The Vultures Are Circling Project Playlist

Music streaming service Project Playlist has 40 million users if you believe their home page, or around 10 million if you go by Comscore unique monthly visitors. Either way, it’s a lot. They’ve got a hot new CEO, raised a big round of financing, and finally signed a deal with a big label.

But they’re also in a very vulnerable position right now. Litigation with the other three labels continues, and they’ve been banned from both MySpace and Facebook after those labels threatened to sue them, too. Embedding music playlists on social networks is the key to Project Playlist’s continued growth, and that door has been closed.

And Project Playlist’s competitors have certainly noticed.

Legitimate music startups like LaLa and Imeem, who have deals with the major labels and also let users embed playlists onto the major social networks, are working on tools, we’ve heard, that will let Playlist users port their music lists over to the new services and embed them onto Facebook and MySpace. LaLa confirmed to me that they are working on such a tool.

If I were these services I’d try to cut an advertising deal with Facebook and MySpace that targets just those users that used to have Project Playlist playlists embedded on their profiles. I imagine they’d get a very nice conversion rate.

Users are fickle, don’t expect them to just wait things out as Project Playlist scrambles to get their label litigation settled and deals finalized. If those users see an easy way to get their favorite songs back on their profile, they’ll take it. And they may never go back to Project Playlist.

Update: Mixaloo says they’ve already released a tool that does this, see comments below.