Analysis Snocap, the company formed by Napster creator Shawn Fanning, today launched what it claims is the first music licensing platform that will allow music download services and P2P networks alike to allow any track to be delivered or shared in the knowledge that the copyright holder is taking their cut.
The company's system essentially takes Napster's original centralised P2P architecture - the one that allowed the music industry to prevail over the company in its epic legal battle - and ditches the P2P client.
The idea is that this centralised system will act as licensing manager, ensuring only licensed content is shared or downloaded, and recording for royalty purposes what tracks are copied.
Music retailers can offer vast catalogues of music to customers who want to buy music on a track-by-track basis or to those who want monthly 'all you can eat' subscriptions. Ditto P2P networks who want to maintain volume content availability to users, but want to ensure they're operating in harmony with the music industry. The latter can sit safe in the knowledge that all this movement of content is generating revenue, and that they can set usage rights.
That doesn't necessarily mean DRM, though DRM may have to be used at some level to control CD burning and the like. Snocap uses a music fingerprinting system licensed from Philips which scans downloads and shares as they pass through the Snocap system and compares them to the company's database. If there's a match, the royalty tally is updated and usage rules applied, allowing the transfer to proceed if such an action is permitted, ditching it if it isn't. Tracks that don't match, however, are allowed through.
Not the first
In the UK, online service Wippit used a similar system for its original sharing service, albeit with a far more limit range of content than Snocap envisages. Crucially, though, Snocap isn't the first to deliver on such a vision.
"Today there is still a great divide and consumers are caught in the middle," said Fanning, in a statement. "There are some good authorised online music services but they have limited content and a comparatively small number of users. There are unauthorised services that have content and users orders of magnitude higher, but the service they provide is inferior and they are at odds with rights holders. Snocap is the means to bridge that divide for the consumer."
That at least is Snocap's pitch, and it all sounds a little too perfect.
First, there's the licensing. Snocap also said today that it had secured full rights to Universal Music Group's catalogue, though it didn't say how much it had paid for those rights. That still leaves three other major labels and countless indies around the world still to go. Then there are all the artists, typically very popular ones, who maintain control over their own catalogue and have not yet authorised even their labels to deliver content digitally. It will also need deals with music publishers. As iTunes and co. have discovered, licensing music is not a straightforward process.
And don't forget that licensing is further muddied by the international nature of the business. Universal may offer artist A in the US, but Sony is A's label in Europe. To operate as it envisages, Snocap will need deals at all these levels. If it can't get them, it will need to filter out cross-border shares and downloads, which is not an easy process. IP addresses give some indication of geography, but it's by no means a guarantee. For example, all AOL users, wherever they are in the world, appear to reside in the US, as far as their IP addresses go.
The licensing issue will, for some time to come, leave Snocap's catalogue behind what's offered by today's P2P networks. Plenty of users will stick with those because they don't like the idea of their actions being monitored by Snocap. Even if Grokster, Kazaa, Limewire, eDonkey and co. all switch over to Snocap, the code is out there and new de-centralised P2P services will emerge to fill the gap.
Who's picking up the tab?
Then there's the question of who's going to pay for all this. The labels bill Snocap, and Snocap bills the P2P networks. They, in turn, will need to bill the user, either directly or through advertisement revenue. Either way, the punter pays, and again that may well steer folk toward separate P2P services. It's no-cost content that drives P2P usage today, far more than breadth of content.
Snocap's hope lies in sufficient numbers of people choosing to go legit. Certainly the experience of Apple, Napster 2 and co. is that there are people out there that are willing to pay for music in order to be sure of finding and downloading the right file, and receiving it quickly, none of which today's P2P networks can say they offer for certain.
Essentially, then it's playing the numbers game. With a big enough catalogue, it can win over sufficient outlets who will channel their own retail/sharing/subscription services through Snocap. But it needs revenue up front to license said catalogue. Snocap said today it has received a further $10m in funding from a number of VCs, hopefully to be spent on licensing.
Today's launch is more about furthering that process, by telling music labels, retailers, P2P networks and artists that Snocap is serious. It has some way to go yet before it can launch an operational service. Indeed, it admitted today that "full platform deployment" won't take place until sometime next year.
Snocap's vision is a compelling one, but it's predicated on putting in place not only licensing deals that are sufficiently far-reaching that they can match today's P2P networks for musical content, but that enough end-user facing firms sign Snocap for back-end services. With the former in place, the latter will follow, and they'll bring the consumers. Certainly some P2P networks desire a level of legitimacy beyond that which was conveyed upon them by the US Court. Witness Grokster's so-called 'P2P radio' service, and its talks with Sony to set up a licensed sharing platform. The latter may even presage a deal with Snocap - indeed, it's looking like their Mashboxxx service will use Fanning's system, though so far each party will only say they have been in talks with the other.
But at this stage, it's by no means certain that Snocap can provide a viable alternative to free P2P networks. ®
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