By AppleInsider Staff

Published: 10:20 AM EST

A once controversial peer-to-peer file sharing service said this week it is relaunching with the blessing of the recording industry under an ad-supported model that will see its vast music catalog made available as free downloads, even for Apple iPod owners.

New York-based Qtrax, which now bills itself as the "World's First Free and Legal P2P Music Service," promises to serve up between 25 million and 30 million copyrighted tracks to users over its file sharing network, dwarfing the the number of song downloads offered by rival services such as Apple's iTunes.

Qtrax claims to have struck a deal with all the major record labels whereby downloads will be tabulated and artists later compensated through advertising revenues garnered by the service. For end users, the service will be free, allowing unlimited music downloads that come wrapped in digital rights management (DRM) software to prevent their duplication.

Although the service launched on Monday without iPod support, Qtrax claims to have devised a way for its tracks to work on the Apple players, which have thus far been restricted to compatibility with DRM-free tracks of those wrapped in Apple's proprietary FairPlay wrapper.

"We've had a technical breakthrough which enables us to put songs on an iPod without any interference from FairPlay," Allan Klepfisz, Qtrax's president and chief executive, told the Associated Press. Although the exec declined to give specifics on how Qtrax will make its audio files compatible with Apple devices, he noted that "Apple has nothing to do with it."

Qtrax says iPod compatibility could arrive as early as March. It's unclear, however, whether Apple will attempt to circumvent Qtrax compatibility in order to maintain the strong bond between the iTunes Store and its digital media player line.

Update

Following Qtrax's announcement overnight, at least one of the major record labels disputes that they had reached an agreement with the company to offer their tracks through the new service.

"Warner Music Group has not authorized the use of our content on Qtrax's recently announced service," Warner, the No. 3 music company, said in a statement.

For its part, Qtrax responded by saying, "We are in discussion with Warner Music Group to ensure that the service is licensed and we hope to reach an agreement shortly."

Meanwhile, a source close to Universal Music Group, the world's largest music company, told Reuters it also did not have a deal with Qtrax but discussions were continuing.