File-Sharing For Fee

By Robert MacMillan Staff Writer
Wednesday, June 29, 2005; 9:14 AM

The Supreme Court's ruling against Internet file-sharing networks was just what Wayne Rosso was waiting for.

Just after midnight, the online music entrepreneur announced a deal with Sony BMG Music Entertainment to distribute the label's music on Rosso's Mashboxx network. Music by Sony BMG artists will be sold through Mashboxx at 99 cents per download, the same price that Apple charges at its iTunes online music store.

It's the first deal between a major music corporation and a peer-to-peer file-sharing network, the kind of distribution technology that the entertainment industry had tried to get the Supreme Court to shut down. The difference about Mashboxx, which is not yet live, is that it will require users to pay for music they swap over its service. The company is in talks with other music labels and plans to announce more deals, Rosso said in a press release sent out this morning.

Not a bad start, all things considered. We're talking about legal access to Avril Lavigne, Bruce Springsteen, Yo-Yo Ma, the Foo Fighters, Shakira, Miles Davis, Bob Dylan, Kenny Chesney and Antonio Carlos Jobim. I feel like Johnny Cash talkin' the "Rock Island Line." Oh, he's in there too.

Rumors of a deal like this has been in the works for a long time, but getting music executives to talk about it -- as my colleagues and I discovered -- wasn't so easy. Who could blame them? History shows us that it's not usually considered good form to negotiate in secret with the enemy while you're busy baying for their blood.

That's why timing the announcement to just after the Supreme Court decision is not accidental. Technology entrepreneurs who believe that file-sharing networks can be key conduits for 21st-century music distribution heard what they need to hear: Networks like Grokster and StreamCast can be held liable for copyright infringement for failing to prevent their customers from using the software to steal movies, music and software.

The idea is that if the networks take steps to prevent digital piracy, then file-sharing is legal after all. I'll let Reuters take it from here: "Mashboxx is designed to work closely with the technology company Snocap, headed by Napster founder Shawn Fanning, which identifies songs by their digital 'fingerprint' and determines if they are copyrighted. ... Sony BMG Chief Executive Andy Lack told Reuters after the Grokster ruling that he had hopes that unauthorized peer-to-peer services would change their tune by utilizing technology like Snocap's. 'There's an opportunity to employ lots of different technologies that legitimize these file-sharing services,' he said. 'A lot of them didn't want to come to the table until this ruling.'"

Los Angeles Times reporter Jon Healey described Mashboxx, Snocap and similar companies as the file-sharing world's "reform ring:" "These ventures are closely allied with the major record companies, which are eager to transform the file-sharing world from a Wild West free-for-all into a more conventional, copyright-friendly place to sell music. Unlike the leading file-sharing networks, Mashboxx and IMesh will stop users from swapping tracks if the copyright owners object, and they will charge for permanent copies of songs that can be burned onto a CD."

Healey wrote about how these and other reform-minded file-sharing networks will try to change the habits of an Internet population by not rocking their world too much from the outset. One example: charging low monthly fees for hundreds of downloaded songs from a pool that's far larger than what iTunes offers right now.

He also included the voice of a skeptic: "President Sam A. Yagan of MetaMachine Inc., the New York company behind the popular eDonkey file-sharing network, said Monday's ruling had no effect on 'rogue' networks, foreign companies and non-commercial file-sharing programs ... If eDonkey puts out a version with restrictions that its users dislike, Yagan said, they will quickly switch to a competing network with no restrictions. 'I will do any deal with anyone where we get content and the users don't run away,' Yagan said. ... 'But there's no point in making dog food if the dogs aren't going to eat it.'"

Yagan has a good point, but I hope he doesn't end up swallowing it. ITunes is one of the proofs that legitimate online music distribution can work. If that were otherwise, it wouldn't be taking such a hit from fans wondering why the Beatles catalogue is absent.

Busting open that market with cooperation from even more major labels, while continuing to bust a few chops among the Internet pirates from time to time, could make marketplaces like Mashboxx attractive to the casual music fan -- which is what most people are.

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