David Nelson, the 15-year-old co-founder of the free site Muziic, idealizes Napster creator Shawn Fanning. But that doesn't mean he's going to run his business the same way.
Muziic, which launched two weeks ago, is a music service that piggybacks on YouTube. Nelson's software rounds up YouTube's music videos and enables users to sort and add them to playlists as if they were MP3s. There's no messing around with YouTube's search engine, videos, or advertisements.
There's little about Muziic that compares to Napster, the peer-to-peer service that helped demolish the traditional music business and usher in a new digital era. Yet, Napster in its original trailblazing form didn't last long. The site, some would argue, doomed itself by defying copyright law. For Muziic, Nelson has more modest goals and higher hopes.
Nelson, who lives with his parents in Bettendorf, Iowa, about 60 miles east of Iowa City, said: "We knew when we started out that the key was to develop something legal."
But the question of the site's legality is still unanswered. Mark Nelson, David's father and Muziic's co-founder, acknowledged this week that Muziic was built without the consent of YouTube or any of the major recording companies. What's unclear is whether Muziic complies with the terms of service for YouTube's API or whether the big record companies will object on the basis of copyright.
Last weekend, a YouTube spokesman said that after a preliminary review of the site, Muziic appears to violate its terms of service. The spokesman didn't specify how. On Thursday, Mark Nelson, 45, said he and David were contacted by YouTube and talks between the companies have begun.
Later in the day, a YouTube spokesman issued a statement about Muziic that at best was noncommittal: "We encourage people to leverage the power of our open API to embed YouTube videos in creative and innovative ways that comply with our terms of service."
Representatives from the three largest labels still doing business on YouTube, Universal Music Group, Sony Music Entertainment, and the EMI Group, either declined to comment or did not respond to interview requests.
What is clear is that a teenager--armed only with a good idea and precocious coding skills--has plopped himself into a rapidly shifting and legally shaky digital music climate. The record companies, perennially struggling with the digital world, may just now be developing serious doubts about sites like Muziic.
During the past two years, the big labels partnered with ad-supported streaming services such as Imeem, MySpace Music, and Last.fm (owned by CBS, parent company of CNET News). They hoped the sites would one day generate big advertising bucks and spur download sales, according to record industry sources. Recent studies show, however, that free streaming may compete with sales, the sources said.
'Can you do that?'
"We don't have anything against sharing with the music industry," said Mark Nelson when asked whether he worries about lawsuits or paying licensing fees.
If some in the music sector think the elder Nelson sounds arrogant, on the phone he sounds more naive than confident. One must remember there's no public relations rep coaching the Nelsons during interviews. There are no MBAs, no lawyers, not a dime of venture capital money.
There's nothing but father and son.
Nearly a year ago, Mark and David were watching "Star Trek" in their living room when Mark suddenly asked: "Wouldn't it be great if we could use YouTube's API to build a music site?"
David got excited. "It needs to be a desktop app," he told his father. "It's got to be something that anybody can open up in Windows. Imagine if you took YouTube and could play the videos in a media player."
"Can you do that?" Mark asked.
David paused to consider what it would take. "Yes," he said.
He was 14 at the time.
What does David do for fun? Like most teens, he hangs out with friends. But he also enjoys reading about two of his other heroes, Google co-founders Larry Page and Sergey Brin. "I'm into Google history," David said. "I like learning about business."
Besides helping his son generate ideas for the site, Mark Nelson's biggest contribution to Muziic is paying the bills. According to David, the entire Muziic project has cost the Nelson family less than $10,000.
Those costs are likely to rise, however. A story about the service published last Saturday by CNET blogger Matt Rosoff helped raise the site's profile. Muziic now sees a total of 70,000 visitors per day, says Mark. Before Rosoff's story, the site received about 4,000 daily visits. In the two weeks since the site's launch, Muziic's software app has been downloaded more than 500,000 times.
Managing this kind of growth isn't easy for a two-man operation (in David's case "man" is used loosely). On Wednesday, Muziic saw some performance issues as a result of making too many queries to YouTube's API servers, David said. YouTube limits the amount of traffic from developer sites.
David said he solved the problem by caching queries made by Muziic's users so information can be pulled from his site's servers instead of YouTube's. It's obvious by the way David explains the fix that he enjoys trouble-shooting tech problems.
Other challenges may prove less fun.
Navigating the music sector
When Fanning unleashed Napster in 1999, the record companies were still very much in the dark about digital music, file sharing, and the power of the Web to transmit songs.
In some ways, it was easier then to launch a disruptive music service than for today's start-ups. Music executives have a greater understanding of technology. They also can be more wary. They still cut plenty of deals with digital services, but negotiations can be complex. The costs of obtaining licenses from a major label can run into the millions. For companies that don't negotiate, litigation can be just as expensive.
In Muziic's case, the Nelsons also have to worry about television networks and film studios. On YouTube there are a lot of music performances recorded from television or film. Do YouTube's licenses cover sites like Muziic?
Mark and David may have had some of these questions answered prior to launch had they spoken with YouTube. They said one reason they didn't was to avoid exposing their work to other developers. The other reason was David and his father didn't want to risk getting shutting down, David said.
That could rankle some label executives. One of their major complaints about digital music services over the past several years is that many launched first, built followings--enticing visitors with free music--and then told the labels "we're here, so there's nothing to do but negotiate a licensing deal with us."
Often the labels do just that. But music execs say using their libraries to draw an audience and then later ask for rights can undermine potential partnerships. They also emphasized that a site with a big following isn't guaranteed a deal. Just ask Project Playlist, a service that launched first, got sued by the recording industry, and as a result has been bounced off the top social networks.
The Nelsons say that they want to deal in good faith with the labels and they suspect the record companies will welcome them. "We think we solve a lot of the problems confronting digital music," Mark said.
One thing the Nelsons say they don't worry about is YouTube.
"We're not scared of Google," said David. "Those guys know a good idea when they see one, and I think they're going to recognize our service is a great way to listen to music."