Flipr (Future License of Intellectual Property Registry) issued a press release today, reporting they are working on creating a "legal" file sharing application.

FLIPR stated that they are working on building a collection of legitimate files, they control and compensating copyright holders for the use of these files through their service.

The file sharing application with FLIPR is reported to have built features built in capabilities to track intellectual properties of various file formats, such as audio, video, pictures and text files. This would allow FLIPR to accurately compensate a copyright holder for the use of their copyright files through the service.

From my understanding, the idea behind the service is the ability FLIPR has built into the file sharing application to embed advertisements, driven by the content the user selects to obtain through the service. This would allow FLIPR to establish a business model to allow income to compensate copyright holders for the use of their files.

FLIPR will offer a basic version of this application for free, with the option of a high-end subscription run version of the application also available.

What I am curious to know, is how the auditing system of such a file sharing application works? Would the copyright holder have the ability to self audit such a service to ensure that they are getting adequately compensated for the use of their files, or is this done on a "trust" basis (something which I highly doubt in this industry).

Whatever the case is with regards to auditing of the files shared through the service, it appears FLIPR will be making more "official" announcements about this in the upcoming weeks, hopefully answering some of these questions.