Mashboxx in Grokster 'takeover talks'

One-time Grokster CEO Wayne Rosso could end up running the once again if claims in today's Wall Street Journal that his current operation, Mashboxx, is trying to buy the controversial P2P software company prove correct.

The financial terms on which such a deal might be struck are not known, but the WSJ speculates that Grokster's owners might take a cut of Mashboxx's future revenues.

Mashboxx was founded last year by Rosso to build a legal peer-to-peer network. The company's P2P client uses Snocap's major label-supported music identification system to tracks downloads. When a user downloads a track that's in Snocap's database, he or she is given the chance to pay for the privilege. The download is protected by DRM code.

Snocap was founded by Napster creator Shawn Fanning to create the infrastructure necessary for legal P2P services to operate.

When The Register saw a demo of Mashboxx in action in May this year, the software acted as a standard P2P client for all non-Snocaped tracks. However, Grokster's failure to persuade the US Supreme Court that it's not responsible when users share music illegally has put a question mark over that aspect of the software.

The Supreme Court ruled that Grokster could be sued for copyright infringement if it can be shown that it encouraged the sharing and downloading of unauthorised copies of copyright material. Grokster was sued by the movie industry, and the case must now go back to the lower court, which will have to decide whether the company did indeed encourage its users to steal songs.

Various comments made by the Supreme Court judges suggest Grokster and fellow defendant StreamCast, owner of the Morpheus P2P client, will have a hard time persuading the court that it didn't try to profit from illegal downloading. A deal with Mashboxx might present Grokster with an opportunity to show its willingness to go legal, and thus limit the impact should the court side with the movie industry.

Mashboxx has already licensed music catalogues from Sony-BMG, and is in talks with other major labels and independents. ®