Last week at Y Combinator’s Startup School nearly a dozen of the Valley’s most seasoned entrepreneurs and investors came together to give advice to hundreds of people looking to launch or get involved with a startup. One of the standout talks came from Dalton Caldwell, the founder of defunct music startup imeem who is now running his second company, picplz. If you’ve ever considered launching a music startup yourself, or wondered why so many seem to falter, it’s really a must-watch. We’ve embedded a video of his full talk here, and he’s also given us the slides so you can take your time reading through some of the data points he lists off.

Caldwell kicks off with a brief explanation as to why he was there — after all, his startup imeem “blew up” earlier this year, so he didn’t have a particularly inspirational success story to share. But he does know the music industry cold, and even though imeem may have ultimately had an unfortunate exit, at one point it was drawing 26 million uniques a month. Paul Graham asked him to speak because there are still so many people attempting to build music startups, and he wanted them to know what they were getting themselves into.

Overall, Caldwell’s talk isn’t going to be encouraging for anyone hoping to launch a music startup: at one point early on he says, “Every time a founder does a music startup, a likely-more-successful startup dies”. But Caldwell’s message doesn’t seem to be that launching a music startup is completely impossible. Rather, it’s just incredibly hard, because you have so many things working against you. And he wouldn’t recommend it.

During his talk, Caldwell gives a high-level analysis of some of the more common business models for music startups. The “Tools for artists” route is hard because artists don’t have the money to pay you, it’s already a very saturated market, and it’s going to be tough to make money selling indie artist content with 20% margins. Likewise, download stores are difficult because iTunes is completely dominant, with Amazon and (soon) Google in this space as well. And with ad-supported startups like imeem, you have to deal was a set of unavoidable quarterly fees to pay to the labels, regardless of how much money you’re taking in. Check out the slides above for more details on the problems with each of these models (there are many).

But despite the problems facing music startups, Caldwell doesn’t think the people running the music industry are evil or stupid (which is an easy assumption to make given how harsh some of their terms seem to be). Instead, Caldwell says they’re a victim of the industry’s structure, and the fact that the major labels’ market dropped from $15 billion in the 1990′s to less than half that today. Above all, they’re trying to make sure their employees still have a job to come to (though the structural incentives for short-term gain over long-term growth aren’t helping).

The bottom line for fledgling startups: these record execs need to discover businesses that will generate hundreds of millions of dollars, and they can’t take gambles with a bunch of startups that want to gradually build up a user base and focus on monetization when they (probably never) hit critical mass. They’ve tried that, and it hasn’t worked out for them.

Flickr image by Alexa Lee

Over the weekend at the MidemNet music event in Cannes, MySpace CEO Owen Van Natta took the stage to talk about the current status of the struggling company. During his keynote interview with Billboard editorial director Bill Werde, Van Natta stated that MySpace was showing an increase in unique visitors for the first time since the middle of last year. In fact, Van Natta said that according to comScore data, MySpace visitors grew by 7 percent between November and December. That may sound like great news for the site, but it may be misleading: many of these new users may have simply been redirected users of Imeem.

MySpace completed its acquisition of Imeem on December 8, and the music service was promptly shut down (Imeem was out of money and its music licenses were expiring). As soon as Imeem shut down, MySpace redirected all of its traffic to its own music site.  Now, we can’t tell exactly how many users MySpace gained from these redirects, but according to comScore MySpace saw a jump in 4.7 million unique visitors in December, which is about the same as what comScore was measuring for Imeem in previous months (it had 4.6M in October and 4.4M in November).  Again, we can’t definitively say how much of MySpace’s growth was due to Imeem, but it’s likely that it represented a substantial portion of it.

To be fair, Van Natta and MySpace aren’t exactly out boasting about their improved traffic stats — Van Natta’s comment was in response to a question that was posed to him on stage, and he followed it up by saying, “We don’t want to get ahead of ourselves here but it’s good that the numbers have stabilized and we hope this will continue”.

It’s worth pointing out that while MySpace’s uniques have stabilized after big drops last spring and summer, it’s unclear if the number of page views the site receives has stabilized (see the comScore graph below).

The process is simple: users enter their imeem Email address, hit “Import Playlists”, and will find their imeem playlists restored under the “My Music” section of MySpace Music. The playlists will behave as normal MySpace playlists do, but will be labeled to indicate that they originated from imeem. The process should be seamless for most users, but there are a few caveats: MySpace won’t be able to restore songs where there are differences between the imeem and MySpace music license catalogs. MySpace says this won’t be an issue for most songs, but didn’t have an exact percentage for how much of the catalogs overlap.

It’s worth pointing out again that MySpace didn’t really have anything to do with the shutdown of imeem — it would have shut down anyway as its licences expired and money ran out. We’re hearing this actually took quite a bit of work from MySpace’s end, as they had to pair up thousands of songs to prepare for the import process.

Here’s the Email message being sent to imeem users:

We’re happy to share that we’ve recreated your imeem playlists on MySpace Music. We spent a lot of time and effort to make a home for your music on our platform. Beginning today you’ll be able to access your playlists. Here’s how:

1) Access your playlist by clicking here: http://www.myspace.com/music/import-playlists. You will need to be logged into MySpace. Click here to login or signup for MySpace.

2) Enter your imeem e-mail address.

3) Click import and we will retrieve your playlists.

4) Upon completion, your playlists will be stored in “My Music,” our playlist management tool. All playlists can be identified by the name “import_[yourplaylistname]”

This process isn’t perfect and while we expect most of your content to have migrated from imeem to MySpace Music, we appreciate your understanding if any discrepancies between the two music catalogs affected your individual playlists.

If you have questions, please visit http://faq.myspace.com/app/home.

Thanks,
The MySpace Music Team

The launch has been a long time coming, considering the fact that the startup has already produced a fully functional web client, and Adobe-AIR powered desktop client and applications for iPhone, Facebook and Boxee since its founding in late 2008.

Like Lala, imeem (which both recently got acquired, by Apple and MySpace, respectively) and other competitors like MP3tunes and Deezer, tunesBag allows registered users to upload their entire music collection to the cloud. This enables them to play tracks from anywhere as long as they have a working Internet connection and a browser.

There’s also a social layer wrapped around the music streaming and backup service, which makes it easy for users to share individual songs and playlists with others by e-mail or via social networks, as well as rate and recommend them publicly.

What about copyright, you ask? tunesBag claims it has all of that covered, as it will only make sharing features visible to people who are located in countries where sharing of tracks is legally covered by licensing agreements, as determined by their IP addresses. As a substitute, the service will attempt to fetch the music from other sources (e.g. YouTube to let other people stream songs you wish to share with them). This isn’t fail-proof, of course, which tunesBag acknowledges.

As an example, I uploaded Depeche Mode’s Enjoy The Silence to my tunesBag account, and the public link to it will not effectively give you access to the track I uploaded, but to a video that features the song as the audio layer.

I hardly think this approach is going to stop the record industry from taking a very critical look at the fledgling company’s offering, although they appear to be serious about closing deals for more countries in 2010 (the service is already available in multiple languages, by the way).

TunesBag has adopted the standard business model of most digital music startups: advertising, selling premium services and affiliate revenue.

The startup offers a basic, advertising-supported version of the product for free with 1GB of space, or an ad-free version with more storage space for your music (up to 200GB), higher streaming bitrates and a desktop uploader. The company also hopes to generate revenue from referrals for music purchases, event tickets, etc.

We’ve known this was happening for a while now (MySpace even tells users who visit imeem.com that their playlists are being migrated), but it now looks like the site is taking a more proactive approach to keeping its users informed. This is probably what it should have done from the start, instead of suddenly pulling the plug on its API and redirecting all imeem traffic to MySpace without any prior warning. But at least your imeem playlists will live on, which is better than nothing.

The service has announced that it surpassed 40 million registered users earlier this month. That means the service had doubled its size in 2009. And it’s adding 600,000 new registered users a week now. Even more remarkable is that half of those new users are coming from mobile devices. And of those, the iPhone continues to lead the way with 10 million Pandora users of its own. That number has grown some 400% this year.

These good numbers follow the news earlier this year that Pandora had officially been “saved” after reaching an acceptable deal with the music companies for the royalty rates they have to pay. Pandora, unlike the other music services mentioned above, is much more of a radio service in the traditional sense of the word because you can’t pick exactly which song you’re going to listen to. But a proposed rate hike, which almost went into effect, would have severely hampered Pandora’s ability to survive as a business. Instead, with the new deal, they expect to be profitable by next year.

And that certainly seems possible given that Pandora is now apparently accounting for 44% of all Internet radio listening hours, Ando Domestic Ranker and their own internal numbers confirm. And they have great demographics to serve up ads to. Amongst 18-24 year-olds, Pandora has twice as many daily visitors as Hulu and ESPN, according to comScore. That said, the more music Pandora streams, the more they have to pay, so they need those ads to be effective. But that seems to be the case.

And while you might think the surge in mobile usage might be bad for Pandora which relies heavily on the ads that blanket its website, number indicate they have been able to monetize these mobile users as well.

It’s been nearly a week since MySpace Music closed its acquisition of some of the assets of music service Imeem and redirected imeem.com to music.myspace.com. MySpace took a lot of heat for the sudden shutdown of the Imeem service, particularly the API.

But the fact is that MySpace didn’t shut the Imeem service down. Imeem’s creditors and the music labels did. If MySpace hadn’t done the deal Imeem would have shut down anyway. The company was just out of cash and options, and the wheels had come off the car. For the most part the press now gets that MySpace had very little to do with the shutdown, and has settled down.

Imeem’s 16 million monthly visitors apparently haven’t gotten the message, though, and every couple of minutes one of them fires off a frustrated message on Twitter. One example just a few minutes ago, in the image above: “Imeem, one of the best music sites, died, destroyed by MySpace.” Another: “RIP imeem, I will dearly miss you…All the more reason to hate myspace. They sold out on Dec. 8th.” Users are particularly upset about losing their playlists, something MySpace has said they’d work hard to transition “as quickly as possible.”

It’s not exactly the warms hug MySpace probably thought they’d receive when they stepped in and saved as much of the Imeem service as they could. And with the benefit of hindsight some basic communication to Imeem users other than the shock of a redirect to MySpace Music might have been a good idea. Like an email to users telling them what was happening, for example.

But the result is the same. The demise of Imeem had nothing to do with MySpace, and whatever parts of the service do live on will only do so because MySpace stepped in to buy some of Imeem’s assets. The hard part, of course, is getting that message to those 16 million pissed off users.

One of the biggest apps affected is twt.fm, a mashup between the Twitter and imeem APIs that lets users easily tweet out links to their favorite songs. The app has become quite popular, driving over 1.5 million users to start following the official twt.fm Twitter account. Developer Lee Martin, who built twt.fm, has written an SOS blog post about the change. From Martin’s post:

It’s only fitting that the day after I speak on a panel regarding the creation & usage of APIs and their importance to music innovation, that MySpace shows up to pull one of the best API platforms out from developers’ feet without warning. I created a Twitter/Music app called twt.fm (http://twt.fm) that mashed up the Imeem API with Twitter’s API to allow for music sharing via short links attached to tweets. While it wasn’t the most trafficked of services, I do believe it added a certain value to the Twitter experience and given @twtfm’s 1.5 million followers, I’d like to think others feel the same.

If this is MySpace’s idea of how to run a successful music tech company, they have truly lost their way. Imeem was leagues ahead of their competition (MySpace, iLike, and Lala) in terms of technology and openness. They represented the music business of the future. Now they are a forced hyperlink to a cold, un-innovative, MySpace landing page (http://myspace.com/imeem) making false promises and giving no guidance or help for the developer community they just destroyed.

Lee is understandably upset, and I suspect plenty of other developers will have similar complaints. But we’re hearing that the label deals imeem had negotiated have expired, so MySpace may not have had many other options. The death of the API is also related to the way imeem was set up — when imeem proper goes down, so does the API. Given that all of imeem now redirects to MySpace, that would explain why the API is dead.

All of that said, there’s no reason MySpace couldn’t have given developers some sort of warning. Some of these developers rely on these APIs for their businesses, and are now having to fix their services on the fly.

We first broke the news that MySpace was close to acquiring iMeem last month. Two days later, we reported that an agreement was signed to purchase the assets of the company for $1 million in cash.

The deal didn’t close, however, because some of the assets MySpace Music was going to buy (namely, servers) were actually being leased. So that had to be worked out. And the final price ended up being less than $1 million, meaning MySpace Music is getting the iMeem brand and users for next to nothing. An additional earnout is also part of the deal, but it’s not much.

Unlike the iLike acquisition, iMeem is being acquired by MySpace Music, not MySpace. MySpace Music is a joint venture between MySpace and the music labels.

But now it is official. MySpace Music will be acquiring some of iMeem’s remaining assets and transition its 16 million monthly users over to MySpace Music. All of their playslist swill be migrated over, for instance. Founder Dalton Caldwell, CTO Brian Berg, COO Ali Aydar, and VP of Sales David Wade will oversee the transition on a consulting basis. It is not clear what will happen to IMeem’s other employees. Imeem now redirects to this landing page.

All of that was accurate, including the $1 million fire sale price. But despite reports to the contrary, while the deal was signed it never closed (which explains why MySpace hasn’t announced it).

Sometime between signing and closing some problems came up in due diligence, we’ve heard. Specifically that some of the hard assets that MySpace was acquiring, hundreds of servers, were leased rather than owned. Meaning that MySpace couldn’t buy them.

The two sides have feverishly been renegotiating the deal, say our sources. At this point a deal may still be done in the next day or so at an even lower price than the $1 million. Or the deal may be terminated altogether (we’re hearing it’s likely some sort of deal will still happen).

It’s also always been unclear exactly how much capital iMeem raised to fund the company. We’ve tracked just $25 million in announced or leaked deals on CrunchBase. But we’ve heard the total is much closer to $80 million, including debt and pre-paid royalties to music labels. It’s clear that those investors aren’t seeing any return at all on that investment. Users, though, are still hoping the service lives on under MySpace.

LaLa was purchased for $17 million by Apple, according to our sources with indirect knowledge of the deal. And the company supposedly had $14 million in cash in the bank, meaning the actual purchase price was really $3 million.

That’s in line with recent competitive sales like iLike ($20 million) and iMeem ($1 million). LaLa had plenty of cash in the bank, but they were burning $500k/month, say our sources. There’s just no reason Apple would pay $80 million for the company.

We also believe that LaLa was acquired mostly for the star engineering team and the awesome recent Google deal more than for the product. iTunes in the cloud isn’t something we should hold our breath for. $3 million for top-of Google music results and a top team of engineers makes a lot of sense. $80 million not so much.

LaLa has raised $35 million and was valued at $180 million or so in it’s last round of funding. The reason for the misreports on the $80 million sale may have to do with those numbers. We’ve heard that the purchase price was “forty or fifty cents on the dollar” from one source, meaning 40% or 50% of the $35 million in venture capital the company has raised. But a misunderstanding of what that means could easily have people thinking it was 40% or 50% of the last round valuation, which gets you the $80 million number.

If we get additional sources on this story either way we’ll update. LaLa, which used to love to talk to us, has become scarce when we call or email.

$1 million isn’t the “real” purchase price for the company. Some assets are being left behind, say our sources, including millions of dollars in accounts receivable plus some other cash. All or most of these assets, plus the purchase price, will be used to pay off some of the debt iMeem has accumulated.

About half of iMeem’s 55 employees will now work for MySpace. The rest, we’ve heard, will be looking for a new job.

One question that’s still unanswered – will the iMeem service live on? That’s completely up to the music labels, say our sources. iMeem’s deals with the labels terminate on this acquisition. The service is running at breakeven, we’ve heard, so MySpace may push to keep iMeem alive.

One thing is clear – MySpace is getting the iMeem assets for an absolute steal. I wouldn’t be surprised if other bidders suddenly get interested in iMeem and try to disrupt the deal before it actually closes.

MySpace and iMeem won’t comment on this story.

The iMeem acquisition isn’t yet finalized, we’ve heard from sources, and awaits approval from various stakeholders.

We don’t know the price of the acquisition, but this isn’t going to be a big win for investors. iMeem has raised at least $25 million (that we’ve been able to track) plus at least another $10 million in debt. But the difficultly in making a free streaming music service work as a business model forced them to make some hard decisions. Earlier this year they renegotiated label contracts and recapitalized the company, bringing in $6 million in fresh capital.

iMeem found a way to survive a few more months. But now they’re under the financial gun again, we’ve heard, and investors aren’t willing to put more capital into the company. But MySpace is stepping in to acquire the company.

What’s in it for MySpace – the acquisition of a seasoned team with lots of experience in music. Plus the iMeem and SNOCAP intellectual property. It’s not clear if the iMeem brand will live on, but iMeem users will certainly be welcome at MySpace, I’m sure.

This is another blow for free streaming music lovers. iMeem and MySpace Music were among the last free streaming services in the U.S. And MySpace Music, we’ve heard, will soon be forced to turn to subscriptions to manage costs.

iMeem was founded six years ago by then 23 year old Dalton Caldwell The first product was social networking via a client application that included file sharing, status messages, etc. It morphed into a music streaming service over time. According to Comscore, iMeem had 16 million unique visitors worldwide in September.

I’m here at Capitol Records in Hollywood, California for a special media event where Lala, MySpace, iLike, Google and others are officially announcing the launch of Google’s Music Onebox — a special new kind of Google search result that will let you instantly stream songs directly from Google’s results page. We first broke the news of the feature’s impending launch last week, though none of the companies involved have been willing to comment on it until now.

Here’s how the new feature will work: Onebox will let users stream songs directly from Google’s search result page, and will also include additional content like tour information and music videos (the actual content shown will vary depending on the partner — more on that later). Enter a query for “Use Somebody”, and you’re going to see a small ‘play’ button in your search result that lets you stream the Kings of Leon song in its entirety, or buy the song. Clicking on the play button will bring up a small browser window that will immediately start streaming your song. If you enter the name of an artist rather than a song title as your search query, Google will present a handful of popular songs by that artist with multiple ‘play’ buttons.

Here’s what the results page looks like, when multiple songs are being presented:

The new feature is being powered by two entirely different services: Lala, the innovative music site that lets people buy ‘web songs’ for ten cents, and iLike, the popular streaming music and artist hub that was recently acquired by MySpace. In an interesting twist, iLike’s appearance in OneBox will be short-lived — MySpace branded widgets will soon be taking their place. This is an important step in MySpace’s transition to being seen as a media/content hub rather than a pure social network. MySpace is also leveraging some of the new features it has recently rolled out since the iLike acquisition, including its artist dashboard and extensive library of music videos — you’ll be able to jump to a music video for a song directly from MySpace’s Onebox results (this is impressive given that the site only launched those services a week ago).

Likewise, this is also a massive win for Lala. We’ve been big fans of Lala since the site relaunched back in October 2008 with a unique business model that lets users build their music libraries in the cloud for cheap — you can purchase an entire streaming version of an album for around 80 cents, or 10 cents per song. The service’s only problem has been establishing traction, and this will certainly help with that. Expect the service’s userbase to see a big jump as millions of people on Google are exposed to Lala for the first time.

The joint partnership comes with a few quirks. Google will basically be doing a coin toss with each eligible query to determine which service will be serving up the widget. That will help the service distribute load and perhaps leaves the door open for Google to include multiple other music services, but I’m not sure it will provide the best user experience — some users may get confused when a feature in one widget isn’t available in the other.

Google VP of Search Products and User Experience kicked off the event,talking about how Google has expanded its search offerings over time, with Images (2201), Book (2003) and Maps (2007). “Music” is one of Google’s top ten searches of all time, as is “lyrics”. But it hasn’t always been easy to actually find music, which is why Google is looking to offer full song streaming directly from Google.

Google has also partnered with Gracenote to provide full lyric search — if you type in the lyrics from a portion of a song, they’ll identify the song. Song purchasing partners include imeem, Rhapsody, and Pandora, who will help with music discovery.

Google passed the baton off to MySpace, with MySpace Music President Courtney Holt outlining how much growth MySpace Music has seen and how happy the site is to be working with Google. Ali Partovi, iLike’s former CEO (and MySpace’s current SVP Business Development) took the stage, first taking the time to congratulate MySpace on acquiring iLike. He was joking, but what he says has some truth to it: MySpace made an offer on iLike before iLike could talk about the Google partnership, which iLike had been working on for a long time. In other words, MySpace lucked out with the deal.

Lala’s Bill Nguyen next to the stage, saying that Lala has always been about finding music, and then discovering more that you might like. He says that for the last ten years, music has been about business models, not discovery. Once you wind up on Lala, you can follow other users and see what they’re listening to.

The new feature will be gradually rolling out to users, with a small percentage (1-5%) having access today and rolling out gradually over the next couple days to everyone in the US.

Here’s the Lala player:

Here’s MySpace’s widget (you’ll be seeing an iLike widget temporarily, but eventually they’ll shift over to look like this):

In case you’re not familiar with Grooveshark: it’s a great web-based music search, play and management tool that’s been around since April last year. You can use the app to instantly look for, share and listen to music, and there’s the quintessential social component that allows you to interact with people from its community and discover new music from others’ choices.

With the new look, Grooveshark’s design is now more desktop client-like (think Spotify, Deezer or Imeem), which in my opinion is a good thing. The overall design and the new navigation bar on the side make for a much smoother user experience, and you can switch themes to make the app fit your mood or resize the menus to fit your screen.

But the back-end tweaks that have increased the speed of the application are what’s making me seriously considering switching to Grooveshark for most of my online music needs. Playback between tunes is now seamless, with no more lag in between tracks when you’ve added multiple ones to a playlist. Switching between menu items and tabs is as fast as I consider possible inside a browser. In short: great new design combined with an excellent user experience.

Grooveshark is still struggling to get all major music industry players involved for the ‘legalization’ of its vast content library, which is in large part put together by avid users uploading music files straight from their hard drives. So far, the only one it has signed up is EMI and that was after the company sued Grooveshark over copyright infringement.

In May news broke that iMeem may have found a lifeline with new funding and a new business plan, although there was still an issue of $4 million owed to Warner Music.

Now we’ve been able to confirm some of the rumors around that financing. As suspected it was a recapitalization, which means that earlier investors were mostly wiped out. A recap is a difficult pill to swallow, but once it’s completed a company can get a fresh start. And, importantly, current employees get refreshed stock options and an incentive to continue the fight.

The company raised around $6 million in fresh capital, we’ve heard from multiple sources. Most of the new cash came from existing investor Morgenthaler Ventures. Sequoia Capital and other early investors declined to participate, and so their ownership percentages dropped to miniscule levels. Warner Music also participated in the round, we’ve confirmed, likely by dropping in cash that was immediately returned to them for past debt or future royalty commitments.

The company was valued at around $6 million prior to the funding, meaning new investors took 50% or so of the company in the round. That’s a highly dilutive funding, but it gives iMeem a new lease on life. And if rumors are true, the company may have found a business model that works for them (we outlined that business model here). Profitability, albeit at a low burn rate, may hit sometime next year.

Music plays a large role in our lives. Since the web now plays an even bigger part, combining the two together has become unavoidable. The greatest thing about this powerful duo is that you don’t need to spend a lot of time searching for music you like  — just use this nifty guide list and you’ll find just about everything you need to enjoy hours of good music. The sound quality changes from service to service, but overall, it’s good enough for regular web usage.

Please note that this is a list of services that you can use over the net without the need to download anything to your computer. This is why I’m not listing any P2P software: i.e., Spotify, as well the fact that most of us can’t really test it or use it for all that matter. This is also only the first half of this guide; part two will include more web music players (including MySpace Music, Streamzy, and others) as well as music search engines and services that make it easy to share songs on Twitter and other social sites.

Music Recommendations:

Pandora is a service that can be used only in a specific locale, this one being within the U.S. Luckily, I had the chance to test the service when it was first released and became available to everyone. Launched way back in July 2005, the project had been in the initial testing phases for five years prior to launch date. Pandora recommends music to you by matching similar musical attributes. All you really need to do is choose an artist or a band you like, and Pandora will do the rest. Pandora delivers high quality 128Kbps audio streams, offering recommendations similar to the artists you have chosen. Pandora’s player looks like a radio, you can open up to 100 stations and navigate through them quickly. Registering for Pandora will provide you with a free account (advertising-supported). Free Pandora accounts will play up to  40 hours of music for free per month, you also have the option to pay 99 cents for unlimited listening hours for the rest of that month, or pay $36 to upgrade Pandora for one year. If you want to download music from Pandora, you can do it through iTunes or Amazon. You can see our past Pandora coverage here.

With almost 3 million unique visitors a day, Last.fm is one of the most powerful social music communities on the Web today. Like Pandora, the service allows you to enjoy music that you like, but unlike Pandora, Last.fm analyses what you and your friends listen to and like, and then suggests more music based on that analysis. When you recommend music to a friend or you tag it, or you write about it, or simply just listen to it – you shift the song’s importance on the site, and will in turn get recommended to more people. Based on the music you’ve already listened to, Last.fm will recommend new music you might like, as well as suggest other users with a similar music taste to yours, which you might be interested in friending, and you can also easily communicate with them. If you live outside the U.S., U.K. or Germany, you can listen with a free 30-track trial or subscribe for a low price of $3/month for unlimited radio streaming. (Launched in 2002!)

This is how BlogMusik, looked in 2006, and this is how Deezer (formerly BlogMusik) looks today – pretty impressive change, don’t you think? The French-based service is one of the largest and happens to also be a very successful music recommendation search engine. Once registered here, you can create your personal profile and reach the Deezer community. You can create playlists, send messages to your contacts, leave comments, add artists and albums to your favorites, and more. But here’s what I like the most – The SmartRadio, which is an intelligent radio that automatically generates 3 hours(!) of continuous listening based on one artist – completely free. Priceless! You can see our past coverage of Deezer here.

I think the first Adobe AIR application that I ever tried was Finetune. Finetune provides you with the most interesting new playlists of related music from your choice of artists. Besides the site’s community where you can browse, listen to music, create a profile, connect with other users and more, Finefune also has some cool feautures to complete their suite, and each tool gives you an extraordinary music experience. Take for example the Finetune Wii project (which can be played also over the web), it’s a great sight and sound for the eyes and ears. Just enter an artist’s name and Finetune will create a playlist with similar music that will play for hours. Best of all it’s free, and you also get an iPhone, Facebook and a Desktop app that all sync with your music playlist, no matter where you play it from. You can see our past coverage of FineTune here.

Also worth mentioning in this same topic group are, of course: Ilike.com (acquired by Myspace), and music.strands.tv

Independent Music:

Amie Street is a home for musicians. The service allows music fans to discover new and independent music. Visitors at the site can search for new music based on genre, region, or recommendations. Fans can also search for music according to its price -  Amie Street is actually the only marketplace where listeners determine the price of the music. How does it work? Every song is originally priced free or very inexpensive and increases in price, up to 98 cents, as more and more users purchase it. Musicians then get 70% of the revenue from each sale. Additionally, Amie Street matches you with music that you might like, for example: I couldn’t locate Coldplay on the site, but I got more than 70 results that sound similar to the band. Obviously, this exposes me to music that I’ve never heard before, which is always a welcomed experience. You can see our past coverage of Amie Street here.

Why is Jamendo one of my favorite music services? It offers the largest catalog of music under Creative Commons licenses – worldwide. And, not only are all of the albums free to download, there’s also a large chance you won’t know any of the artists. If you already have an open mind about music, surely it won’t stop you from listening to some new albums, right? The best way to find music at this site is to search by the genre tags. Found something that you like? You can review, comment, rate, share and as I’ve said download it for free.  The service is available in seven languages, and has an iPhone app that you can download for free. Business model? Yes they have one too.

SoundCloud is by far the best looking music application there is today. It offers a great interface, a great user-experience and above these all, great music! SoundCloud lets music professionals receive, send and distribute their music. The service allows professionals (and non-professionals) to exchange, and follow music and musicians at the site. It’s a full community where people can easily communicate with each other based on shared tastes, but it is also a place where musicians can store and showcase their music using high quality standards. With the free account, you can only upload 5 tracks maximum per month, but if you are an industry fanatic and you find this plan to be somewhat lacking, you can check the pro page for packages that are more suitable to your needs. See our past coverage here.

TheSixtyOne allows artists to upload their songs and lets thousands of listeners decide whether they like it or not. The most popular songs hit the front page. Think about it as a Digg for music, the more people heart a song, the higher it goes. The site connects musicians and fans, giving them all the tools to communicate with each other. For artists, it’s good place to promote their work. For anyone else, it’s a wonderful place to discover and support new music.

Create & Listen to Playlist:

I’ve never been very much of a Project Playlist fan, but I have to say it’s a good service. Ultimately, it’s a community based on playlists. You don’t have to register to be able to listen to the music, but once you do, you can start building your playlist and enjoy more features such as the Playlist IM, which is a chat system similar to Facebook where you can connect your ‘playlist’ friends or even friends from AIM, Facebook, Yahoo Messenger, etc. What else? You can write blog entries, upload photos, privately connect with other members, browse thousands of other music playlists, comment, share, and much more. My guess is that people use this site mostly to share their playlist on their blog/site or social network. Playlist allows you to grab a playlist code and embed it anywhere you want. One thing that bugs me though is that the member’s search feature is missing. Today, when everything is so connected to your identity, this is a must have feature. On the other hand, I was impressed to see they saved my playlist from 2006…

Jiwa.fm allows you to create personalize playlist and share it in the Jiwa.fm community or with friends & family. As a member, you are able to share, exchange, and explore music. You can also expand your tastes with the SmartRadio tool. I found this service to be unique in a way because no matter what you are doing at the site, it won’t prevent you from listening to your playlist, it just plays in the background. Amazingly, when you click on an artist from within a mixed artists playlist, it will automatically create an album playlist of that artist. You might find the site to be a bit cluttered at first time, but once you get it, it works like a charm – highly recommended.

At Jogli, you don’t really need to create a playlist – they create it for you. Think about it as a giant web-based CD store where you can search for an artist, see all of his/her albums, and then listen to them exactly as listed in original CD  Let’s take Michael Jackson for example: Here you can find all his discography, and listen to his CDs one by one. Clicking on the button ‘Play Radio’ will open a radio station generated from music you might like from similar artists. As a registered member, you are able to save playlists, write reviews, and more. You can also import your playlists to Last.fm or iTunes to make it a video playlist. Check out our past coverage of Jogli here.

MixTube would have been better and easier if they allowed you to search for Youtube videos on their site to create a playlist. But no, you have to supply them with a Youtube URL, which means, you’ll have to go directly to Youtube, search for a song, then copy-paste that song URL back into MixTube. Thus, I found it to be frustrating. But looking at the bright side, you can always search for someone else’s playlist, and save yourself time and agony. One word about the Youtube music integration – lots of services use it, but unfortunately, it doesn’t offer you much control of your playlist, and what plays today, may not play tomorrow..

Lala is another great music store/playlist maker that we’ve covered extensively since the site relaunched last year. It allows users to listen to any song they want one time. If you want to listen to a song more than that, you buy a 10 cent ‘web song’ that lets you stream the song from the cloud as many times as you want (you can also purchase a full download of the song as you would from iTunes or Amazon). The site has a great integrated music player and a variety of pre-made playlists built by other users.

Worth mentioning: Imeem, and Maestro.fm

Music Visualization:

There’s no doubt in my mind that Musicovery has a strong following of avid users. The site is an interactive and personalized webradio enabling its users to generate in a few clicks a musical program adapted to the various listening situations and their preferences. Their unique mood matrix proposes a relationship between music and mood in an ergonomic and attractive manner. I’ve submitted this item about the service to Digg in 2006 and it’s good to see the site still works . But things have changed. You have limited navigation if you’re not a pro user ($15/3 months or $48/12 months), but once you are – the sky is the limit. In any case, this service will blow you away.

CitySounds.fm is perhaps just a mashup site, but it’s a good one! CitySounds.fm collects music from SoundCloud and pictures from Flickr to create a wonderful music experience from a single page. You can listen to the latest music from cities all around the world. At the top are the most active cities and the list is constantly changing as new music is being created.

Web-Radio:

Very similar to Last.fm in concept, Jango allows you to create your own custom radio stations and share them with friends. Just type in what you want to hear – and your station will immediately play the music you want along with similar favorites of other Jango users who share your tastes. You can customize your stations further by adding more artists and rating songs. Each artist get a page, containing the web-radio, the music playlist, biographies, events list, comments from members at the site, and fan list for easy communication. The service claims to be legal and says it pays royalties due to all labels/artists every time a song is played. Moreover, Jango runs a program called Jango Airplay. This program gives emerging artists an unprecedented opportunity to be proactively exposed to the millions of visitors at the site. See our past coverage of Jango here.

RadioBeta is an efficient way to locate radio stations in your area or around the globe. You can search stations by geography, genre, band, language or tags. You can listen without signing up, or you can log in and create your personal dashboard with favorite stations that  you can then listen to on a daily basis. We mostly hear radio on the go, but now you can easily track your favorite radio stations on the web. All the radio stations are public so you aren’t asked to pay anything to use the site.

OK, TheRadio is also one of my favorites because of its simplicity. Entering an artist or a genre gets you custom channel, but if you go over the channel listing, you will find much more interesting suggestions. I don’t know about you but I actually like when someone else picks the music as long is it in the range of my request. Anyway, TheRadio does a great job on finding music that I like – it simply works.

Aupeo fits in the Recommendation list as well as this category. The service lets you experience music in a fours different ways: by Stations, Artist, Mood, and Personal. The Stations area is pretty limited if you don’t have a pro account, but you can still get the feel of it. In the Artist zone, you enter your favorite name and choose from a variety stations suggested. The coolest way is the Mode area, which plays music based on your chosen mode. These stations are created by music experts, says Aupeo.  The Personal station streams music based on your music behavior at the site. Overall, very intensive and powerful!

Worth mentioning: Tun3r, Mugasha, and  Play.fm

That’s it for Part 1 of this music guide. If you have any other suggestions related to these groups, you are more than welcome to add them in the comments. In the next part of this post, I’ll offer the best options for Music search engines, Music web-players, Twitter-Music craziness, and more. Stay tuned!

Image by RossinaBossioB on Flickr.

Does embattled music streaming site imeem think it can take on iTunes? For the most part, nearly every streaming song on the site has a download button which links to both iTunes and the Amazon MP3 store. But it is quietly testing its own music download store which bypasses iTunes and Amazon and sells MP3s directly. For instance, this is the case with some Sub Pop artists, such as Iron and Wine and The Shins. When you hit the download button on songs for those artists, a window pops up showing the album where that song came from with with the option to download the entire album or any individual song for $0.99 (see screenshot above). You can then pay imeem directly by credit card or Paypal and download the song to your computer.

This imeem music store is obviously an experiment. The vast majority of songs still direct users to iTunes or Amazon for downloads, and you’d expect imeem to provide its own lightweight desktop client to manage and store the downloads, or at least place them directly into iTunes instead of a download folder on your computer. But it is also likely a sign of things to come. After nearly running out of cash because it was paying out too much money to the music labels for streaming rights, imeem went through a sever recapitalization. Warner Music ended up taking a $20 million hit to write down its investment and bad debt from imeem. Instead of walking away, however, Warner renegotiated its deal with imeem to get new shares without putting in any new money.

Imeem is doing everything it can right now to cut costs and find new sources of revenue. Last week, it announced it will soon stop storing user’s photos and videos, an expensive remnant from its earlier strategy to compete with Facebook and MySpace as a larger social network. Now, imeem is focusing on being a music site. It was one of the first sites to strike streaming deals with all the major labels and for the most part has renegotiated those on more favorable terms. Its iPhone and Android apps, which also offer streaming music, are taking off and driving even more downloads.

And that’s where the imeem music store comes in. Currently, imeem gets a dinky 5 percent affiliate fee for every song its users buy from iTunes or Amazon. As part of its renegotiations with the music labels, it is getting download rights along with its streaming rights I’ve been able to confirm. Instead of getting a few pennies for each song from iTunes and Amazon, imeem can capture the roughly $0.30 per song that doesn’t go to the labels. What is more likely, however, is that it is giving the labels more than the 70 percent cut they get from Apple. Even if it splits its share with the labels and takes only $0.15 per song, imeem still stands to triple its download revenue. Add in ringtone sales and its existing advertising revenues (imeem attracted 25 million unique visitors worldwide in May, according to comScore), and imeem might just have a chance to survive. But if it does survive, it probably won’t be because of its advertising model alone. It will be because the free music is driving enough sales of actual music downloads.

Update: Imeem has confirmed that it is planning to roll out this store more broadly, but says that when it does it will continue to offer iTunes and Amazon downloads as an option.

Below are screenshots of the new post-payment window for songs imeem sells itself and the regular affiliate link window which still pops up for most downlods:

Imeem Mobile for the iPhone, which we were the first to report on back in May right before it launched, already accounts for 1/3 of Imeem’s mobile users, we’re told. It’s been consistently in the top 5 music apps and near the top 50 overall in the App Store since then. But does that mean that it’s better than the Android version? No, in fact, it’s worse for one reason: It can’t run in the background.

That of course, isn’t Imeem’s fault. Rival Pandora suffers from the same problem because Apple will not allow these apps to stay open while you do other things on your phone, or put its screen to sleep. That may change eventually, but it seems likely that this isn’t happening anytime soon. So, for now, Imeem has decided to continue this fully two-pronged approach to the mobile app world: Android and iPhone.

On one hand it now has the sexy iPhone app, which gives them access to all those iPhone users. On the other hand, it has its fully-functional Android app, which offers much higher engagement. In fact, Android listening session lengths are more than twice as long as they are on the iPhone, Imeem CEO Dalton Caldwell tells us. And the Android platform offers another advantage in that Imeem knows that its app is now on 2 out of every 3 Android phones out there right now. That’s pretty crazy. And 1/3 of the users who install the mobile version of Imeem are completely new to the service.

Of course, all of these things are just fairly inconsequential stats if the service isn’t monetizing them in some way. There has been of a lot of speculation about Imeem’s future, after reports surfaced that some of the major music labels which had been backing it, were not seeing returns on their investment and were backing out. Warner Music was the one in particular that was unhappy. But reports today indicate that they’re back in the mix after renegotiating some kind of deal with Imeem. Caldwell wouldn’t comment on that, but we’ve heard that Warner is back in as well. This follows Imeem raising more money to continue onward last month.

In terms of monetization, Caldwell said that Imeem beat their Q2 goal for ad sales, and that they’re particularly excited about the mobile ad numbers they’re seeing. And there’s apparently a growing interest in cross-platform ad buys, from advertisers who want access to the site, the mobile apps, audio ads, and the widgets that Imeem makes, all in one package.

Pandora told us last month that it had been seeing some great numbers with regards to music downloads being driven by their app. Caldwell sounds less enthusiastic about those, but said the click-through rates are always good in that area because there’s such a high intention rate when it comes to buying music through the app.

So with a million mobile installs and a firm commitment to the iPhone and Android platforms, what’s next for Imeem in the mobile space? Well, the company is taking a wait-and-see approach. When asked about the hot phone of choice right now, the Palm Pre, Caldwell is cautious. “We’ve been very judicious in our use of resources,” he says. But he notes that they are watching the Pre closesly (Pandora was one of the phone’s launch partners), and sounds much more interested in that platform than any of the other ones out there not named the iPhone or Andorid. “They [the other platforms] don’t have a great distribution model. It’s a total pain to install anything on the BlackBerry.”

Instead of an expansion to another platform, we’ll have to make due with an update to the Imeem Android app, which is due shortly.

The blog post, titled ‘Navigating the storm’, speaks volumes about Yasuda’s sentiments on the music industry in general, even if they are not all that outspoken. A short excerpt:

The challenges involved in running a start-up in the music space are immense. To be honest it’s completely nuts, but we are trying to navigate our way through the perfect storm: a struggling music industry, a global economic meltdown, and a fundamental shift in the way people relate to one another and share their appreciation for music.

The biggest change mentioned in the post is the following: the music Blip.fm will be streaming from now on will primarily be coming from Imeem, which means there will be some limitations to what can be streamed henceforth. This decision affects Blip.fm users not located in the U.S. in a big way, which basically means about 80% of its current user base is now using a trimmed down version of the service.

The other changes are:

* Adding urls to public mp3s will be limited to legitimate bands and labels approved in our systems
* The embeddable widget will still show blip messages, but won’t play the music in most cases.
* Where applicable, old blips will be replaced with content from the imeem catalog, but anything that doesn’t match will temporarily cease to function. We plan to add tools to allow you to correct any false matches and find replacements for unavailable tracks.
* We plan to add a preference to skip 30 second clips.
* Additional media content will be available as it is sourced via new partnerships.

Yasuda says he can’t go into detail about why the changes were made exactly, so we can only speculate about it at this point. The big elephant in the room here is that most of Blip.fm’ music catalog was being sourced from SeeqPod, and by now we know what kind of trouble that company is in (although they might still be saved by Microsoft). He does mention that the startup has engaged in talks with ‘lawyers, artists, people from the labels and aggregators’ besides software developers, publishing companies etc. to ensure the service stays alive and can keep adding features.

I’ve contacted the Blip.fm team for more information and will update this post if and when they get back to me.

Looking at their Compete stats (which usually underestimate actual traffic for websites), Blip.fm actually appears to have been growing nicely the past few months. Compete pegged monthly unique visitors going to the service at about half a million in April.

We should also note Fuzz, the initial company behind the Blip.fm service for which they raised an undisclosed amount of angel funding back in February 2008, recently sent its music destination site / social network Fuzz.com to the deadpool to focus completely on Blip.fm, making the whole situation extra painful for the 4-headed team.

Too soon to put Blip.fm on deadpool watch, but beyond a doubt its future is now less bright than it was before.