Liquid Audio to Bid on Scour

Liquid Audio, Inc. on Friday officially stuck in its oar to bid on Scour’s
technology assets, including Scour’s peer-to-peer file sharing application.
The bid is being filed with the U.S. Bankruptcy Court for the Central
District of California in Los Angeles for court approval.

If successful in its bid, Liquid Audio anticipates that it would integrate
Scour’s peer-to-peer file-sharing technology into the Liquid Music
Distribution System. This would enable online retailers and music
destinations in Liquid Audio’s global distribution network to add
peer-to-peer music services to their sites. Retail sites in the Liquid Music
Network include CDNOW, BestBuy, TowerRecords.com, HMV and Musicland’s
destination sites, which use Liquid Audio software and services on their Web
sites to offer music fans a catalog of 100,000 tracks for streaming,
downloading, playback or export.

“Peer-to-Peer capabilities are a logical extension of our secure music
distribution system. Our goal is to enable our network of retailers to offer
subscription services, including peer-to-peer downloads, that complement
their online music stores,” said Gerry Kearby, CEO of Liquid Audio, Inc. “As
the leading music delivery infrastructure, Liquid Audio is in the best
position to deploy a legal peer-to-peer network based on our technology and
the Scour assets.”

Liquid Audio will have some tough competition in the bidding coming from
CenterSpan, Inc., which has repeatedly expressed intention to purchase Scour
in order to include its peer-sharing technology – and most particularly its
peer-sharing membership base – into CenterSpan’s new C-Star marketing
initiative to be launched early next year. But, maybe they won’t bid that
seriously. Maybe it’s not that important to them.

“We plan to launch the public beta of our new peer-to-peer distribution
channel in the first quarter of 2001, regardless of whether we are successful
in our bid for Scour,” stated Steve Frison, CenterSpan’s Senior Vice
President of Product Development and Chief Technology Officer.

CenterSpan has said it believes Listen.com, also a bidder, will open with a
bid at $5 million which CenterSpan will match and then better.

The question remains: will old peer-sharers opt to purchase what they
formerly got for free? Now that Napster is re-opening its P2P service for
pay, that should be answered very soon. But probably not soon enough to
benefit the bidders in the Scour auction who will, in that regard, be buying
a pig in a poke.