Meet the music company giving away songs for FREE...

The launch of iTunes in 2001 would change the music industry indelibly, allowing consumers to download music legally, easily and affordably, paying less than a dollar per song rather than splashing out on a whole album.

Seven years later, the release of Spotify ushered in the next phase of digital music, enabling listeners to stream music for free or pay a subscription fee for a premium, advertising-free experience.

Now, after another seven years, a company called Qtrax is heralding the third wave of the digital music revolution.

Qtrax is an advert-supported music player that for the first time allows the users to download, stream and create a personalized radio channel all from one place - and, crucially, all for free - that is relaunching at the end of the quarter with the twin aims of cracking down on music piracy and ensuring artists get paid for their work.

We are aiming for two paradigm shifts,” Allan Klepfisz, chairman and chief executive of Qtrax, told the Telegraph. “One is to give consumers what they want and are taking illegally, and to give it to them in the form that they want it... And two, [to address] that artists and writers are being horribly compensated.”

Qtrax has created an initiative called the Artist Manifesto that allocates 30% of the company’s equity to the artists whose music it plays, making them co-owners of that stake and lining them up to benefit from the business’ success. The Artist Trust, which will be governed by an independent board of directors including managers, lawyers, artists and publishers from the industry, will compensate artists according to their popularity on the site.

Singers and writers will also be paid an additional 10% in streaming royalties over what they currently receive from their existing contracts, while new artists will retain 100% of the profits from their Qtrax presence from their first year on the site.

There is something very wrong with the current model,” Mr Klepfisz said. “The current economic structure is not likely to ever compensate the artist… But it’s not that difficult for a paradigm shift to occur. Traditionally the record companies get equity in digital services, but no one has asked on behalf of the artists. This could become a de facto way of doing business.”

While iTunes charges users for the music they download, Spotify’s free-to-listen service has drawn attention to reservations within the industry about how artists get paid for their work. Most notably, in November, Taylor Swift removed her catalogue from Spotify after writing in a July op-ed for the Wall Street Journal: “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It's my opinion that music should not be free.”

Last year, Bette Midler tweeted that “Spotify and Pandora have made it impossible for songwriters to earn a living”, adding that Pandora had paid her $114.11 for more than 4m plays over three months."

Ed Sheeran has admitted that he once got a royalty cheque from Spotify “that was about $2.00”. And a recent memo from Sony/ATV chief executive Martin Bandier revealed that Pandora only paid John Legend $3,400 in royalties for 55m streams of All Of Me and Pharrell Williams $2,700 for 43m plays of Happy, calling it “a totally unacceptable situation and one that cannot be allowed to continue”.

But Lance Ford, president of Qtrax and a former musician himself, told the Telegraph that the industry will have no choice but to catch up with how digital media is changing the consumer landscape if it wants to survive the invasion of piracy and the ease of access -- even through mainstream legal sites such as YouTube -- to free music.

There’s a certain amount of nervousness in the industry about providing free music,” he said. “But if you look at traditional media, it has always been supported by advertising: newspapers, radio, television… and it’s the same with new media. It’s not a radical notion - it just may be radical in the concept of music.”

Mr Klepfisz added: “Facebook is a free service supported totally by advertising. We believe you can do that globally for music... To revolutionize the industry, all it takes is one digital music company to be the size of Facebook. Music is a much bigger platform for advertising if you look at the amount of time people spend on music” compared to how much time they spend on social media.

Indeed, the “free now and free forever” pledge emblazoned on Qtrax’s website has a strong echo of Facebook’s boldly displayed promise that “it’s free and always will be”.

While digital music services such as iTunes, Spotify, Pandora and Deezer have amassed millions of devotees - downloads and streaming accounted for 37% of global music revenues in 2013, according to the International Federation of the Phonographic Industry (IFPI), up from 16pc five years earlier - Mr Klepfisz believe the “huge opportunity” staring the music industry in the face is in targeting the 95% of music listeners who are still using piracy to access songs. These users have no brand loyalty to a certain service - Mr Klepfisz called them “a pretty promiscuous audience” - and are more interested in getting free music than using illegal sites. A high quality alternative to free songs “can render pirate sites irrelevant”, Mr Klepfisz said.

In its most recent Recording Industry in Numbers report, the IFPI said that “the scale of the digital piracy globally remains vast”, with 26% of fixed-line internet users worldwide regularly accessing unlicensed services.

While it’s hard to monitor exactly how many songs are illegally downloaded, or to place the full blame on piracy for the severe drop in music revenues over the past 15 years, the Recording Industry Association of America estimates that some 30 billion songs were illegally downloaded on file-sharing networks between 2004 and 2009.

We still see huge numbers of people going on to pirate services,” Alex Jacobs of the IFPI told the Telegraph. “There’s obviously a market to fish in there. Qtrax is tapping at an open door.”

It’s something that the biggest players in music have been trying to tackle for years. The industry has attempted to clamp down on piracy by urging payment providers including Visa and MasterCard not to process transactions made via illegal businesses, by working with Google to lower the search rankings of pirate sites so they don’t appear on the first page of results, by blocking peer-to-peer websites via court orders in certain markets, and by taking legal action against the major unauthorised BitTorrent sites such as isoHunt.

This is not the first time Qtrax has tried its hand at the free music market. After failing to win licensing deals with all the major record labels, the company suffered a humiliating implosion amid a handful of lawsuits in 2008 due to what Mr Klepfisz has called the company’s naivety. The service relaunched in 2011 and is currently operating in beta, attracting just over a million users.

And now Qtrax’s executives believe the music industry is ready for its radical ideas.

Everyone has a right to be skeptical about the outcome,” Mr Ford said. “But the current regime has no chance of success... We don’t expect it to happen overnight, but we are revving the engines.”

Qtrax will be a success if their plan could attract a fraction of the number of people who use the major social networking sites, which “should not be difficult given the passion of the global consumption of music,” Mr Klepfisz said. If that happens, “then you have completely revolutionized the industry.”

In a sign that the music industry is cracking down on illegal usage, PPL, the music licensing company, increased the number of cases it brought to court last year by more than a tenth.

The UK-based firm formerly known as the Phonographic Performance Limited launched 230 cases in the High Court in 2014, up from 209 the previous year, in an attempt to clampdown on pubs and clubs that play music on their premises without obtaining the licenses.

Paul Joseph, copyright partner at RPC, called these leisure venues “a far easier target for the music licensing organization to pursue for potential copyright infringement than an illegal online file sharing website that might be based thousands of miles away.”

The Football Association Premier League launched seven times more cases last year than in 2013 in a similar attempt to tackle the wave of pubs broadcasting football matches without a license.

PPL accounted for 6pc of all claims heard in the High Court, according to the law firm RPC, three times higher than the next most frequent initiator of cases, Capital Home Loans.