CenterSpan snaps up Scour for $9m

Sees off Liquid Audio, Listen.com

Liquid Audio and Listen.com were both outbid yesterday for the remains of failed movie sharing and Net search company Scour.com. The winner: CenterSpan Communications, with a $9 million in a mix of cash and stock.

The deal, made up of $5.5 million in cash and $3.5 million in CenterSpan shares, simply covers Scour's technology - CenterSpan takes on none of the failed operation's $4 million debt or the damages it may have to pay out after losing the copyright infringement case that arguably finished it off. Scour will use the money to pay its creditors.

Before CenterSpan was awarded Scour's technology by the US bankrupcty court, Liquid Audio dropped out of the bidding, having joined the auction only late last week.

"We did due diligence and didn't think it was worth that much [$7.5 million, the figure above which the company would not go]," said Phil Wiser, Liquid Audio's CTO.

Listen.com, the buyer favoured by Scour's board, went to $8.5 million, but no more.

CenterSpan will incorporate Scour's Scour Exchange movie sharing system into the secure, legal digital distribution system that it's been working on for some time and plans to launch early next year.

The company's CEO, Frank Hausmann, said the deal put CenterSpan on a par with the Napster-Bertelsmann alliance, but we do think he's stretching the point somewhat. Hausmann said he has been talking to movie and music companies, but he didn't say who, or how successful those negotiations had been.

Without such partnerships - and big-name ones at that - CenterSpan will have a long way to go to match the quantity of content and the entré to other major labels the deal with media giant Bertelsmann gives Napster - provided it clearly demonstrates it's going legitimate.

For its part, CenterSpan has to demonstrate not only its secure sharing system but that it has content that punters will actually want. ®

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