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Summary:

A few weeks ago, I got a chance to chat with Srivats Sampath, the former chief executive of McAfee.com. These days he is running Mercora, which is an interesting twist on P2P music revolution. One of Mercora’s co-founders is Michael Stokes, who developed the Gnutella 2 […]

A few weeks ago, I got a chance to chat with Srivats Sampath, the former chief executive of McAfee.com. These days he is running Mercora, which is an interesting twist on P2P music revolution. One of Mercora’s co-founders is Michael Stokes, who developed the Gnutella 2 platform. Mercora is a small little application, which you download and install on your computer. It scans your hard drive, looks for all sorts of music files – Mp3, Ogg Vorbis, WMA – and builds a tiny database. Then you send invites to your pals, inviting them to join your buddy list. Once they join your buddy list, they can listen and control a special playlist that you create for them. Think of it as a nano-radio station that webcasts music to anyone musically using a peer to peer technology.

The Mac ITunes users, thanks to the Rendezvous technology, can share music on their local networks but not over the Internet. Mercora, has taken that concept and globalized by connecting it over the Internet. I-Mesh and ShoutCast are doing similar stuff, but their architecture is client-to-client P2P. The architecture of Mercora network mimics Napster’s server centric architecture. The music streams through a Mercora proxy which maintains the bit rate, and the sound quality is surprisingly clear. Mercora application is as easy to use and intuitive as Napster, minus the downloading, and it can webcast music at 48 kilobits per second. “It is an optimal quality and bandwidth trade off. We use direct X codec for transmission and playback of music. On a typical DSL connection you can do this quite well,” says Sampath. “We use the DirectX to compress the bits and send it out as WMA.”

“Mercora has has social characteristic and connects you to people who have similar interests. It has an instant messaging and music listening capabilities,” Sampath says. And his company does it legally by getting non-interactive webcasting licenses from RIAA. We can enforce rules to make the casting is not interactive and
d not listen to entire album. So our client does obey these rules automatically. We pay for these rights for now.” Right now, I don’t see a business model for Mercora, though Sampats says contextual advertising for the music business, fan clubs and subscription services for value added stuff are some of the options for the one-year-old company. The company which has been self funded so far – about $500,000 – is now looking for its next round of funding. “Search engines do what they do, which is search because they can crawl and index data on the web,” says Sampath. “You cannot do that right now with music. Our end game is to have a music search tool which is a listening tool as well. It is a distributed music search model.”

Mercora’s approach to digital music makes a lot more sense that the recent proposal from Microsoft, which is still mucking around with something called, ThreeDegrees

Yahoo, Microsoft and other Internet giants are banking on their online chat software to help push music downloads–and shout down iTunes. Without any fanfare, MSN has already begun toying with playlist sharing. The latest MSN Messenger, version 6.2, contains a link to a test application called ThreeDegrees. Among other features, the software lets a person share a playlist with other members in a private group. The marriage between IM and music is not without its hurdles. Record labels have quietly expressed dissatisfaction over services that let people trade or even stream songs to each other. IM slips dangerously close to the land of peer to peer, record industry executives say.

I think MSN, Yahoo and others have the whole thing backwards, while Mercora is on the right track. I have a few suggestions for the Mercora team which is going to keep them ahead of Microsoft and other pretenders. What they need to do is ride on Internet users current buddy lists – whether they are MSN, AIM, ICQ or Yahoo buddy lists. Instead of making people send and invite others, they could simplify things for the consumers and expand their network much faster. It is not such a tough trick to pull. Folks at PDAapps have used a proxy server to communicate with multiple IM services. This could ultimately make them a bigger player in the digital music business.

  1. This is a great business model. I think they have found a way to leverage the P2P platform and avoid the “rights” battles. This definately has the opportunity for the same huge social surge that Napster had now that the broadband is in place for the market.

    You might look at how Trillian has leveraged and inter-protocol approach to bring all of the “buddy lists” into one IM application. This is how I keep my IM contacts in one application. It might have some application to what Mercora is trying to do.

    I am off to give it a whirl!

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  2. Bill … I agree… I think these guys have figured it out and all they need to do is work on finessing their business plan. marry it with trillian like application, use IM for identity management and watch Microsoft and others squirm.

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  3. This will never hold up once the label attorneys catch wind. The DMCA explicitly forbids giving a listener the ability to scan/search broadcasts, and Mercora enables artist-on-demand without a special license.

    Type in Linkin Park and get a list of users who are “broadcasting”. Click on one and the song starts at the very beginning (clearly not broadcast). Despite Mercora’s claims, this is clearly outside the scope of the statutory license provided by the DMCA. As soon as the label attorneys catch wind of this, they will be sued.

    “the transmitting entity cooperates to prevent, to the extent feasible without imposing substantial costs or burdens, a transmission recipient or any other person or entity from automatically scanning the transmitting entity’Äôs transmissions alone or together with transmissions by other transmitting entities in order to select a particular sound recording to be transmitted to the transmission recipient”

    If this were legal, MSN, Yahoo, and others would have done it a long time ago.

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  4. Mercora has no Mac version. When is it coming?

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  5. I don’t think the RIAA will have a case for this one…

    Mercora’s P2P music sharing is doing nothing wrong because the music is being shared through streams… not downloads.

    So when participants ’Äúshare’Äù music that they own within their network, they are really just allowing others to listen to the song. There is nothing illegal about that.

    Plus… it is completely free! This is going to be killer for the competition.

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  6. looks like a win-win for industry and consumers! thanks for the info.

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  7. well i visited their homepage and from the first page their advertising is just the apple’s ipod’s in more color well they do add color to the itunes sharing ‘ as they alow over the net sharing

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  8. no mac version is even under development, from what i am told. i think the idea here is to combine social networks with the most social activity – music. i think this is an ancillary service, not meant to compete with the download services like itunes. i think these guys have figured out that no point sc…ing around with megabillion dollar companies.

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  9. I signed up for Mercora when the Wired article came out in October 2003, and then received the email a few months later.

    It was interesting, it was fun, but it was a lot of work to have to rebuild my IM lists, trying to get people to join.

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