The trick involves marrying peer-to-peer technology with Internet radio. Using that combination, some companies are creating powerful tools that automatically broadcast people's private playlists onto the Web. The output is then pulled together into a searchable database that lets listeners find the music they want, when they want it.
Safeguards are in place to prevent unauthorized downloads, ensuring copyrights are honored. But if the technology behind the networks keeps improving and the number of people using them keeps growing, the services could one day turn into something akin to free, on-demand request radio.
Few companies have staked out this territory yet. A handful of pioneers--including Apple Computer, Virgin Digital and upstarts Mercora and Live 365--are just beginning to see demand.
Apple lets users of its iTunes music jukebox software share playlists that are streamed them over a local area network. By contrast, Mercora runs a Web-based network of roughly 8,000 broadcasters worldwide. Those broadcasters devise their own playlists, which are served up to 175,000 to 200,000 listeners connected over the Internet.
Mercora's software also automatically streams music from an individual's hard drive, making each member of the network a broadcaster.
"We're doing for music what Google did for the Web," Mercora CEO Srivats Sampath said.
Peer-to-peer radio is the latest step in a long line of efforts to turn the Web into an on-demand jukebox without running afoul of copyright law. In the past, such projects have caused tension with record industry executives, who turned to the courts to shut down Napster and are now bringing lawsuits against individual file swappers.
Those legal worries have been less evident in the Net radio sphere. Still, the music industry has taken steps to rein in interactive services that might sap CD and digital download sales.
During the dot-com boom, companies such as Launch Media and Musicmatch (both now owned by Yahoo) and MTVi all vied to create interactive radio services. These provided substantial listener control, which ultimately lead towith the record industry.
New copyright fight?
Most interactive Net radio services are now subscription-based, which allows a different set of legal rules to be observed. Leading examples of these services include RealNetworks-owned Rhapsody and Napster's all-you-can-eat streaming service.
Newer software lets people listen to what others are broadcasting from their hard drives, locally or internationally, thereby increasing variety.
The most widely used is Apple's iTunes, which originally let people browse andover the open Internet. Later, it to local networks.
Initially, Mercora said it expected tovia a download service resembling that of Apple's iTunes Music Store. The switch to an Internet broadcast network allowed the company to take advantage of the distinct manner in which the law treats music streamed on the Internet.
Broadcasting fees are set by the U.S. Copyright Office rather than by the record labels and are relatively cheap--they come to about 1/7th of a penny per listener, or about $1,429 per million people. As a result, Mercora says it can afford to pay the fee on behalf of the broadcasters on its network, with the cost offset through advertising sales.
"The big nut we had to crack is how to do this legally," Sampath said. "The law says you can broadcast as long as you pay. Fine, we will pay you."
In the end, this creates a beneficial symbiotic relationship between all the parties. Home broadcasters get a creative outlet, but they don't personally incur any broadcasting fees. For its part, Mercora can function like a broadcaster or cable network, with future revenue coming from selling ad space and subscription services. But it doesn't have to buy or maintain a content library, unlike a regular media network. It does, however, have to spend money on maintaining a bank of servers.
The benefit for listeners is access to music at no cost. Right now, users only have to download the software to join the network and can listen for free. In the future, Mercora may charge subscription fees for some services, said Sampath, who became a noted name in the tech industry years ago by founding the antivirus company McAfee.
What happens if listeners download broadcast music? Technically, if the legally broadcast song is for personal use only, the listener does not violate copyright law. "It's like a tape recorder," Sampath said.
If the downloader tries to sell a track or transfer it to another person, it's illegal. In future, improvements in digital rights management technology should begin to curb the ability of listeners to do this. Mercora also inserts technology into its client software to try to control the practice.
Apple has wrestled with the problem as well, issuing a series of upgrades to its iTunes software designed tosuch as MyTunes. These programs enable users to make copies of music streamed using iTunes' playlist-sharing feature.
Legal or not, Mercora's service most likely will draw the scrutiny of the music industry. The Recording Industry Association of America has already raised concerns about a PC radio receiver marketed by XM Satellite Radio, which enabled consumers to download broadcasted songs onto a computer when used with a third-party software application. XM subsequentlythe device.
The RIAA has also fought, albeit often unsuccessfully, againstsites where people download songs. An RIAA representative had no comment on the Mercora service.
While the potential popularity of Mercora could dent music sales, Sampath predicts that won't be the case. Not all 10 million tracks on its network are likely to stream at the same time. The ephemeral nature of radio makes it difficult to be sure that a particular song will be playing the moment a listener wants to hear it.
For now, the best Mercora listeners can do is tap into a genre or particular artist on demand. Over time, a larger network and improved search tools should let people pinpoint musical demands.
The concept for the music service owes its heritage, in part, to the dreary state of corporate-owned radio, Sampath said. Salsa and reggae account for 21 percent of record sales, for example--but good luck finding them on the radio.
"You can listen to Clear Channel in Santa Cruz, and it's the same Clear Channel in New York, and it's crap," he said.
Sampath had his own epiphany when he logged on to find music from one of his favorite acts, early-1970s medieval rockers Jethro Tull. He found eight broadcasters with Tull selections. (On the network, Sampath is living in the past. Seventy percent of Mercora's listener/broadcasters say they were born in 1979 or later.)
Legal sharing of personal playlists through radiolike features could set up a new long-term battleground between the record industry and consumers. But backers say they could also be used to create promotional opportunities for artists and record labels.
Networks promoted by Mercora or competitors like Live365 will likely become significant tastemakers for the music industry by providing a forum for public opinion, some music executives predict.
"Traditionally, radio generated 95 percent of new music sales, and digital radio is taking that same space," said Zack Zalon, president of Virgin Digital. "It takes six to eight listens for a song to become a hit in a consumer's ears."
CNET News.com's John Borland contributed to this report.