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New dreams for Morpheus

After a legal ruling in its favor, a rejuvenated StreamCast Networks spruces up its Morpheus software--once the Net's most popular P2P program--and imagines a new future.

StreamCast Networks' Morpheus, once the Net's most popular file-swapping software, is being reborn yet again with new technology, and StreamCast also has a new CEO: Former Chief Executive Michael Weiss.

StreamCast, which saw most of its top executive staff depart last month, said Wednesday that Weiss had returned to the helm, and that it would release a wholly new version of its file-trading software May 1.

The announcement came just days after a federal judge made a surprise ruling that StreamCast was not liable for copyright infringement that took place using its software, giving the struggling company a new lease on life.

"It's a new day for us," Weiss said. The ruling "allows us to expand the company, and perhaps reach out to artists who would like to directly connect with users. It really allows us to come out of the shadows and move the way we'd always wanted to."

StreamCast's quick announcements mark the first of what is likely to be a string of similar reactions from a rejuvenated peer-to-peer community collectively rejoicing over its first legal win in the United States.

Although Friday's court decision is sure to be appealed by the recording industry and movie studios one way or another, it appeared to be a clear defense of the legality of decentralized file-swapping services. As long as the companies simply distribute software, and don't actively participate in linking uploaders and downloaders, they are shielded from liability in the same way manufacturers of VCRs or copy machines are protected, Judge Stephen Wilson ruled.

The appeals process remains somewhat unclear, since the ruling was made on a summary judgment motion, or request to dismiss the suit. The two sides--the peer-to-peer companies and the Recording Industry Association of America--are meeting with the judge to determine what the most efficient way forward will be, RIAA President Cary Sherman said Tuesday.

Twists and turns
Even by the unsettled standards of file-swapping businesses, StreamCast Networks and Morpheus have ridden a roller coaster of change over the last few years.

Originally launched as Music City, and as a streaming-media company, StreamCast later launched the Morpheus file-swapping application. As people fled Napster's service in 2001, Morpheus became the most popular replacement for people looking for a new way to swap files.

However, StreamCast had licensed its file-swapping technology from the same Amsterdam-based developers that created the Kazaa software, and a licensing dispute ultimately ended with the Morpheus network going dark almost overnight. StreamCast quickly released a wholly new version of its software based on open-source Gnutella technology, but the company's popularity never recovered.

The new Morpheus technology is also based on Gnutella, but streamlined and with new additions that Weiss said come out of users' requests. People will be able to download pieces of the same file from multiple sources, and chat more easily with other users, for example.

Early indications from some users indicated that the software still had some hurdles to overcome. One person using the screen name "Selkeyes" said he preferred the earlier version's search capabilities, both to the new software and to other file-swapping software.

"The old was sure better," said Selkeyes in an online chat interview. "As long as Kazaa is not good for my CPU, I'll actually try to dig up the old 2.0 version."

The new version of Morpheus comes with several bundled software applications, none of which actively monitors users. The "My Search Bar" software creates an IE search toolbar and can replace a users' home page with its own site.

Weiss indicated that StreamCast will move ahead aggressively with other business ideas now that it has some vindication by the court. The company received a new round of venture funding from Timberline Venture Partners recently--before the court ruling, Weiss said--and so should have enough funds to pursue new projects. The long legal fight had previously drained the company's coffers to dangerously low levels.

"I think that investors behind the company finally see a bright light at the end of the tunnel," Weiss said. "If I didn't think they were going to support it, I would not be here."