Real Audio | How to Listen

Peer-to-peer company Grokster has been one of the main targets of the recording industry's legal campaign to crush downloading. But now Grokster is teaming up with a Silicon Valley startup to offer a music streaming service, in which users can listen to but not download and save music.

Grokster will promote a co-branded service with Mercora. Users can search for and listen to music that's located on the computers of other users on the system.

Because no downloading is involved, Grokster and Mercora executives believe it is entirely legal.

Srivats Sampath is CEO, president and co-founder of Mercora.

SAMPATH: Radio was the ultimate discovery medium for new music. But over the last 20 years radio has been on the decline as far as bringing new music to peoples' ears. That's the reason a lot of people were going to peer to peer, discovering new music then going to buy the CD. But unfortunately the act of downloading is illegal. So we said look, why don't we figure out a way by which we can provide the same discovery aspect you get in peer to peer but instead of downloading you provide it as a stream. And streaming is legal under
copyright law.

GORDON: And your company pays a fee, right?

SAMPATH: Yes, Tto the songwriters and the people who own the music. So every week we write a check to ASCAP and BMI. And we write a check to Sound Exchange.

GORDON: One thing that is raising eyebrows is your new association with Grokster, which is a company whose software has enabled many people to illegally downloand music on the Internet. So why go with Grokster?

SAMPATH: Look, they have a user base that likes music. Today they are downloading illegally. If we can move that base from doing downloads to streaming, then the artists are compenated, the record lables are compensated.

Technology industry analyst Robe Enderle says Mercora could give Grokster a path out of legal trouble.

ENDERLE: What this does is provide Grokster with a potential end game. At some particular point the record industry wins. If Grokster doesn't have a way to deal with the situation in a legal fashion, they'll go the same way the first Napster did. So I think this is a way for them to hedge and transition into a legal property.

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