Napster founder is back, legitimately

Shawn Fanning's new company, Snocap Inc, aims to create an online marketplace where people can buy authorised tracks from each other without incurring the legal wrath of the record label

At 19, Napster founder Shawn Fanning graced the cover of Time magazine as the poster boy for the online piracy of digital music.

Now, at 24, he's ready for his second set: Legitimising the revolution Napster started.

Fanning's new company, Snocap Inc, aims to transform the music-swapping free-for-all Napster sparked into a vast online marketplace where people can buy authorised tracks from each other without incurring the legal wrath of the record labels.

Napster launched the online file-sharing craze and attracted tens of millions of users before the company collapsed in 2002 under a legal assault by the major record labels.

Napster's successors - even more popular online services including Kazaa, Morpheus and Grokster - have proved harder for the labels to drive out of business.

Five years after starting the fight, Fanning, who sports close-cropped hair under a baseball cap, believes he can end it. It's a personal mission that began shortly after he left Napster.

"I do have something to prove at some level,'' Fanning said last week in one of his first interviews in more than two years.

"In terms of creating something lasting - that we can go and create something that is a representation of what we believe, that is a representation of the ideals we had at Napster.''

Leverage the power

Fanning and his fellow programmers, many of them Napster alums, set out to create a database that would keep information about recordings and their owners and leverage the power of peer-to-peer networks, which link hordes of small computers.

The idea is to marry the mass reach and vast catalogue of the untamed networks with the reliability, quality - and legality - of the sales approved by the record labels, publishers and others with rights to the music.

Beginning sometime next year, peer-to-peer networks that want to sell songs will be able to use the database. Song files whose owners have been identified can be transmitted as long as payments go through Snocap to the various rights holders.

If a song hasn't been registered with Snocap beforehand, it can still change hands. But the act of checking it against the database will allow Snocap to take a digital fingerprint of the new file. Then the copyright owners can lay claim to it.

Song owners can set the price and attach almost any conditions they want to the material, including whether and when it expires and how many times it can be copied.

They can even name countries where they don't want the songs to be made available. The songs are marked with an audio fingerprinting system licensed from Philips.

Universal Music Group and SonyBMG have been enthusiastic about the project, and EMI Music chairman Alain Levy said last month that his firm would reach a deal as well.

"We're hoping that peer-to-peer becomes another way for people to discover and purchase music,'' said Larry Kenswil, president of Universal's ELabs.

The trick will be getting established peer-to-peer companies to participate when users could defect to free alternatives.

And Michael Weiss, the chief executive of the company that makes the free Morpheus file-sharing software, said the Snocap system would be less reliable than Morpheus. That's because Snocap depends on a central gateway, and if it goes down, so does the network.

Legal victories

Central gateways are something many file-sharing companies are keen to avoid, but not solely out of concerns about reliability.

Some of them have won legal victories against the record labels by arguing that the decentralised nature of peer-to-peer networks doesn't allow them to control what their users do online.

Snocap's 20 employees, who work in a brick-walled loft in San Francisco's financial district, have said nothing publicly about their project until now. The company's website is nearly blank.

But as word began leaking about its plans and partnerships, including a licencing arrangement with Universal and a tentative deal to work with Sony on a forthcoming peer-to-peer network called Mashboxx, Fanning decided to step forward.

Always media-shy, Fanning said it was easier now that he supported what his company was doing: By the ignominious end of Napster, Fanning had a hard time telling people that as the company tried to block all copyrighted songs from trading, it was still providing a valuable service.

Apple Computer Inc's success with the iTunes Music Store shows that a small but significant minority of online music seekers will pay for quality and convenience.

The big draws for Snocap are its flexibility and the new information it can bring to all parties. The labels will be able to see which songs, including long-forgotten tracks, are the most popular.

System architect Jordan Mendelson was a Snocap founder, and Ali Aydar, who led Napster's effort to remake itself as a legal service, serves as chief operating officer.

The CEO job, until recently held by former Vivendi Universal Internet executive Jonathan Spalter, is vacant.

Snocap has taken in $10 million in financing from WaldenVC and Morganthaler Ventures. Whatever Snocap's technological strengths, several people who have dealt with the company agree that both it and its peer-to-peer clients will rise or fall based on Fanning's business concepts.