December 2, 2004 9:00 PM PST

Napster founder basks in funding, label support

With $10 million in venture funding and the backing of at least one major record label, Napster founder Shawn Fanning will officially unveil his new peer-to-peer music company on Monday.

As previously reported, his new company, dubbed Snocap, is a far cry from the anarchic service that opened the file-trading flood gates in 1999. This time around he has created tools that he and his co-founders hope will allow other file-swapping services to operate with the blessing of record labels, with artists getting paid for downloads.

After more than a year of silence, Fanning himself is now outlining his vision for a new generation of file-swapping services that might rival the huge breadth of content available on the original Napster, without the attendant legal hassles.

"The last five years of peer to peer have enabled consumers to explore music that was otherwise inaccessible," said Fanning, who serves as chief strategy officer of the new venture. "It's going to be very hard to expect the majority of them to turn back."

If the company is successful, it could help transform peer-to-peer networks into an authorized distribution channel for music--and ultimately even movies, games and software--the same way that Apple Computer's iTunes has popularized download stores.

At the core of Snocap's offering is audio "fingerprinting" technology licensed from Philips Royal Labs and used to identify songs being traded on a network by their unique audio characteristics. Labels then provide Snocap with a set of rules to be associated with each fingerprint--for example, a song might only be allowed to be traded if it is wrapped in Windows Media digital rights management, which can be unlocked with a 99-cent payment.

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