Building New Template for File Sharing

Call it the reform wing.

A handful of companies are trying to build an audience for legal file sharing, enabling people to swap songs for a fee, not free. Three of them -- Mashboxx of Virginia Beach, Va., IMesh of New York and Ruckus Network Inc. of Herndon, Va. -- plan to let users connect through some of the same file-sharing networks that have been hotbeds for pirated music and movies.

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.

The entertainment industry's vision for file sharing, however, differs significantly from the networks operating today, which place no limits on downloading and offer free versions of virtually every song and movie.

As a consequence, companies like Mashboxx and IMesh are in for a long, tough slog as they woo users from the free downloading networks, said analyst P.J. McNealy of American Technology Research.

"It's not just an economic change, it's a cultural change," McNealy said. "It's reconditioning people to the realities of business, that people who create content have to get paid."

Monday's unanimous Supreme Court decision gave a boost to this new breed of service by overturning earlier rulings in favor of Grokster Ltd. and StreamCast Networks Inc., two well-known sources of free downloads. The justices said companies could be held liable if they actively encouraged users to infringe copyrights through their marketing, business plans and product designs.

Both Grokster and StreamCast have offered or announced ways for labels and artists to charge users for downloads. But the major record companies have refused to let file-sharing networks sell their songs unless they blocked unauthorized copying -- something leading networks were unwilling to do.

By contrast, former Grokster President Wayne Rosso, who now heads Mashboxx, said the record industry was "firmly behind us."