MySpace puts Napster founder back into business

Posted by Wolfgang Gruener

San Francisco (CA) - Shawn Fanning, founder of the Napster file-sharing service, gets another opportunity to shape the music business: Snocap, which he co-founded in 2002, today announced that it will offer artists and labels tools and storefronts to sell music to the MySpace community.

A little over five years ago, Shawn Fanning attracted more than 25 million users to his peer-to-peer (P2P) file sharing service Napster. After a series of lawsuits filed by artists such as Metallica and Dr. Dre as well as the Recording Industry Association of America (RIAA) had forced Napster to shut down in July 2001, Fanning resurfaced in 2002 when he co-founded Snocap with venture capitalist Ronald Conway and Jordan Mendelson, who was chief architect at the original Napster.

Four years after the firm's inception, Snocap has closed its first major deal. According to a press release distributed Tuesday morning, the company "will become the provider of digital music retail tools for MySpace, marking the first music e-commerce deal for both companies." The new service, expected to be available by the end of this year, will offer MySpace users "unique tools that enable them to sell their music from their profile pages and distribute a digital storefront across the community," Snocap said.

Fanning's company does not own digital content, but acts as a registry that provides U.S. musicians and labels with access to a network of retailers. "MyStore", "Linx" and a P2P plug-in are Snocap's technology foundation enable website owners to integrate sales tools and storefronts into their websites. Once music is sold, the company collects content and distribution fees and the pays the artist or label. Musicians and labels are able to set their own price, file format and digital rights management (based on Windows DRM), but will have to pay a distribution fee of $0.10 or 15% of the price and, if a track was sold through another website, a wholesale fee of $0.45 per unit. Additionally, Snocap charges a flat fee of $30 for unsigned artists, which can sell up to 1000 different songs, and $100 for Indie labels that can upload up to 100,000 songs.

Snocap currently limits its service to the distribution of music, but mentions on its website that it may extend the service to distributing books, films, games and software.

"Up until now bands faced the challenges of content availability, technology and distribution," said Tom Anderson, president of MySpace, in a prepared statement. "This music service enables artists and labels to oversee their own commercial and distribution platforms while lowering the barriers for all bands to sell music directly to their fans in a way that's easy and totally legal."