to sell their ads at about $700CPM, which we can all agree only works if we’re talking about pesos.
A gentleman going by the name, “wow, you really are a moron” had the following comments, which I’ve broken down and explained, in my moronic logic.
did you ever actually use the qtrax service? apparently not, or you have an agenda
A: No, I haven’t tried it – as of this posting QTrax is still not available for OSX, despite them using what appears to be an Apple Design Template for their website. Obviously, having your music platform not work for anyone under 30 (Mac Users) is a great way to break into the market. Hey, at least it’s unique … right? Right!
let me give you my calculations. CPM is per imptression NOT per download.
A: This is an excellent point, but if people are coming to the site to download songs, how many more impressions will there be than downloads? Say someone clicks through 10 pages to get to a list of tracks, and then downloads 10 tracks off that page without refreshing? QTrax is still at a 1:1 ratio of Impressions:Downloads.
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.
A: Okay, Three ads per page – let’s move that ratio to 3:1 Impressions/Download, so now QTrax only needs to sell ads at $233 CPM … but they’ve tripled their inventory. You’re in the same place.
if qtrax can sign up 10 million users (very conservative, considerung limewire’s 80 million unique monthly visits)
A: The fact that Limeweire has 80M Uniques, is bad for QTrax, not good. That’s 80M people who already have a source for all their music, for free, it works on Mac, and has a 10 year head start. However, just to show you how right I am, I’ll let you have the 10M users … hell, let’s make it 30M users. The math is the same …
& each user brings in $10 a year, we have a company earning $100 million.
A: Since I upped the number to 30M users, just to be bold, @ $10/year per user (also assuming QTrax is able to unload all their inventory) you’re looking at $300 Million/year. However, the mistake you made was in calling that “Earnings.” It’s not “Earnings,” it’s “Sales.” Since QTrax is a legal downloading site, they have to pay for those downloads, and even at much less than the $0.70 a label gets from iTunes, I’m guessing each of those 30M users is going to download more than 15 tracks/year. Meaning, QTrax could have 80M users and just lose even more money.
also qtrax can serve targeted ads based on gender, age, geographic location, etc. this will bring high CPM.
A: Who can’t?
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.
A: So you’re saying the music downloads are a loss-leader for their search commission and merch sales? I doubt it. I don’t have solid numbers on this to back it up, but I’d be willing to bet the Execs at QTrax are planning on their main revenue stream being Advertising.
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
A: Again, I can’t download the software … because I have a Macintosh, but don’t worry, Macs have nothing to do with Music … right?
Posted by c007km 
