02:50 AM

Fanning's back

by Doug Millison for SiliconValleyWatcher.com

Front page news in the San Francisco Chronicle's Business section today is Napster founder Shawn Fanning's new venture, Snocap, in a story based on one of Fanning's first public interviews (Business Week and many other publications have the story today, too, so that claim seems a bit weak) since Napster wound up in bankruptcy proceedings.

The Chronicle frames the story as Fanning's effort to get back into the good graces of the record industry after alientating them with Napster:

As founder of Napster Inc., Shawn Fanning achieved rock-star status among fans of Internet file sharing, but he also became public enemy No. 1 with the record industry.

Today, Fanning officially takes the wraps off a new technology venture that is working with the biggest record labels to find profits in the online music phenomenon he ignited.

Fanning's new business model?

Snocap has created a database platform to be licensed by record companies, individual musicians or other copyright holders to manage the sale and distribution of their work. The technology is designed to let copyright holders set prices or other terms of distribution.

Universal has agreed to register its entire catalog of songs with Snocap. How those songs will be sold online is unclear, but Fanning is using Snocap's database as the first step in what he hopes will be the creation of a single worldwide clearinghouse for online music distribution, whether through a Napster-style file-sharing network or an online service like iTunes Music Store.

Business Week describes how it works:

Here's how Snocap's technology works: A file-sharing service that wants to participate in the Snocap scheme creates a software program that must be downloaded before an individual can be part of that file-sharing network. Typically, these programs will simply be variations of peer-to-peer technology already available, such as Gnutella or KaZaA.

When the user finds a file on another user's computer within that network, the newly downloaded software will check with Snocap's database to see if that file is registered. If it's not, the software won't allow the file to be transferred over the network. If it is, the file can be shared and paid for. Snocap will log the transaction, get paid by the service per transaction, and in turn pay the label the licensing fee it's owed for the transaction.

Snocap won't set the terms for the sale or the file-sharing rules. That's up to the content owners and music services. Depending on those agreements, a file might have to include copyright protection, or it could be shared multiple times before a payment is requested, or it could be available through a subscription service.

Does Fanning still have the Midas touch?

The Chronicle reports that "Snocap will announce it has received $10 million in a round of financing led by Bay Area venture capital firms WaldenVC and Morgenthaler."

by Doug Millison for SiliconValleyWatcher.com


Banking on Snocap: After alienating music industry, Napster founder tries to help it by Benny Evangelista, San Francisco Chronicle, 3 December 2004

Shawn Fanning's New Tune: Snocap, by Heather Green, Business Week, 3 December 2004

What's the story? Doug Millison also edits OnlineJournalist.org, "on a need-to-know basis"