November 16, 2004 4:00 AM PST

Music rebels seek to tame P2P

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Labels have flirted with peer-to-peer services before--most notably when BMG Music parent Bertelsmann provided a financial lifeline to the original Napster in the last months of its operation. Labels have also had discussions with Altnet, a company that has tried to sell music, movies and games through Kazaa and other file-swapping services. But so far nothing tangible has come of those talks.

But a generation of peer-to-peer companies and executives, weary of intractable legal fights, now appear to be willing to accede to record labels' primary demand: They can distribute major-label music, but not alongside free, pirated content.

"Presented with an opportunity to get licensed, as we have all been screaming for for the last year, it would be disingenuous not to do it," said former Grokster President Wayne Rosso, whose Mashboxx music distribution network, slated to be released early next year, may be one of the first services to use Snocap's technology.

They'll have a steep hill to climb, competing against the established download services, such as iTunes, as well as free file-swapping services. Optimists point to tapping the community aspects of peer to peer, in which drawing from other users' unique playlists would still be an attractive notion, even if the songs were no longer free.

"It's going to be a tricky thing, but ultimately you could make it viable, in the same way that eBay offers an alternative to Amazon in purchasing goods," said Vance Ikezoye, chief executive officer of Audible Magic, a company that provides technology for identifying and blocking songs on peer-to-peer networks. "You might say that P2P could similarly be an alternative way of purchasing content to iTunes and Napster."

Snocap details emerge
Fanning and other Snocap executives, through a spokeswoman, declined requests for an interview. But new details of their technological system are emerging as it nears completion.

The company has been working for more than a year with the close support of many in the record industry. Top executives in the business have come to see one-time pariah Fanning as a genuine convert to the idea of selling music legally online.

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