updated 12/3/2004 9:21:27 AM ET 2004-12-03T14:21:27

Shawn Fanning's Napster software enabled countless music fans to swap songs on the Internet for free, turning him into the recording industry's enemy No. 1 in the process.

Five years later, now heading San Francisco-based Snocap Inc., Fanning is touting a new technology designed to help the music companies who once sued him into submission cash in on file-sharing between computer users, also known as peer-to-peer.

Rough details of the venture, in the works the past four years, surfaced in recent weeks, but Fanning spoke publicly about it for the first time Thursday, hailing it as a means to create a licensed online music service with the nearly unlimited selection of music now available on file-sharing networks.

"There's nothing out there offering a content experience with the breadth of content on peer-to-peer thus far," Fanning said.  "We're trying to basically open the market up."

Fanning says the biggest drawback to existing licensed digital music services, such as Rhapsody and Apple Computer Inc.'s iTunes Music Store, is that the selection of tracks available is woefully small compared to the volumes and variety of content swapped on file-sharing networks with programs like Morpheus, Kazaa and LimeWire.

Despite rising sales of music downloads this year, the amount of music purchased from licensed services is dwarfed by the amount of file-sharing taking place.

"That sort of open access to music, the ability to download stuff and try it very quickly, the fact that you have been able to do so the last five years has really changed consumers' expectations," Fanning said.  "It's clear that something is missing."

While some artists and record labels have experimented with distributing music over online file-sharing networks, sometimes only for the exposure, major record companies have been reluctant to license their music to file-sharing software firms while unauthorized versions of their artists' music continues to be swapped on the networks.

Snocap's system would allow record labels to manage whether computer users could swap their recordings over file-sharing software that has been equipped with the technology.  Computer users would also be given the option to pay to download songs.

This would purportedly afford some manner of assurance to record labels that unauthorized versions of their music, specifically the tracks they register with Snocap, would not be shared, while also allowing the freewheeling exchange of other files, Fanning said.

The technology employs an acoustic fingerprinting system to identify tracks and compare them to a database of licensed songs submitted by record labels.  The program also would filter out spoofed, damaged or unlicensed versions of songs in the database, Fanning said.

Record companies would also be able to specify an array of restrictions, including how many times a track can be played on a computer before the user is required to buy it, or whether it can be burned to CD, or shared, Fanning said.

Snocap's technology wouldn't, however, block music files that have not been expressly blocked by a record company on the Snocap song database.  So, in theory, a random fan bootleg recording of an Eminem concert could still be traded, at least until the recording company got wise and placed restrictions on the file, Fanning said.

Industry support
Fanning has made a believer out of one major recording company, Universal Music Group.  "Snocap presents one of the first real solutions that will bring peer-to-peer consumers a broad array of choices in authorized services," Larry Kenswil, president of UMG's eLabs said in a statement.

Fanning says he's in talks with other major record companies, but it remains to be seen how many file-sharing software firms will play along.

Such firms would have to agree to pay record companies a licensing fee in addition to equipping their software with the Snocap technology.  So far, only one file-sharing service, dubbed Mashboxxx, appears to be in advanced talks with Snocap to use its technology.

Fanning declined to confirm reports that a deal has been finalized with Mashboxxx, but said the company has been in talks with it and other P2P software firms.

"One of the goals of our system is to enable those services to transition into authorized retail channels," Fanning said.

It's not clear whether established file-sharing services, who have survived direct assaults from the recording industry in U.S. courts, will be interested.

Michael Weiss, CEO of StreamCast Networks, the company behind Morpheus, dismissed Snocap's technology as a backward step.

"It looks and feels like Napster circa April 2001," Weiss said, referring to a file screening system Fanning implemented in his attempts to save Napster from going under in 2001.

That system only sought to filter out files whose labels matched the names of songs on a recording industry list of 5,000 tracks, but computer users simply deliberately mislabeled files to circumvent the filter.

"Any kind of central server for a filter is a problem," Weiss said. "What they're doing is asking us to adopt an old technology and forget about the innovations we're moving forward with."

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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