Music rebels seek to tame P2P

After years of bitter battles between copyright holders and file-swapping services, the outlines of a partial truce are emerging that may soon see major record labels partner with peer-to-peer networks to create legal online music stores.

At the center of the detente is Napster creator Shawn Fanning, whose new company, Snocap, has spent the last year building technology designed to identify music on file-swapping networks and turn free song trades into purchases. The company plans to emerge from stealth mode by the end of the year and has already secured licenses to the song catalog of the Universal Music Group.

Fanning's technology is designed to work behind the scenes of other companies' services, rather than directly replacing either file-swapping networks like Kazaa or today's download stores such as Apple Computer's iTunes Music Store. But several companies are already planning to use the technology, which could allow peer-to-peer networks to become online stores that sell music legally, much like iTunes.

In order to get there, though, peer-to-peer companies would have to agree to keep unauthorized music out--something large networks that support millions of users might be loathe to do.

"There's nothing we'd like better than to see peer-to-peer (services) selling our music," said one top label executive, who spoke on condition of anonymity. "They just can't be allowing people to steal it at the same time."

Three years after the courts forced Napster to close its doors at the peak of its popularity, the company's founder is poised to rejoin the online music revolution on the side of the record labels.

Fanning's apparent conversion offers more than a hint of historical irony. As a young renegade, he was ordered by courts in 2000 to begin blocking trades of copyrighted songs on the original Napster service, which ultimately shut down a year later, after the company's filters proved unwieldy.

The Snocap system, which identifies songs in order to extract payment, carries at least the mark of that original court order--and might arguably be seen as its fruition.

Fanning's technology is just one element in a series of pieces that are rapidly falling into place to allow new kinds of peer-to-peer music distribution. Another change, possibly more significant, has come in the form of growing flexibility on the part of record label executives, who increasingly see how using peer-to-peer technology as a legitimate distribution system could offset its use for piracy.

Labels have flirted with peer-to-peer services before--most notably when BMG Music parent Bertelsmann provided a financial lifeline to the original Napster in the last months of its operation. Labels have also had discussions with Altnet, a company that has tried to sell music, movies and games through Kazaa and other file-swapping services. But so far nothing tangible has come of those talks.

But a generation of peer-to-peer companies and executives, weary of intractable legal fights, now appear to be willing to accede to record labels' primary demand: They can distribute major-label music, but not alongside free, pirated content.

"Presented with an opportunity to get licensed, as we have all been screaming for for the last year, it would be disingenuous not to do it," said former Grokster President Wayne Rosso, whose Mashboxx music distribution network, slated to be released early next year, may be one of the first services to use Snocap's technology.

They'll have a steep hill to climb, competing against the established download services, such as iTunes, as well as free file-swapping services. Optimists point to tapping the community aspects of peer to peer, in which drawing from other users' unique playlists would still be an attractive notion, even if the songs were no longer free.

"It's going to be a tricky thing, but ultimately you could make it viable, in the same way that eBay offers an alternative to Amazon in purchasing goods," said Vance Ikezoye, chief executive officer of Audible Magic, a company that provides technology for identifying and blocking songs on peer-to-peer networks. "You might say that P2P could similarly be an alternative way of purchasing content to iTunes and Napster."

Snocap details emerge
Fanning and other Snocap executives, through a spokeswoman, declined requests for an interview. But new details of their technological system are emerging as it nears completion.

The company has been working for more than a year with the close support of many in the record industry. Top executives in the business have come to see one-time pariah Fanning as a genuine convert to the idea of selling music legally online.

The overall technology is designed to plug into other software or services and identify songs that are being swapped on a network, sources familiar with the company say. In a peer-to-peer network, a piece of software using Fanning's technology would have to get authorization from Snocap before downloading a song, for example.

Sources said Snocap itself is not a filter, although some in the record industry see it as proof that existing file-trading networks can have copyright-friendly filters applied to them, blocking unauthorized transmissions. Services that use Snocap's technology will not be allowed to have pirated material swapped alongside the authorized versions of songs.

Snocap itself will offer a range of different services to record companies and other customers, including the creation of a "warehouse" of authorized music that can help "seed" peer-to-peer networks with content.

Record executives say they are also interested in a feature that will track peer-to-peer requests for songs that aren't yet licensed for digital distribution. That will help them go into their archives and find songs that are out of print that people may want online, one executive said.

The identification and transaction system won't be limited to traditional peer-to-peer networks, sources said. Ordinary Web retailers could use the technology to sell a song online, and let their own customers forward the song to other people. If those people downstream wanted to keep the song, they would also pay for it, with the funds forwarded to the original retailer by Snocap.

The seeds of competition
None of this is likely to eliminate traditional peer-to-peer networks anytime soon, of course. The siren call of free music and movies, even with the associated risk of prosecution from the Recording Industry Association of America or the Motion Picture Association of America, will keep many people coming back to unregulated networks like Kazaa and eDonkey.

But a few services will likely pop up early next year. Rosso has been widely reported to be in talks with SonyBMG, although sources say no deal has been finalized. Sources familiar with the project say Mashboxx is likely to provide low-quality versions of music to sample, along with Snocap-backed links to purchase high-quality songs, in part tapping into existing file-trading networks for content.

Rosso himself declined to comment on the specifics of his project, or on whether he had already inked any deals with labels. But "it's going to be file-sharing on steroids," he said.

Wayne Chang, the creator of the college-focused peer-to-peer service I2Hub, which now operates in part on the super-high-speed Internet2 network, said he is interested in turning it into an authorized service with the help of Snocap or other similar technology.

The Israel-based iMesh service, which settled a lawsuit with the recording industry earlier this year, has also said it will turn itself into an authorized distribution channel, while retaining its peer-to-peer aspect. But sources familiar with the company said it is likely to use Audible Magic technology rather than Snocap.