Byline: David McGuire
Ever since the day he became president of the Internet file-sharing service Grokster in 2002, Wayne Rosso has prided himself on being a thorn in the recording industry's side. The loudmouth tech executive remains the go-to guy for journalists seeking incendiary quotes comparing music lobbyists to murderous dictators.
But if Rosso's latest venture gets off the ground, he may wind up generating piles of cash for the music industry giants he once savaged. His new company uses technology developed by another former industry pariah -- Shawn Fanning, the student programmer who kicked off the file-sharing craze with his Napster service in the late 1990s.
Dubbed Mashboxx, Rosso's new service is set to go online early next year. It will rely on the basic "peer-to-peer" technology offered by Grokster, Kazaa and other file-trading programs that allows users to download and swap digital music files.
The big difference is that Mashboxx will be the first peer-to-peer network to use SnoCap, the music-licensing service founded in 2002 by Fanning. This makes it the first "real" legal alternative to popular free P2P networks such as Kazaa and eDonkey, as well as industry-supported downloading services like iTunes and Musicmatch.
"Our model is regular peer-to-peer. You're going to have all the content you're going to get with all the major (file-sharing) networks," Rosso said. "Unauthorized content will not be blocked. Instead, what we're going to be doing is replacing unauthorized content with authorized versions."
SnoCap won't prevent Mashboxx users from downloading, uploading and swapping popular songs over the network, but it will force them to pay for their music.
Although SnoCap promises to clean up and legitimize Internet file trading, it won't work unless peer-to-peer companies allow the San Francisco-based firm to scan the traffic that travels over their networks.
Ali Aydar, SnoCap's chief operating officer, confirmed that the company is in discussions with Mashboxx and several other potential partners that he declined to name. He said Mashboxx could be the first retailer to use SnoCap if it launches as planned in early 2005.
SnoCap works by electronically "fingerprinting" songs and maintaining a database of those fingerprints that it can compare against tracks being sold on retail sites or traded over peer-to-peer networks. Under SnoCap's approach, it will be the record companies' responsibility to claim the songs they own and set the rules for how those songs can be traded.
SnoCap gives song owners the option of making their music available at no cost, allowing free trades for a limited time, selling them, or demanding that they not be distributed electronically at all, Aydar said. Copyright owners will also be able to change the rules at any time.
Universal Music has agreed to set rules for its songs in the SnoCap system, and Aydar said SnoCap is in serious discussions with other major labels. The company's contract with retailers requires that they force their customers to follow the rules set by the rights holders. In cases where copyright owners haven't gotten around to claiming a particular work, retailers can choose either to block unclaimed files or let them through.
Rosso said Mashboxx will take the latter approach. "If somebody comes to me and says, 'Our stuff is up there and blah, blah, blah,' all I have to say is, 'Give SnoCap a call.'"
Rosso did not reveal exactly how Mashboxx will deploy the SnoCap technology. But possibilities include allowing users to download radio-quality versions of the songs to sample before buying the clean digital copy and grafting radio-style voiceovers onto the beginnings and ends of sample songs.
"The bottom line is that the user will get the whole file, and get the opportunity to play it and use it and enjoy it, and get the opportunity to pay," he said. He added that because copyright owners can set the wholesale prices for their tracks in the SnoCap system, the per-song price for Mashboxx users will vary, but the majority of songs will probably be priced around $1 each.
Privacy and Safe-Harbor Concerns
If Rosso succeeds, the man who once unfavorably compared Recording Industry Association of America President Cary Sherman to Joseph Stalin could create a fresh new revenue stream for record companies, shoring up sales in an industry that's worried about the Internet's impact on its bottom line since Napster's rise in the late 1990s.
If Sherman finds that ironic, he isn't letting on.
"We have maintained all along that [peer-to-peer services] could filter if they want to and stop the infringement. This basically proves that's true by no less a technology guru than Shawn Fanning," Sherman said. "It would be wonderful to find that these really are viable business models."
At a P2P conference put on by the Federal Trade Commission last week, Sherman projected a recent Rosso quote on a giant screen for the audience to read: "The problem is that even though the opportunities are starting to arise now and the record companies are reaching out, many of my colleagues are backing off, afraid that if they play ball, they'll lose their traffic."
Indeed, the biggest obstacles to success for Mashboxx or any other peer-to-peer company looking to "go straight" are the dozens of popular, free networks that have no intention of joining them.
Adam Eisgrau, the head of P2P United -- a trade group that represents eDonkey, BearShare and Rosso's former employer, Grokster -- said his members won't do business with SnoCap. "We will not do this voluntarily," Eisgrau said, adding that he would fight any attempt by Congress to mandate filtering technology.
"What's being suggested is that every file transfer must first pass through their database. From a privacy perspective, from a free speech perspective, from a network effectiveness perspective, that's preposterous." Eisgrau said. "I understand why it makes sense to Hollywood and friends. I don't understand why it would make sense to anybody else."
Phillip Corwin, who lobbies on behalf of Sharman Networks, the Vanuatu-based company that distributes Kazaa, said that even if SnoCap did make sense from a business perspective, it could put peer-to-peer companies on a shaky legal footing.
A federal appeals court ruled in August that peer-to-peer software publishers Grokster and StreamCast Networks Inc. could not be held accountable for the copyright infringement committed by their users. The court concluded that unlike the original Napster, which was ordered shut down by a federal judge in 2001, Kazaa and Grokster don't maintain centralized servers and therefore can't control what their customers share with one another.
However, the U.S. Supreme Court plans to review the Grokster-StreamCast settlement next year, and SnoCap's debut on a service like Mashboxx could undercut arguments that P2P services are unable to control how their software is used.
"If I'm a peer-to-peer executive, I've got a great safe harbor right now. Any change in the technology puts me at legal risk," Corwin said. Since SnoCap requires that transfers be routed through a centralized location, a peer-to-peer company using the technology could be liable in the same way Napster was, he said.
Legal questions aside, the continuing existence of free file-swapping services that operate beyond the reach of U.S. authorities presents significant competition for any service like Mashboxx, according to Peter Menell, a law professor at the University of California at Berkeley.
SnoCap is "certainly a nice idea and it's serving at least a public-relations benefit for the copyright industries, but I don't think they're banking on it as their savior," Menell said. "I think we could spend a lot of time developing business models that meet all of the needs of the major players, but no one really wants to buy it."
Rosso said he is confident that people will flock to a network that lets them share songs without having to worry about lawsuits from the RIAA or the Motion Picture Association of America, or about "spyware" programs that are sometimes packaged with files downloaded from free services.
A Crowded Field
Mashboxx will face competition from other companies lining up to offer licensed file sharing. One is Peer Impact, owned by Wurld Media Inc. in Saratoga Springs, N.Y. The company has already inked licensing deals with three major labels. Another is Seattle-based Weed, which is focused largely on the independent music scene. Weed requires users to buy the songs, but then pays them when they get others to download the same file. Both of those services use their own technology to prevent illegal downloads.
