Looking to Share Again
At 19, Napster founder Shawn Fanning graced the cover of Time magazine as the velveteen-haired frontman for online music piracy.
Now, at 24, his second set is taking a different direction: Legitimizing the revolution Napster started.
Fanning’s new company, Snocap Inc., aims to transform the music-swapping free-for-all Napster sparked into a vast online marketplace where people can buy authorized tracks from each other.
Napster launched the online file-sharing craze and attracted tens of millions of users before the company collapsed in 2002 under a legal assault by the major record labels. Napster’s successors -- even more popular online services such as Kazaa, Morpheus and Grokster -- have proved harder for the labels to drive out of business.
Five years after starting the fight, Fanning, who sports close-cropped hair under a baseball cap, believes he can end it. It’s a personal mission that began shortly after he left Napster.
“I do have something to prove at some level,” Fanning said this week in one of his first interviews in more than two years. “In terms of creating something lasting -- that we can go and create something that is a representation of what we believe, that is a representation of the ideals we had at Napster.”
Fanning and his fellow programmers, many of them Napster alums, set out to create a database that would keep information about recordings and their owners and leverage the power of peer-to-peer networks, which link hordes of small computers.
The idea is to marry the mass reach and vast catalog of the untamed networks with the reliability, quality -- and legality -- of the sales approved by the record labels, publishers and others with rights to the music.
Sometime next year, peer-to-peer networks that want to sell songs will be able to use the database. Song files whose owners have been identified can be transmitted as long as payments go through Snocap to the various rights holders.
If a song hasn’t been registered with Snocap beforehand, it can still change hands. But the act of checking it against the database will allow Snocap to take a digital fingerprint of the new file. The copyright owners can then lay claim to it.
Song owners can set the price and attach almost any conditions they want to the material, including whether and when it expires and how many times it can be copied. They can even name countries where they don’t want the songs to be made available. The songs are marked with an audio fingerprinting system licensed from Philips.
Universal Music Group and Sony BMG have been enthusiastic about the project, and EMI Music Chairman Alain Levy said last month that his firm would reach a deal as well.
“We’re hoping that peer-to-peer becomes another way for people to discover and purchase music,” said Lawrence Kenswil, president of Universal’s ELabs.
The trick will be getting established peer-to-peer companies to participate when users could defect to free alternatives.
And Michael Weiss, the chief executive of the company that makes the free Morpheus file-sharing software, said the Snocap system would be less reliable than Morpheus. That’s because Snocap depends on a central gateway, and if it goes down, so does the network.
Central gateways are something many file-sharing companies are keen to avoid, but not solely out of reliability concerns. Some of them have won legal victories against the record labels by arguing that the decentralized nature of peer-to-peer networks doesn’t allow them to control what their users do online.
“I don’t know if peer-to-peer developers who have decentralized want to turn the clock back,” Weiss said.
Snocap’s 20 employees, who work in a brick-walled loft in San Francisco’s financial district, have said nothing publicly about their project until now. The company’s website is nearly blank.
But as word began leaking about its plans and partnerships, including a licensing arrangement with Universal and a tentative deal to work with Sony on a forthcoming peer-to-peer network called Mashboxx, Fanning decided to step forward.
Always press-shy, Fanning said it was easier being the frontman now that he supported what his company was doing: By the ignominious end of Napster, Fanning had a hard time telling people that as the company tried to block all copyrighted songs from trading, it was still providing a valuable service.
That conflict -- between the Web companies with vast audiences and the content owners unwilling to unleash songs -- inspired Fanning to try to become the trusted middleman.
“It’s a deadlock that’s existed for the past five years,” said Fanning, a music fan and competent rock guitarist. “It didn’t feel right to leave when there was no clear way out of the fighting.”
Apple Computer Inc.’s success with the iTunes Music Store shows that a small but significant number of online music seekers will pay for quality and convenience. Fanning, Kenswil and others believe that at least some peer-to-peer companies also want to base their businesses on something better than advertising and the spyware that often comes attached to the software downloads.
The big draws for Snocap are its flexibility and the new information it can bring to all parties. The music labels will be able to see which songs, including long-forgotten tracks, are the most popular.
“It gives rights holders the ability to experiment,” Fanning said.
Snocap competitors include privately held Audible Magic Corp., which has a database of 4 million songs and can filter out unauthorized copies. But it lacks the structure for payment. Wurld Media Inc. said it would start a closed peer-to-peer network, also with major-label content, as soon as January. Wurld will sell only authenticated files, all of which must be available for permanent download. That makes the operation less flexible.
“Shawn’s been more ambitious in what he designed,” Kenswil said.
For help in launching the company and for its technology, Fanning turned to some of the best-regarded young engineering whizzes at Napster.
System architect Jordan Mendelson is a Snocap founder, and Ali Aydar, who led Napster’s effort to remake itself as a legal service, serves as chief operating officer.
The CEO job, until recently held by former Vivendi Universal Internet executive Jonathan Spalter, is vacant.
Fanning suggested the company’s name for its sound, not out of any affection of the candy made by Nestle. Snocap has taken in $10 million in financing, mostly from WaldenVC and Morgenthaler Ventures.
Gone from the mix is Fanning’s little-known uncle John Fanning, who incorporated Napster Inc., kept 70% ownership and was blamed by employees for antagonizing the record industry.
“We never demonized Shawn, because Napster became something he never intended,” Kenswil said. “He set out to try to figure out a way to discover music.”
Whatever Snocap’s technological strengths, several people who have dealt with the company agree that it and its peer-to-peer clients will rise or fall based on Fanning’s business concepts.
“There will be peer-to-peers that are able to make that transition and compete,” said Audible Magic CEO Vance Ikezoye. But, he added, “technology is not the problem; it’s the business model -- how do you convert somebody who’s getting something for free?”
