James Bates, a director in Deloitte’s media and entertainment division said: “We will have to wait and see exactly how the market responds to Qtrax but it would appear that it has crossed the first hurdle for any new entrant into the global music download market: a large library with quality content and the support of the four major record labels.

“Qtrax will face other challenges: ease of use is important – it will need to be a pleasurable and seamless experience. 

“Advertising will appear every time a song is played and that may prove too intrusive for many consumers.  There is also a growing antipathy to online advertising amongst internet users generally, particularly targeted advertising. In addition, attracting sufficient advertisers that are interested in this type of advertising may also prove difficult.

“Qtrax uses a peer to peer network which many will feel wary of, added to the fact that such networks are banned by many companies and universities.

“Apples’ iTunes is a tried and tested model but if, as Qtrax claim, their downloads will also work on iPods then Qtrax could have a chance of threatening Apple’s position as the only truly dominant player in the online music market.”

Deloitte’s 2008 predictions for the technology, media and telecommunications industries 
Analysis of industry trends from Deloitte’s predictions follow that will impact Qtrax’s business model:

On Online Advertising
Obstacles ahead for the online advertisement

Find out more on Deloitte media predictions 2008 

One barrier may be growing antipathy to the online advertisement itself. One 2007 survey of US consumers found that over three-quarters of respondents considered Internet advertisement more intrusive than those in print. Nearly two-thirds claimed that they paid more attention to print advertising than to that on the Web. Over a quarter stated they would pay for advertisement-free online content. The coming year may also see growing opposition to a key feature of online advertising: the tracking of online behaviour, whose main purpose is to enable the delivery of online advertising

On Online Piracy
Overcoming online piracy may not mean the end of counterfeit content

Read more about Deloitte media predictions 2008

During 2008, the battle against digital piracy may start favouring the industry, as a two pronged attack of persuasion, through education, and punishment, in the form of denial of broadband access as well as fines, starts to bite. The number of casual pirates, many of whom were not entirely sure that their actions were illegal, could decline.

On Digital Music
Time for music to get tangible again

Read more about Deloitte media predictions 2008

The reluctance to spend money on digital downloads may be because it is harder for consumers to value intangible products. It may be far easier for customers to value a song, and to pay more money for it, if it were physically ‘wrapped’, with the bigger the packaging, the greater the perceived value.

Read more about Technology Media and Telecommunications -Trends: Predictions 2008. 

Ends

Notes
Qtrax  is due to launch on Sunday 27/01/08 at Midem, the international music trade show in Cannes, France.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms.  Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ("DTT"), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other's acts or omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.