Troubled SeeqPod Files For Bankruptcy Protection

SeeqPod, the popular “playable media” search service that many music sites use as the foundation for their core offering, has filed a petition for Chapter 11 yesterday with the U.S. Bankruptcy Court of the Northern District of California.

The company, which has raised $7 million in venture capital to date from undisclosed investors, is evidently doing this out of fear about the outcome of the multibillion dollar lawsuits it was slapped with by music labels like Warner Music, Capitol Records and EMI.

We reported earlier that SeeqPod has become quite the target of the music industry, which went so far as going after developers who merely leveraged the SeeqPod API. They silenced Songbeat and forced Streamzy to put itself up for sale on eBay as a result.

SeeqPod has developed interesting and powerful technology that is able to quickly crawl the web for playable media (MP3s, slideshow presentations, videos, etc.) and enables users to play it on-site. It doesn’t actually host any files on its servers, but the downside of the technology from a legal point of view is that the crawling engine picks up pirated music files from across the Web too, which is why the music labels are so eager to sue the company behind the service, especially since it spawned so many third-party services which use the engine as the basis of their online offerings.

It’s worth noting that many search engines index copyrighted material too and are shielded from legal actions against them under the DMCA, so it seems rather arbitrary that the music industry is picking on SeeqPod specifically (the startup is huddling under the DMCA protection too). Maybe this is because of the fact that SeeqPod enables visitors to play files directly, and because it has reportedly been slow in setting up negotiation talks with the labels.

SeeqPod recently started selling its source code to developers (price tag: $5,000) in the hopes of creating a legion of ‘mini-SeeqPods’ which could prove difficult for the music labels to kill one by one, but it’s unclear if this strategy has paid off so far, and yesterday’s Chapter 11 bankruptcy petition doesn’t bode well for the startup (or its investors, who are often wiped out in such proceedings).

To be continued.