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New swap shop for Napster founder

newsmakerShawn Fanning is back in business, and he's talking about his new vision of label-approved file trading.

Shawn Fanning is back.

Few in the tech world need an introduction to Napster's founder, the college dropout whose revolutionary file-swapping technology shook the foundations of the $11 billion record industry. But Fanning's celebrity--which included an appearance on the cover of Time magazine--got short-circuited when Napster found itself on the receiving end of a legal challenge by the recording industry. After a year of increasingly severe court rulings, the original Napster song-swapping service shut down in mid-2001. Not long afterward, the company sold its assets in bankruptcy court.

Now Fanning is returning to the digital music scene with a new company called Snocap. This time around, Fanning hopes he can help rehabilitate file-swapping technology as a way to sell music, not steal it.

Snocap is basically aiming to create tools for identifying songs as they are moved around online and prompt listeners for payment before they can listen. He foresees new file-swapping services built on the technology--or old ones that have added it--that will keep millions of people swapping tens of millions of songs a day, all with the blessing of the music labels.

The biggest hurdle is still Fanning's old vision of Napster. Any new service using Snocap's technology will have to compete not only with Apple Computer's iTunes and other song stores, but also with rivals such as eDonkey, Kazaa and other file-swapping services where music can still be found for free.

CNET News.com talked with Fanning about Snocap's vision for a detente between file-swappers and record labels.

Q: How did the record labels react when you pitched them this idea?
A: The labels were very open-minded and receptive to the idea of meeting with us. We didn't want to go in there with just an idea; we wanted to show that the technology and the idea of a content registry made sense. We went in to make them understand that this was something that--although it was a long-term and ambitious project--had to happen, that it was essential for them to succeed in offering the kinds of services that consumers have come to expect.

Did they understand the idea that there could be different kinds of peer-to-peer services? That peer-to-peer was just a technology, rather than necessarily a practice of piracy?
It's obvious when you use the phrase peer-to-peer, certain things come to mind. But in general, they were aware of the fact that other things were possible. We had to be very clear as we talked as to which ideas were new, which were still peer-to-peer in the sense of what peer-to-peer is.

The idea was directly in conflict with what the existing services were able to do. They are as hands-off as possible, and so they're limited as to what they can do in creating a good user experience. That's why there's this huge void in the market. You've got the existing retailers with a lack of content. Then you've got existing peer-to-peers, which are still the majority of the usage, with a really bad user experience.

It helps having been in the same situation at a peer-to-peer service and knowing what it's like to want to build certain things into your product but you can't.

There have always been two attractive things about peer-to-peer. One has been the breadth of content available, and two, the fact that everything is free. You're still going to be competing with somebody out there who is free, whether it's Kazaa or eDonkey--or the latest open-source successor. How does that affect you?
We've always expected that free services will exist in some form. There is always going to be some set of users who have more time than money. If you look at the spectrum of users today, the people who pay for iTunes are at one end, and these people are on the other end. There's a huge gap in the middle. These are people who would move if there was an authorized way that was much more reliable to get the stuff they care about, without feeling like they're giving up something significant by moving into an authorized environment.

It is about convenience, and about providing a service that's worth paying for. It's about finding the right business model and the right price point--which is going to take time. But there are many other business models to be explored. And it's about the content. Snocap is leveling the playing field on the content side, and we're going to open up the market.

Because of your history with Napster, can you go into the peer-to-peer community and say, "This is the way to do it now; this is the way the market is evolving?" Will they follow your lead, or does that at least give you an entree to customers?
It helps having been in the same situation at a peer-to-peer service and knowing what it's like to want to build certain things into your product but you can't. All of these are things that we've considered in the development of Snocap. Having been at Napster helps... It's really shaped what we've developed, and they know that we understand what they're dealing with.

Toward the end of Napster, it sounded like you were having problems with fingerprinting. Is this 100 percent now? Is it bulletproof?
Nothing's 100 percent, but it's extremely reliable.

Could your technology be used as a filter if it were plugged into Kazaa or some other peer-to-peer network?
We're using identification technologies. Identification technologies can be used to filter. But that's just one piece. We're incorporating it for reasons that are related to growing the amount of content available. It's really the difference between being able to use the technology for one thing rather than another, and seeing that similarity, versus what our actual business is.

It's not what we're about. We're trying to build something that facilitates a high-quality service. Respecting rights holders is important, but it's all working under the assumption that everyone is trying to make as much content available as possible. The business is built on the premise that a peer-to-peer service ought to be able to launch a successful authorized system and have the breadth of content that they had available previously, or close to that.

Is there any way to apply this to video games, software, movies or other things found on peer-to-peer networks?
Absolutely. In fact we would like to extend our business and our technology. The system itself is very easily extended into other areas. The fingerprint technology is music specific, but fingerprinting can apply to video, etc. The rule-sets are specific to music, but those are also very easily adaptable. So our system in a general sense is very extensible, and we believe that once the music space begins to adopt the Snocap system, there will be a demand for this kind of architecture to provide content in other forms.