The man considered responsible for jumpstarting the peer-to-peer music-downloading craze has officially launched a new venture that aims to bring some legitimacy to the P2P world.

Shawn Fanning, the mastermind behind the original Napster file-swapping software, is co-founder of Snocap, a start-up that’s pushing what it says is the first end-to-end solution for online music licensing and copyright management. Basically, the Snocap platform is supposed to give record labels and other copyright holders a way to collect royalties on the songs they own that are swapped on P2P networks, even live and bootleg tracks made available by “peers” on the network. The number of tracks available over file-sharing networks seriously dwarfs what the labels make available via sanctioned digital music stores. This, in addition to – and in some cases even more so than – the fact that the songs are free, attracts consumers to P2P networks.

What Snocap hopes to do is make the broader selection that’s found on peer networks available on legitimate online music services and help turn P2P outfits into authorized distribution channels. “Snocap envisions a world where consumers can discover, share and purchase music from a massively deep, almost infinite catalog – constantly updated with new and old releases, live, out-of-print tracks and more,” said Fanning, the company’s chief strategy officer. “By giving record labels and artists what they need to deliver their music over any digital platform, including peer-to-peer networks, we are finally realizing the full potential of the Internet as a source of music for fans everywhere.”

At the heart of the platform is Snocap’s proprietary Content Identification Service (CIS) that uses audio fingerprinting technology licensed from Philips Royal Labs to identify, register and track music that is available for licensing. For the service to work, labels and artists register their music and copyright information in Snocap’s database. They can then manage the online distribution of all their content through the Snocap copyright management interface, which lets them set business rules for each track and region. If a user posts a live, remixed or other version of a copyrighted song on a P2P network, artists and labels can use the system to track it, tag it and start charging for downloads.

One of the more interesting points about Snocap is its first major customer – Universal Music Group. Universal was one of the more vocal foes of Fanning’s Napster and even went so far as to sue Bertelsmann, then the parent of BMG Music, for its support and plans to help Napster become a legitimate entity.

In the landmark deal, Universal has signed on for Snocap to provide the technology and database services for he online distribution of the company’s entire catalog. It has already started registering its catalog with Snocap.

The money folks also seem to have faith in what Snocap’s trying to do. It received a hefty $10 million in VC financing in a round led by WaldenVC and Morgenthaler Ventures.

According to Fanning, “Today there is still a great divide and consumers are caught in the middle. There are some good authorized online music services but they have limited content and a comparatively small number of users. There are unauthorized services that have content and users orders of magnitude higher, but the service they provide is inferior and they are at odds with rights holders. Snocap is the means to bridge that divide for the consumer.”

The company expects to have the full platform deployed sometime in 2005.