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Napster's Fanning has Snocap-ped vision

Shawn Fanning, creator of the once notorious song-swap service, is working on new venture aiming to help record labels make money from file swapping.

Far from his anarchic Napster days, file-swapping pioneer Shawn Fanning and several of his old colleagues are quietly working on a new venture called Snocap that is aimed at turning peer-to-peer networks into dollars for record companies.

Based in San Francisco and backed by angel investor Ron Conway--who also initially funded Napster--Snocap has for months been quietly writing code and building the bridges to the music world that Napster lacked, according to sources familiar with the company.

Fanning's role as the creator of the music industry's archenemy does not seem to be holding him back. As earlier reported, Snocap's plan, which involves identifying music files being traded through file-swapping networks and then attaching a price tag to them, is resonating well with music industry executives.

"It's a pretty well thought-out idea, but the success of it hinges on everybody in the ecosystem getting involved," said one record label executive familiar with Snocap. "The key to its success is the peer-to-peer companies agreeing to participate. If they do participate, it could be phenomenal."

Requests for comment from Fanning and other Snocap employees were not returned.

Fanning's return to the peer-to-peer world is one of the most ambitious of several ongoing attempts to bring about a detente between file-swapping networks and record labels, which have been at war almost since the day Napster launched in 1999.

Today's unrivaled file-swapping leader, Sharman Networks' Kazaa, is closely affiliated with Altnet, a division of Brilliant Digital Entertainment that seeds file-swapping search results with authorized files such as games or music. Altnet has been trying unsuccessfully for more than a year to strike distribution deals with major record labels and movie studios. Sharman is now suing the entertainment companies on antitrust grounds, alleging that they are colluding against peer-to-peer companies.

Altnet and Sharman have also helped create a forum called the Distributed Computing Industry Association, which is trying to bring entertainment companies and file-trading companies to a negotiating table in order to work out their differences. That effort is still in the early stages, however.

After the flood
A filing with the California Secretary of State states that Snocap was incorporated in Delaware on Oct. 28, 2002, with Conway as president, listed as the sole officer. The filing also notes that the company changed its name to Snocap from Open Copyright Database on June 25, 2003.

The company, at least in its early stages, looks much like Fanning's old one.

According to sources familiar with the company, Ali Aydar, who worked with Fanning on pre-Napster projects and ultimately became a key engineer at the file-swapping company, is chief operating officer. Jordan Mendelson, who helped develop Napster's search technology in its early days, is also a co-founder. Mendelson registered the Snocap.com domain name.

Mendelson has chronicled a few moments in the company's development on his Web log, including a recent flood caused by an errant sprinkler that temporarily forced the start-up out of its San Francisco offices. A visit to Snocap's office in San Francisco's trendy "SoMa," or South of Market, district bears out the flood's damage. A Snocap banner and a few scribbles on a white board now overlook empty desks and exposed wallboards.

Nevertheless, the company is growing, with a total of nine employees as of early January, according to Mendelson's blog. A few job listings had been posted on the company's Web site.

As of Monday, however, the company had removed its job listings from the Snocap Web site, along with the company's address and the map of its location. Mendelson also password-protected his blog.

The technology itself, according to sources familiar with the company, takes a page from Napster's last days as a file-swapping company. In late 2001, courts forced the company to block copyrighted songs before they were traded through the network. Napster, with partner Relatable, worked to develop a way to identify and filter material.

Ultimately, the company decided to shut the service down rather than try to develop the technology under the court's order. The Napster name is now being used by the Roxio-owned digital music download service, a rival to Apple Computer's iTunes store. The new Napster service does not have any of the file-swapping capabilities of the original, however.

Watching the detectives
Snocap has been working on ways to identify songs, as they are traded through a file-swapping network, including using a technique called "audio fingerprinting," which monitors the sonic characteristics of music files.

That fingerprinting tool could be integrated into the file-swapping software itself in several different ways, sources said. When a file is being downloaded, the software could check its "fingerprint" and then compare it against a database Snocap operates, for example.

Once an identification is made, the download could be blocked, unless the computer user pays a fee, as if they were downloading a song from iTunes or another digital song store. Alternately, some mechanism could be established, under which the file-swapping network operator would pay for the downloads that are tracked by Snocap's system and would later be reimbursed by subscription fees or advertising revenue.

Fanning has been explaining his ideas to record label executives, who are interested but not entirely sold, sources said. His background with Napster may be helping him win meetings with the labels, rather than hurting him, they suggested.

"Shawn is a smart, articulate guy. That goes a long way," said one source familiar with Fanning's discussions with record labels. "He walks in a world that they desperately want access to."

Peer-to-peer companies, however, may also be a difficult sell. Executives from several major file-swapping companies said Fanning has yet to contact them; some said other companies with similar ideas based on audio fingerprinting were looking for support.

"We had a very similar idea run past us," said LimeWire Chief Technology Officer Greg Bildson. "We basically ended up not following up on it. It is interesting, but we're not interested in building filtering and any centralization into our client."