"What's being suggested is that every file transfer must first pass through their database. From a privacy perspective, from a free speech perspective, from a network effectiveness perspective, that's
preposterous." Eisgrau said. "I understand why it makes sense to Hollywood and friends. I don't understand why it would make sense to anybody else."
Phillip Corwin, who lobbies on behalf of Sharman Networks, the Vanuatu-based company that distributes Kazaa, said that even if SnoCap did make sense from a business perspective, it could put peer-to-peer companies on a shaky legal footing.
''I'm about to get everything I've been fighting for and frankly so is the record industry,'' says Mashboxx creator Wayne Rosso.
(Courtesy Wayne Rosso)
|
|
A federal appeals court ruled in August that peer-to-peer software publishers Grokster and StreamCast Networks Inc. could not be held accountable for the copyright infringement committed by their users. The court concluded that unlike the original Napster, which was ordered shut down by a federal judge in 2001, Kazaa and Grokster don't maintain centralized servers and therefore can't control what their customers share with one another.
However, the U.S. Supreme Court plans to review the Grokster-StreamCast settlement next year, and SnoCap's debut on a service like Mashboxx could undercut arguments that P2P services are unable
to control how their software is used.
"If I'm a peer-to-peer executive, I've got a great safe harbor right now. Any change in the technology puts me at legal risk," Corwin said. Since SnoCap requires that transfers be routed through a centralized location, a peer-to-peer company using the technology could be liable in
the same way Napster was, he said.
Legal questions aside, the continuing existence of free file-swapping services that operate beyond the reach of U.S. authorities presents significant competition for any service like Mashboxx, according to Peter Menell, a law professor at the University of California at Berkeley.
SnoCap is "certainly a nice idea and it's serving at least a public-relations benefit for the copyright industries, but I don't think they're banking on it as their savior," Menell said. "I think we could spend a lot of time developing business models that meet all of the needs of the major players, but no one really wants to buy it."
Rosso said he is confident that people will flock to a network that lets them share songs without having to worry about lawsuits from the RIAA or the Motion Picture Association of America, or about
"spyware" programs that are sometimes packaged with files downloaded from free services.
A Crowded Field
Mashboxx will face competition from other companies lining up to offer licensed file sharing. One is Peer Impact, owned by Wurld Media Inc. in Saratoga Springs, N.Y. The company has already
inked licensing deals with three major labels. Another is Seattle-based Weed, which is focused largely on the independent music scene. Weed requires users to buy the songs, but then pays them when
they get others to download the same file. Both of those services use their own technology to prevent illegal downloads.
Mashboxx and similar services must also compete with increasingly popular pay-for-download services like Musicmatch and iTunes. In the first six months of 2004, the RIAA reported that
legitimate download sites sold more than 58 million singles.
Still, the number of legal downloads is dwarfed by unauthorized transfers. Last month alone, file swappers traded nearly 1.4 billion tracks over free networks, according to Atlanta-based BigChampagne, a company that monitors peer-to-peer services.
Rosso believes Mashboxx has a better shot of luring long-time P2P users than a pure download service like Apple's iTunes because Mashboxx will offer the ability to participate in an online
community, share files with other members and browse from a vast library that includes rare tracks often not available from the big download stores.
Aydar and his colleagues have mortgaged their company's future on that premise. "Here's the challenge: There's about a million tracks on iTunes right now, while on a peer-to-peer network, there are 25 million tracks. There are just too many rights holders out there. We feel that the industry has tried one model, but there are other business models out there," he said.
"Record companies need for me to succeed as much as I need to succeed," Rosso said. "I want to be an agent for change. I think this is a big win for me. I'm about to get everything I've been fighting for and frankly so is the record industry."
