Michael Weiss is coming back to the file-swapping business at a good time.
The new CEO of Streamcast Networks
is rejoining his old company–he left two years ago–just days after a
federal judge issued a stunning rebuke to the film and recording
industries, declaring that Streamcast’s Morpheus and other decentralized file-swapping tools were legal.
With that newfound legal cover, Streamcast and the venture
capitalists behind it are reinvigorated. They see a new future
ahead–one that’s still pockmarked by court dates and legal fees, to be
sure, but one in which they can finally be seen to be running a
legitimate software business, despite copyright holders’ contrary
assertions.
Weiss has a history of fighting Hollywood. He started one of the
early chains of video-rental stores in the 1970s, and in 1984 wound up
helping to organize other video-store owners against a Hollywood
lobbying drive that would have given studios much more control over the
rental business.
Hollywood lost that battle but wound up seeing revenue from video
rentals revitalize the film industry anyway. Weiss believes that the
Internet peer-to-peer story will have the same ending, as do other
peer-to-peer advocates.
Streamcast and its Morpheus software have suffered over the past
year and a half. Once the most popular download on the Net, it has
taken hits to its user base after reluctantly switching to the Gnutella
technology. Rival Kazaa is now the indisputable king of the
peer-to-peer world.
In addition, ongoing legal bills have given the small company a
rocky financial ride. A year ago attorneys said in a court filing that
Streamcast could not sustain the expenditures necessary to fight its
copyright case. A new legal team materialized not long afterward.
Shortly before the court ruling late last month, Streamcast’s
primary venture investors, Timberline Venture Partners, gave the
company another round of funding. Along with the backers’ renewed
optimism, Weiss says, the new funding should help push Streamcast to a
new level.
CNET News.com talked to Weiss last week about the aftermath of the court ruling and the future of digital music on the Internet.
Q: What did the court ruling last Friday mean to Streamcast and to the broader peer-to-peer community?
A: It meant that Streamcast has a bright future. It’s a new day, a new beginning for us.
There are some really wild claims about peer-to-peer out there, and I think that they’re unfounded.
We can come out of the shadows. I think it
opens up business deals and partnerships with major companies–whether
they’re advertisers, record companies or independents. We’ll hopefully
partner with majors someplace down the road, and also with recording
artists, providing them with an effective distribution channel through
which they can reach potential customers.
This is only your the second day on the job, but looking back, what
did legal overhang mean to the peer-to-peer community? Was the
community prevented from pursuing those business deals? Was it held
back from pursuing new kinds of technology?
It was a dark
cloud. It left a question mark. Who’s liable? Who are they going to go
after next? That cloud has been lifted. The judge has ruled. We are
legal and legitimate. It’s a strong ruling that should hold up going
forward.
What the judge didn’t say is that the actions of people using
peer-to-peer software were legal. He alluded to direct copyright
infringement taking place through the services. Is there anything that
you can do, or that is possible to do about the large amount of
copyright infringing occurring through software like Morpheus?
Again, we don’t know exactly how large or not-large this infringement
is–if there indeed is infringement. All that we can do is provide
peer-to-peer software that works and works well. Users will use the
software to do whatever they can with it. As the judge stated, there
are many noninfringing uses. To characterize everyone using a
peer-to-peer network as an infringer is a mischaracterization.
You have had some previous experience with this company, and some
time to think about it. What would you like to see change at
Streamcast?
I’d like to see us as No. 1. When I visit
Download.com and look at the top five most-popular pieces of software,
I want to see Morpheus right up there where it used to be. That’s the
beginning. But to get there, it is going to take listening to our
customers and providing them with the software and the functionality
that they want.
Sure, it’s a David vs. Goliath thing, but we’re in it for the long haul. A big part of Morpheus’ initial success,
which made us number one, was the sense of community–providing users
with community-building tools. That’s what we still need to do.
Peer-to-peer is about connecting people with people. I think that we
could do a much better job of that–and we will.
Some critics of the Gnutella technology have said it’s not as strong
or as robust as the FastTrack system that Kazaa and Grokster use.
What’s your response to that?
Gnutella is improving on a
daily basis. There is a large forum of developers worldwide who are
working to improve Gnutella. I predict that some of the initiatives on
which people are currently experimenting are making the technology
stronger and more robust. I think that in no time at all you’re going
to see Gnutella able to stand up with the best of them. I actually
think Gnutella works just fine now.
Does Streamcast play an active role in the Gnutella community?
In the past we haven’t much, but we sure plan to going
forward–supporting the community. It’s an open-source community, and
we plan to participate.
How do you think the entrance of Apple into the music download space changes the dynamics for peer-to-peer, if at all?
Apple’s not really getting into the peer-to-peer space. They’re
providing a music download service. That’s not what we do. We’re not in
that business. I believe that for iTunes or Pressplay or anybody else,
peer-to-peer might provide a distribution platform for them to reach
their target market in a cost-effective manner.
Apple views software like Morpheus or Kazaa, along with other paid
services, as direct competition. Do you see that as true, or do you
just see a complementary role down the road?
I see a
complementary role. It’s kind of interesting that over the past couple
weeks I’ve seen Morpheus and peer-to-peer compared to lots of things.
There are some really wild claims about peer-to-peer out there, and I
think they’re unfounded.
To date, there hasn’t been an unambiguously successful business
model for peer-to-peer. What do you see as the way out of that problem?
I think there has been a successful business model, and it’s been
advertising. I think there is more that could be done, and I plan on
doing it. But I don’t think advertising has been at all unsuccessful.
We have different rulings from different courts on the legality of
peer-to-peer now. This latest ruling is clearly going to be appealed
and perhaps will make it as far as the Supreme Court. Does Streamcast
have the resources and the will to go that high, or will you be looking
for a settlement?
We’ll take it to the end. We believe that
the ruling that was made on Friday was the correct one. We believe that
it was a strong one, and we think that it will prevail in the end. The
board of directors and the investors of Streamcast have stayed the
course until now; a lot of other companies have dropped out, facing
this adversity. Sure, it’s a David vs. Goliath thing, but we are in it
for the long haul. I would not be back unless I knew this company was
here to stay, and it is. And so am I.
Source: CNET News.com
