With Audiogalaxy Acquisition, Dropbox Signals Its Cloud Music Ambitions

Dropbox broadly hinted at its future plans yesterday, with the acquisition of Audiogalaxy, a startup allowing users to store their music files and playlists in the cloud then stream them to any device. The announcement was made via a short post on the Audiogalaxy blog, signed by company founders Michael Merhej, Tom Kleinpeter and Viraj Mody.

Based in Seattle, Audiogalaxy had a long and varied history in the music space – an arena that today includes both radio-like applications and music-on-demand services such as Spotify, Rdio, MOG, 8tracks, Slacker, Pandora, SoundCloud, iHeartRadio and even Google with Google Music and Amazon, with its Cloud Player.

Audiogalaxy began its life as a peer-to-peer client software solution which competed with Napster back in the heyday of file sharing, but following conflicts with the RIAA and major labels, it ended those operations in 2002. Audiogalaxy’s Merhej also went on to found and later sell an early, Dropbox-like service known as FolderShare to Microsoft in 2005.

From 2008 to 2010, Audiogalaxy worked on Warner Music’s failed Choruss venture, in an effort to create an Audiogalaxy 2.0 for college students. It teamed up with labels and rights holders on the efforts, but the project members could never settle on pricing and other legal matters, the company later explained.

Then, in 2010, Audiogalaxy relaunched in its final incarnation as an online cloud music player where you could upload DRM-free tracks you own, then play them anywhere – your computer, iPhone, iPod Touch, iPad or Android device.

Unlike services where users’ music is uploaded to servers in the cloud, Audiogalaxy’s software had to run on a user’s PC in order to stream music to mobile devices – an interesting feature, given that Dropbox, too, offers users desktop software. With the acquisition, Dropbox could easily build tools allowing its users to stream their own music files from Dropbox. That’s something which users are doing anyway through support from third-parties.

Dropbox has already been working on improving things like video streaming and photo viewing and sharing in its applications, so music is a natural next step.

Below, the Audiogalaxy blog post:

Hello, Dropbox

We created Audiogalaxy to make people fall in love with music. Over the last few years we’ve built a wonderful music experience on the web and  mobile devices, attracting loyal users from all over the world.

Today, we are thrilled to announce our team is joining Dropbox! We are excited about the opportunity to join the amazing folks at Dropbox and bring great new experiences to 100M+ Dropbox users.

As part of the transition, Audiogalaxy will no longer accept new signups. Current users can continue to use the personal streaming features of Audiogalaxy. Mixes will be available for subscribers until December 31st, 2012.

Michael, Tom and Viraj