to Acquire Scour

By Robert Menta- 11/06/00

A month after declaring bankruptcy, file-swapping company Scour has found a buyer in, which is a portal for the legal download of MP3 and other digital music files will acquire Scour for $5 million and 527,918 shares of preferred stock. The deal is pending the approval of U.S. Bankruptcy Court for the Central District of California in Los Angeles, where Scour filed for Chapter 11 bankruptcy protection.

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Coming only days after Napster announced its pact with music giant Bertelsmann, Scour is the second peer-to-peer company to work a deal.

"We're making a bet here that peer-to-peer really does matter," said chief executive Rob Reid. "But we think if we can get an excellent peer-to-peer system, without the legal baggage, we can create something huge."

Like Napster, the agreement does not rescue Scour from impending lawsuits by the record industry, which is starting to see its lobby and litigation efforts come to fruition. The major labels all but dried up the available funds for budding digital music companies through these tactics, forcing companies like Atomic Pop and Scour to bankruptcy court.

Atomic Pop died a quick death, but it looks like Scour, who in early in September laid off two-thirds of its staff, has been savedůsort of. will not take any financial liability for the pending lawsuit and so Scour will be shut down within "a few weeks or a few days," Reid said. This is a big win the major labels and the Recording Industry Association of America (RIAA) have been looking for.

"I have been assured by's management that prior to the acquisition of the file exchange service and search engine service will be shut down," RIAA chief executive Hilary Rosen said in a stern statement. "Any resolution of the lawsuit will depend upon Scour and following through on this commitment."

Reid said the will get the peer-to-peer technology, Scour's technical team, and other search mechanisms on the service. From this they hope to retool the technology to satisfy the traditional music industry.

But as Steve Jones observed in his USA Today article 'Major labels distort ideal ease of downloading' the recording industry's attempts at selling digital music online have been less than ideal:

The musical bottom line: I know my way around a computer, and 80% of the time I was lost. The record companies have been uniformly vocal in their objections to Net piracy, but they couldn't get together long enough to decide on a common, compatible way to offer their music to consumers -- one that the average person could navigate through.

Two system freezes. Conflicted files. Four reboots. A frustrating experience, and one that highlights the simplicity of the less legitimate Net alternatives.

Satisfying the RIAA and their security fears may render Scour's technology considerably less user friendly. With FreeNet, Gnutella, Swapster, and other non-centralized peer-to-peer programs out there, a failure to put the needs of the customer over the profit motives of the recording industry may only serve to drive users to these other services.

But then the act of shutting down Scour alone will probably do that automatically.

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