August 22, 2005 4:00 AM PDT

How label-backed P2P was born

Andrew Lack wasn't like the other record label honchos, file-swapping maverick Wayne Rosso thought as he left Lack's swank office in a midtown Manhattan skyscraper.

That Lack, the chief executive of Sony BMG Music Entertainment, was even talking to Rosso showed he was more open-minded than most industry executives. That he was talking up the benefits of working together--even schmoozing with the man who used to run controversial peer-to-peer service Grokster--was downright amazing. "'I'm going to make you a millionaire,'" Rosso remembers Lack telling him.

"So I told him, 'I'm all ears.'"

There was no more an unlikely pair in the music and technology business in early 2004. But behind the scenes, their growing camaraderie became one of the most important bridges between the warring recording industry and peer-to-peer companies.

Their relationship led to the creation of Mashboxx, a new kind of peer-to-peer company that's expected to go live in mid-September. Mashboxx is one of several avowedly law-abiding, peer-to-peer companies trying to thrive in the wake of June's landmark Supreme Court decision that found Grokster potentially liable for copyright infringement.

At the time of their meeting, Lack's label was suing Rosso's former employer, Grokster. And record industry executives commonly viewed file swappers as renegades who had helped destabilize their industry.

Rosso, 56, was certainly no peacemaker, either. At the time, he was running a Spanish peer-to-peer software company called Optisoft and was fond of comparing label executives to the iron-fisted dictator Josef Stalin.

Mashboxx and the other label-friendly companies--which include Napster creator Shawn Fanning among their executive ranks--hope to meld traditional file-swapping technology with copyright-friendly filters that will replace unauthorized downloads with copies of songs that must be purchased in order to be played.

None of their ambitious plans has been tested in the marketplace. And skeptics predict that file-swap aficionados will avoid filtered services like Mashboxx and stick with competitors. Law-abiding music downloaders, on the other hand, may simply stick to Apple Computer's iTunes.

Wayne Rosso
Credit: Mashboxx
Wayne Rosso
Mashboxx CEO

But that this new generation of cleaned-up peer-to-peer companies exists at all shows how, despite a still-toxic legal environment and uncertainty in the courts, record labels and tech start-ups are finding increasing room for experimentation and collaboration.

"We said for a long time, and no one believed us, that we were serious that peer to peer could play a role in the distribution of music," said Mitch Bainwol, chief executive officer of the Recording Industry Association of America. "Our beef was not with the technology but with the people who wanted to use our products as start-up capital."

The loudmouth and the TV guy
By the time Lack, 58, suggested his idea for a filtered network in early 2004, Rosso had been meeting with him on and off for almost a year--long before the Grokster case made it to the Supreme Court.

Rosso, a heavyset, bearded former music publicity agent, was the president of Grokster when they first met in early 2003, and was widely known as the man with the biggest mouth in the peer-to-peer software business. He started his career sweeping floors in the United Artists warehouse in 1970, ultimately working his way up over 25 years to represent acts ranging from the Beach Boys to Branford Marsalis.

In the mid-1990s, Rosso found his way into a series of Internet start-ups and eventually landed at Grokster in 2002. A natural headline-grabber, he delighted in thumbing his nose at the record industry, calling its top executives lunatics, even dubbing labels' lawsuits against individual file swappers the "death rattle" of a dying business.

Andrew Lack
Credit: Sony BMG
Andrew Lack
Sony BMG CEO

Lack was more insider than maverick, even if his experience was outside the music business. A former actor in television commercials, he moved behind the camera in the mid-1970s, landing a producer's role at "60 Minutes" and ultimately creating in 1985 "West 57th," a CBS news magazine show controversial for adding show-biz glitz to news. In 1993, he was tapped to lead NBC's news division and was instrumental in shaping the MSNBC and CNBC cable channels before leaving to head Sony Music in early 2003.

He hadn't personally lived the scorched-earth warfare between file swappers and record labels and could call his own shots. That made him a perfect person to pitch, Rosso thought.

When Rosso cold-called Lack in early 2003, the record executive surprisingly called back and suggested they meet. A month later, they sat in a conference room on the 32nd floor of Sony's office and, over twin Styrofoam bowls of popcorn, chatted.

"I told him, 'I shoot my mouth off in the press, but it's all marketing.' He did the same thing, taking a certain stance in public," Rosso said. He has been fiercely loyal to the executive since that meeting, often

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10 comments

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So much hype
Does Cnet have any monetary connection to Mashboxx, iMesh or Snocap? They get a heck of a lot of coverage for companies that have yet to show the world anything.
Other companies like Wurld Media's Peer Impact are live and delivering on the legal p2p promise, now. Have you ever done a story on how a tiny company in upstate NY was able to get licenses from all 4 majors and launch to the public well before any of the companies you continue to cover on an almost daily basis?
Posted by Matt Vog (3 comments )
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How a Con Artisit was Born
Wayne Rosso is a self promoter with no technology and one label SONY/BMG. Andy Lack not the sharpest tool in the shed. Who cares? Rosso was never the founder of anything. They have Borland SNOCapped. Get with it there are real P2P technologies to report on way ahead of these guys.
Posted by Dream Weaver (4 comments )
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Re: Hype
It does seem like a lot of hype! As was already mentioned, they have ONE record label signed. Where are the other 3 majors? Where are the indies? I signed up for the beta quite a while ago and have heard nothing about it.

And as Matt mentioned, where is the story about Peer Impact? Is it because the CEO of the company was never involved in the "illegal" side of file sharing to begin with? So because Mr. Rosso here is affiliated with the bad side of things, he gets more press when he "joins the light side"? Sounds strange to me. Peer Impact has been in beta for months already, and came out of beta at the beginning of August.

And yet there's no 3 page article about that. Just a 3 page article about the company who claims to be the first to sign a major label (by the time that press release went out, Peer Impact had all 4 majors and some indies). And a 3 page article about the man who called Peer Impact "P2P for pu**ies". That's a lot of marketing speak with very little to back it up, but somehow that warrants a story here....
Posted by PIUser (1 comment )
Link Flag
Another Media Outlet Fooled
Just another story by just another news outlet that just doesn't get it. People use P2P's because they're free. The What's In It For Me Factor isn't even addressed here. Until someone comes out with an incentivized way that is legal for sharing music on the web, companies like SnoCap and Mashboxxx will be nothing more than pipe dreams. This isn't the 1990's. Prospective investors need more than a good song and dance routine to make an investment.

Shame on CNet for not covering all the legal P2P's that are out there, like Peer Impact and Weed Share amongst others.
Posted by (1 comment )
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Legal P2P?!
Although I disagree with the user who says that P2P thrives only because people are greedy, I would not be in favor of this Sony BMG Mashboxx or whatever it is. The industry (at present) is the enemy. Will Sony offer its artists better contracts? Will Sony allow the artists to have creative control over their music? I can almost assure you that the answers to both of those is still 'no'. I think that if someone could come up with a system like Weed Share without DRM, it would be completely viable. But the RIAA/Big Four would never buy that. RIAA runs the show, it's a complete cartel. I am in favor of giving money to the people who actually did work, including engineers, mixers, and other technical people, as well as the artists themselves, and even the record producers (some people can just identify talent). Lately I have really researched this topic and found some indie rock bands that I really like, because they have albums with songs that are *all* worth listening to, not just fillers, and they author many albums that fit this description. Imagine that! Creativity! I think also that some people are simply good at doing things like remixes, and the way the industry has lobbied the government, intellectual propterty is treated as a sacred commidity, as if only a certain amount is allowed to go around. That's the wonderful thing about IP, it's supposed to be infinite! I'll end with a quote from US Supreme Court Justice Sandra Day O'Connor:
<blockquote>"The primary objective of copyright is not to reward the labor of authors, but [t]o promote the Progress of Science and useful Arts." "To this end, copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art."</blockquote>
One final thing. This article purported that The US Supreme Court found networks like Grokster possibly liable for copyright damages. That is not the truth. The high Court determined that these networks are able to be sued by the industry, but that they can still use the defense they've always used, which is that they have *no* control, due to the P2P nature, and the fact that there are many legal ways to use it (Sony vs. Universal: Betamax).
Posted by CNerd2025 (98 comments )
Reply Link Flag
Crockster
This Russo guy should have named this vaporware "Crockster".
Posted by R. U. Sirius (745 comments )
Reply Link Flag
Good one liner
"Crockster" dang I luv it!
Posted by (174 comments )
Link Flag
It doesn't matter....
People only use P2P because it is FREE. I hate P2P, but it's free. I personally prefer downloading from the music stores because it downloads A LOT quicker.
Posted by PCCRomeo (432 comments )
Reply Link Flag
P2P makes a lot of sense...
... but laws the controls gave P2P a negative image enough for many people to downplay the importance of P2P to the future of the Internet.

P2P is the ultimate communication and data exchange possibility using the web protocol. Yes, it needs to be controlled. And, yes, it needs to obey the laws. But P2P must never die.
Posted by Mendz (519 comments )
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