HITS Daily Double


Napster Inventor’s New Venture to ID and Charge for Songs on Peer-to-Peer Networks
Snocap Inc., the new company formed by Napster creator Shawn Fanning to help “legitimize” file swapping on peer-to-peer networks, has been officially unveiled.

The company, which already counts Universal Music Group among its clients, intends to build a database of all the world’s recorded music, identifying each song through a digital fingerprinting technology. Once a copyright owner's songs are registered with the Snocap database, the owner can set usage rules, such as price and number of copies allowed. Snocap software will then track these songs as they course through the world’s computers and collect a fee for each download.

Snocap intends to make money by keeping a transaction charge from money collected.

The company has raised a total of $10 million from venture-capital firms Walden VC and Morgenthaler Ventures, according to reports.

Fanning says there are some 25 million songs available through file-sharing networks such as Kazaa, eDonkey and BitTorrent. His intention, along with co-founders Jordan Mendelson and Ron Conway is that Snocap become a “trusted third party” to track and collect royalties for copyright holders as the system turns illicit P2P activity into another method of legal music distribution.

To achieve this, Snocap will have to be adopted by current and future file-sharing networks. Mashboxx, the new network being run by former Grokster President Wayne Rosso, is understood to be using Snocap technology.

And this week another legal-sounding file-swapping network popped up, this one called Peer Impact. Three of the Big Four music companies have licensed their music for trading on the system, which plans to charge 99 cents per download.

But critics point out that as long as there are file-swapping networks that do not employ Snocap or similar technology to promote and collect money for legitimate tracks, songs will continue to be swapped online illegally.

Whether Fanning can make Snocap work remains to be seen, but the effort at the very least redeems him as the computer geek villain who seriously wounded the music business by starting Napster.

Attorney John Frankenheimer of Loeb & Loeb is representing Snocap to music companies and will eventually bring it to movie studios. All have been receptive to the idea so far, since there’s no risk—their music is already out there and being traded illegally—but the potential upside is significant.

And Fanning already has friends in high places in the music business. "His reasons for doing things are really pure, like an artist or a scientist," Interscope ruler Jimmy Iovine told the Wall Street Journal. "I will help him in any way I can."