Now that it’s got a very Apple-like system in place—tablet computer paired with digital media—Amazon.com appears to be cranking up the volume on its online music service as well.

The San Francisco office of Amazon’s a2z research and development subsidiary is chock full of job ads for people to work on the Amazon MP3 store and Cloud Player, the e-commerce giant’s challenger to Apple’s long-dominant iTunes music platform. The company says it’s looking to “rapidly grow this team,” and the 21 job ads listed paint a picture of that growth.

Amazon’s looking for a lot of different skills. The company’s got ads for developers and engineers to tackle both the front-end software and mid-level networking systems. It wants designers to help polish the user interface, engineers to specifically take on overseas products, and program managers to oversee things. And, of course, mobile developers with experience in both Android and Apple’s iOS—a system that doesn’t currently have a native Amazon music player application.

Amazon’s MP3 store has been lurking around for several years, but has really picked up steam with the broad adoption of Android-based smartphones, which often have the Amazon store pre-installed. Its Cloud Player, which debuted last year, is bundled with the Amazon MP3 service.

(Trying to become a default music player for Android is another clever way that Amazon is yanking parts of that mobile operating system away from its sugar daddies at Google, which was late to the game with a serious digital music competitor last year. The more prominent example of Amazon’s bigfooting is now the Kindle Fire itself, which runs on an extremely customized version of Android.)

I’m not sure how much people will use the new Kindle Fire to listen to music, but that would fit into CEO Jeff Bezos’ concept of the Fire as “a fully integrated media service.”

That’s a key distinction. While Apple got into the digital music business to drive sales of its hardware devices, Amazon is plainly coming at the tablet and mobile-app markets as ways to just sell more stuff, whether that’s music or e-books or streaming movies or groceries (still in Seattle only!) or tube socks, for that matter. The longer you stay in Amazon’s digital storefront, the more they know about you, and the likelier it is that you’ll buy something from them next time.

iTunes could certainly stand to face a strong competitor here—from a user’s perspective, the software can be very difficult to navigate and sometimes feels like it’s barely been updated in years (just ask one of the whiners on this “I Hate iTunes” Facebook page.) But even with an integrated MP3 store and attached Cloud Player that makes listening easier, Amazon still has a ton of work to do if it hopes to make a dent in Apple’s huge music-selling lead—especially now that Google also is also on the case.

At the moment, Amazon and other runners-up in digital music are still fighting over scraps. Market research firm NPD Group has estimated that Amazon accounts for about 14 percent of the digital song download market, with Apple claiming about 70 percent. From the look of these hiring plans, Amazon is hoping to get serious about changing that balance.

Comments (2) | Reprints | Share:          

The impact of information-based technologies will continue to grow—probably at an accelerating rate. In nearly every segment of society, we see both quality and productivity improvements because of increased use of automation and digital communication. The impact is obviously huge in some sectors such as finance and publishing. And it will only grow in the laggards, such as education and healthcare, despite the immense challenges due to inertia, privacy, and access.

There will be great change in smaller areas also. I was just reading a journal on digital archaeology, to which I hadn’t previously given much thought, and I was astounded by the role information technology can play. As another somewhat less common application of information technology, Google has sponsored significant Research in the Digital Humanities (using statistical data from our large Books corpus), with the promise of proving entirely new research paradigms. (See Culturomics 2.0 for more.) Finally, the mobile application stores are filled with a surprising variety of applications in a variety of domains, where we might not have thought information technology could play a role.

So, this leads to a natural implication for students: Make sure you deeply understand information technology. This doesn’t mean just understanding how to use a search engine or a word processor. It doesn’t mean that you have spent years playing computer games or using social networks. It means instead developing an understanding of the basics of computer science (which includes at least some programming in a programming language of your choice). It means also that, that no matter what your field of study, you should focus on learning where computer science will hybridize with it to produce great progress. For many years, I’ve argued that the action in most disciplines, X, will be at the front line where computer science meets that discipline: In short-hand CS + X, for all X.

For at least another 50 years, the greatest intellectual challenges and economic value will arise from the hybridization of disciplines. So, by all means follow your passions: study biology, philosophy, medicine, education, economics, music, etc. But combine that study with a healthy portion of computer science.

Comments | Reprints | Share:          

Being too early with a concept is one of the more frustrating ways that an entrepreneur can wind up going bust. But a decade after emerging as one of the original subscription music services in the U.S., Seattle’s Rhapsody is still around.

That survivor story includes a pretty twisted ownership history, as Rhapsody evolved from an acquisition by RealNetworks (NASDAQ: RNWK) to its current position as an independent joint venture between Real and MTV Networks.

And it’s lived long enough to see its way of doing come back into style. These days, Rhapsody is facing off against a surge of buzzworthy competitors, like Spotify, which are banking on a similar mechanism—monthly payments from consumers who want access to a huge pool of on-demand tunes.

As it gets ready to celebrate its 10th anniversary this week—festivities include a concert from indie rockers Built to Spill—Rhapsody CEO Jon Irwin offered up some insights about the past and future of streaming music.

My first question for Rhapsody has always been whether the company will move to a freemium model—it famously has stuck to paid subscriptions as its default, even as new challengers like Spotify or Pandora have entered with a free, ad-supported tier to get people in the door.

Jon Irwin

Irwin didn’t dismiss a freemium model as something that would never happen at Rhapsody. But he labeled it a kind of gimmicky move to grow users, basically “a gamble based on venture capital.”

That’s because services offering a no-cost entry-level service still have to kick in fees to the music labels for the rights to their songs, Irwin says, which only increases the pressure to convert freeloaders into paying subscribers. That can lead to limits on how many songs a user can access, or where they can play the music, or how freely they can navigate the full music library.

Rhapsody, on the other hand, focuses on offering free trials to get new users. Irwin says that’s a much more straightforward way of adding legitimate, paying subscribers than a free tier with hurdles and restrictions.

“We have the ability to pivot to that if we want. But I’m about creating shareholder value, which means I’m going to continue to grow my base as sustainably as possible,” Irwin says.

That base was last publicly disclosed at 800,000 subscribers, and Irwin said there won’t be a new number released until early next year. Part of the hesitance is that Rhapsody is finishing up its deal to absorb the subscribers of Napster, another pioneering online music brand from the turn of the millennium.

Spotify, by way of comparison, says it now has 2.5 million paying subscribers, up from 1.6 million when it rolled out the service in the U.S. in mid-July. Its base built in Europe, where Spotify started before emigrating across the Atlantic. Coincidentally, Rhapsody’s purchase of Napster means the U.S.-based music service is headed for Europe, since the deal included an option on Napster subscribers in the United Kingdom and Germany.

Irwin pointed to innovative partnerships in mobile as a source of growth for Rhapsody in the future. The company recently announced a partnership with Metro PCS, a small wireless carrier which sells pre-paid cell phone plans. Rhapsody can now be bundled as a baseline feature for MetroPCS subscribers, putting music streaming into a market that might not use the service if it were billed separately.

“You pay for your unlimited voice, unlimited text, unlimited web—now you get unlimited music,” Irwin says. And the concept is being embraced by the music labels, Irwin says, as they look for ways to sustain an industry that has seen its fundamental economics implode over the past decade.

“That brought a whole new demographic to the digital music economy,” Irwin says. “It’s not a base that is purchasing songs on iTunes … They were probably still obtaining their music illegally, or just listening to Pandora, where there’s a limited catalog, where there’s no flexibility.”

Comments | Reprints | Share:          

New York’s TouchTunes Interactive Networks raised $45 million according to a press release issued Wednesday. Thirteen-year-old TouchTunes provides digital jukeboxes to restaurants and bars across North America. The new funding comprises a $40 million investment from 3i, for a minority stake in TouchTunes, and a $5 million investment from majority shareholder VantagePoint Capital Partners. TouchTunes said in the press release the new funding will help it expand into Asia and Europe.

Comments | Reprints | Share:          

Last weekend I decided to get serious about the fact that I live in an earthquake zone, and started putting together a kit with all the food, water, and equipment I’d need to survive for a few days if local services broke down. One of the items that turns up on all of the standard readiness checklists is a battery-powered radio. So I dutifully added “radio” too my shopping list. But then I realized that in an actual emergency, I wouldn’t know what to do with a radio. I know the name of only one local station, KQED, and I don’t think I could even tell you where it’s located on the dial.

It’s not that I don’t listen to lots of radio programming—I do. I’m a huge fan of public radio shows like Fresh Air, Marketplace, and All Things Considered. I just don’t listen to any of this content on radios (except in my car, where I never change the station anyway). Instead, I get my “radio” via Internet streaming and podcasts. So when the big quake hits, I’ll be reduced to surfing the radio dial at random; I’ll feel like the doofus who has to ask where Google is on the computer.

That got me thinking about all the other examples of media-shifting in my life.

—It’s been almost three years since a video signal has entered my television by way of a coaxial cable or a terrestrial broadcast. I get all my TV shows via Netflix, or iTunes on the Apple TV, or the Roku Player.

—I buy plenty of books, but in the last year only four of them have been on paper. I ordered two, a cookbook and a graphic novel, from Amazon, and picked up the other two at local bookstores. The rest came from the Kindle Store.

—I get one print magazine by mail, MIT’s Technology Review, and that’s only because I’m an alum. All of my other magazines (the Atlantic Monthly, The New Yorker, Bloomberg BusinessWeek, Wired) come to my Kindle or my iPad.

—I have several hundred CDs laying around, but I almost never play them. More than 99 percent of my music comes from iTunes, Pandora, and Spotify.

—I read plenty of newspaper articles online, but I couldn’t tell you the last time I bought a printed newspaper. 2004 maybe?

I’m not trying to paint myself as some kind of digital pioneer—I don’t think that any of these media behaviors are that unusual anymore. What’s noteworthy is that when I listen to a podcast of Fresh Air, I still think of it as a radio show. When I’m enjoying a Kindle edition of a novel, I still think of it as a book. When I listen to Lady Gaga’s “Born This Way” on my iPhone, I think of it as an album. And I read something from the New York Times, I still think of it as a newspaper article.

I probably think this way because the digital versions of these shows, books, albums, and articles are still recognizable as examples of their original genres, though they’ve been ripped from their traditional contexts. The forms have persisted, even after the vessels that shaped them have been taken away.

It appears that Marshall McLuhan was wrong: the medium is not the message. Or at least, the medium is not the whole message. If it were, there’d be no room for online-only newspapers like seattlepi.com, or podcast-only radio productions like Planet Money, or live theatrical broadcasts of New York operas.

But the current stability of form—the traditions that, for example, make a group of eight or nine singles recognizable as an “album”—won’t last forever. Without the old constraints, certain traditions just stop making sense. Take the inverted pyramid style in newspaper writing, for example. This venerable rule, which says that the most newsworthy details in a story should be … Next Page »

Comments (2) | Reprints | Share:          

[Updated, 8:00 a.m. ET] If there’s a tune playing at Walden Venture Capital today, it’s probably “We’re In the Money.”

The San Francisco venture firm is the second-largest shareholder in Pandora, the Oakland CA-based personalized Internet radio startup scheduled to go public on the New York Stock Exchange today under the ticker symbol “P.” Walden owns 18.67 percent of Pandora’s common stock, a chunk exceeded only by Crosslink Capital’s 22.92 percent share.

Neither firm is selling shares in the IPO—but as Pandora came out of the gate today at a reported $16 per share, Walden’s stake was worth at least $455 million. (It’s not known how much Walden paid for its shares, but it was part of a syndicate of seven investors who together put $19.8 million into Pandora in 2004 and 2005, so it stands to reap a hefty return no matter what.)

I’ve had two conversations with Walden Ventures managing director Larry Marcus in recent months. The SEC’s quiet-period rules kept him from saying a lot about Pandora, but I did get a sense of how the firm thinks about the digital media revolution, and why Marcus and his partners are attracted to the Internet music business.

It’s a sector that hasn’t traditionally been kind to investors. Indeed, Walden experienced at least one “colossal failure,” in Marcus’s words, with Snocap, Shawn Fanning’s post-Napster music venture. The company raised $25 million from Walden and other investors to build a digital registry supporting legal file-sharing, but the technology never took off and Imeem bought the startup in 2008 for an undisclosed price.

But that didn’t sour Walden on music technology. It’s now got big investments in SoundHound, a maker of top-ranked music search apps for mobile devices, and RootMusic, whose BandPage platform is used by 200,000 bands to manage their Facebook fan pages. Pandora, SoundHound, and RootMusic are “three incredibly interesting companies” that are “solving different kinds of questions for music fans—how do you connect with bands, how do you search, how do you listen,” says Marcus, whose office at Embarcadero Center is home to what’s possibly one of the Bay Area’s biggest collections of vintage video game consoles, PCs, PDAs, and other gadgets; there’s even a rare Lisa computer from Apple. “I continue to be really excited about the music space, because consumers have such a passion for music. I think it’s pretty unique [for a fund] to have this kind of concentration.”

Larry Marcus

The mini-cluster of music companies in Walden’s portfolio reflects the firm’s larger interest in early-stage digital media, entertainment, and cloud services startups. Founded in the mid-1970s by Art Berliner and George Sarlo, who are still active partners, the firm calls itself a “sprout stage” investor, meaning it seeks out companies that have a technology that’s mature enough for a convincing demo but hasn’t hit the market. “We try to avoid the seed stage, because even with great people, the transition to developing a product is a very brutal one, and it can take a lot of iteration,” says Marcus. “I want to see it after they’ve built it, and if it’s doing some amazing thing, we can work on how to bring it to market.”

The sprout in Pandora’s case was the Music Genome Project, the effort co-founded by Tim Westergren in 1999 to classify, organize, and recommend music based on nearly 400 attributes. “When I met Tim, the Music Genome Project was fully developed and functioning, and was being licensed out to a couple of industry players like AOL and Best Buy,” Marcus says. “They thought it was great—Best Buy was using it in a kiosk where you could scan a CD and it would tell you other recommended songs. AOL was using it in recommending music off of AOL Music. So we knew the technology was amazing. But when I looked at the Genome itself and felt this overwhelming sense of how incredible the recommendations were, that was the ‘Aha’ moment.”

Marcus helped the company Westergren had built around the Music Genome Project—Savage Beast Technologies—find a chief technology officer, a business development staff, and a new name, and the rest is history. While Marcus declined to speak in detail about Pandora, citing quiet-period rules, he did say that Walden’s experience with Snocap drove it toward music companies like Pandora whose businesses don’t depend on … Next Page »

Comments (3) | Reprints | Share:          

The ascent of smartphones and tablets is causing a seismic shift in the way media companies reach consumers. As an iPad and iPhone owner, I now consume the bulk of my media online. Whether it’s the Kindle App, Netflix, HBO Go, or Hulu, media companies have rapidly realized that they can use the new platforms to increase engagement with their existing audiences while also reaching new consumers who have grown up with Internet-based media as the norm rather than the exception.

Yet the advent of these new platforms and the services around them also raise the challenge of disintermediation. To be specific, look at the subscription initiatives recently launched by Apple, and to a lesser extent Google, governing how media companies can sell their digital wares via mobile app stores. In the iTunes App Store, media companies can now sell subscriptions, with Apple taking a 30 percent fee. Additionally, the original set of rules stipulated that a media company using the App Store could not sell that same digital subscription at a different price on their own or on any other store—though very recent reports suggest that Apple is backing down from that provision.

As the founder and CEO of both eMusic and Vindicia, which provides subscription billing services, I’ve learned a lot about subscription business models and how best to compete against free (especially when free is illegal). For me, this experience reaffirmed the central role that relationship management plays in the relative success of media companies.

As a backdrop for this discussion, it’s useful to understand a couple of basic media business concepts. First, media companies succeed not just because of great content, but because of the compelling experience they provide consumers. Netflix, for example, has set out to make the task of being entertained with video content dramatically easier. The Netflix Prize, designed to encourage the creation of better recommendation algorithms, was just the beginning of Netflix’s effort to solve the “I have access to everything—now what?” problem. In the newspaper and magazine world, publishers are realizing that they must make the experience of consuming their content more enjoyable if they want to compete with services like Twitter, Facebook, Flipboard, Instapaper, and Google Reader that intermix their stories with those from other sources. The positive experience is what creates long-term customer stickiness.

Second, owning the customer relationship is critical to a media company’s long-term success. Engaging directly with customers can shape and improve the overall experience (see the point above), but it also provides media companies with the means to cross-sell and up-sell as appropriate.

So, while there is plenty to like about Apple and Google’s subscription initiatives, not least the rapid and broad market penetration of iOS (and Android) devices with compelling and convenient single-click payment options, it’s not hard to understand why media companies would have questions about the role Apple and Google are assuming as self-appointed middlemen.

Media and content companies realize that successful consumption of their content and services via these devices is partially driven by the platform itself—whether a byproduct of the curation capabilities of the storefront/device or the pricing policies of the platform. Media companies need to explicitly take these factors into account as they build their acquisition strategy on these different devices.

And whenever a third party enters the scene, it raises the question of … Next Page »

Comments (1) | Reprints | Share:          

In a regulatory filing yesterday, Oakland, CA-based Pandora Media revealed the hoped-for terms of its upcoming public offering. The company intends to sell 5 million shares of common stock, while stockholders will sell another 8.7 million shares, at a price of $7 to $9 per share. That would bring in between $96 million and $123 million in new capital and give Pandora a market capitalization of $1.1 to $1.4 billion. The company’s largest shareholders are Crosslink Capital, Walden Venture capital, Greylock Partners, Labrador Ventures, and Hearst Corp.; only Hearst plans to sell shares in the IPO.

Comments | Reprints | Share:          

When Dave Long first started pitching movie studios on a new way to market their old titles, he encountered a fair bit of skepticism. After all, what could a boardgame entrepreneur from soggy Seattle possibly teach Hollywood about selling its own stars?

Nearly 10 years later, the “Scene It?” brand—which builds trivia games around movie and TV clips—has been adapted to iconic titles like Seinfeld, South Park, James Bond, and Harry Potter. The company that Long co-founded, Screenlife, was acquired by Paramount in 2008 and has sold some 20 million games worldwide.

And Hollywood’s major players, Long says, have a different feeling about visitors from up north. ”There is a little mystique around Seattle,” he says. “I’ve had big executives say ‘Hey, what’s in the coffee up there? It seems like there’s a lot of creativity up there.’”

That kind of reception from entertainment bigwigs is helping to fuel an emerging cluster of Seattle companies that are taking innovative approaches to selling entertainment’s products and personalities. These entrepreneurs are building on the area’s traditional strengths in digital media and gaming, with hopes of helping the entertainment industry navigate the fundamentally shifted economics of the digital age.

The roster includes Hark, a startup that aims to spread bite-size chunks of content through the social sphere; Hypershow, a quietly profitable company enabling richly layered digital movies; and Giant Thinkwell, an incubator-stage company that wants to help celebrities of any stripe reach their fans through quirky social games.

Dave Long is back on the job as well. His new company, Exponential Entertainment, is working with the studios to develop promotional digital games—and this time, they’re starting with some major first-run movies.

Building bridges to the star-studded streets of Hollywood still has its challenges, even in a highly networked age. It’s simply harder to build relationships and keep your finger on the pulse of an industry when you’re hundreds of miles away from Sunset Boulevard.

But there are also advantages to being based in the Northwest, says David Aronchick, the founder and CEO of Hark.

“It’s far more cost-effective to work out of Seattle, and you obviously have an incredible depth of technical talent here that allows you to execute very quickly comparatively, and do some really cool things,” he says. “We’re not unique, but we certainly have a lot of cross-pollination because we’re a very migratory city. We pull in a lot of people from all over the place, especially people from on the West Coast. And this is a great place to set up shop.”

Here’s a deeper look at the startups I identified as part of Seattle’s emerging entertainment innovation cluster. I didn’t include folks who produce entertainment-themed content of their own, like the blog publisher Wetpaint, for example. The focus here is mostly on companies that are aiming for business partnerships with the entertainment industry.

Also purposely left off the list was a major name—the Internet Movie Database, or IMDb, which is owned by Amazon.com and headquartered in Seattle. Although it might seem kind of odd to think of … Next Page »

Comments (1) | Reprints | Share:          

Last week’s Xconomy event Beyond Mobile: Computing in 2021 (nicely summarized by freelancer David Needle) kept me pretty busy, but the news rolled on:

—The biggest buzz of the week, of course, was over the initial public offering by Mountain View, CA-based LinkedIn (NYSE: LNKD), which brought the company some $352 million in new funds. Now observers are arguing about whether the 110 percent pop in LinkedIn’s stock price in the first day of trading represented a scam by LinkedIn’s investment banks or just a buying frenzy.

—It’s getting easier for companies to test Web design changes that could improve sales, thanks in part to companies like San Francisco-based Optimizely that offer automated A/B testing software. I profiled the Y Combinator-backed startup, which was co-founded by Pete Koomen and Dan Siroker after Siroker’s experiences helping the 2008 Obama presidential campaign optimize its online fundraising strategy.

—Eventbrite raised a hefty $50 million in a Series E round led by new investor Tiger Global Management. Eventbrite CEO Kevin Hartz told me the company will use the new funds, which more than double its previous venture pot, to expand internationally, hire more developers and customer support representatives, and make acquisitions.

—In my Friday column, I explored the new iPad version of Apple’s Garageband, which one source called “the most capable music creation suite on the market.” I even shared a couple of songs that I wrote using the software.

—Xconomy CEO and editor-in-chief Bob Buderi tallied up a list of the Boston-area venture firms who have either moved to the San Francisco Bay Area or expanded their Bay Area offices in the last few years.

—The City and County of San Francisco selected Microsoft over Google and IBM for a long-term contract to supply e-mail software for government employees, as my colleague Curt reported.

—In the follow-up department: San Francisco-based Streetline Networks expanded its parking finder service from Los Angeles to the Marina District in San Francisco, and SF- and Seattle-based crowd commerce Zaarly opened for business.

—In acquisitions news, Autonomy bought Iron Mountain Digital, VMware bought Shavlik Technologies, and Symantec bought Clearwell Systems.

—In funding news, StackMob raised $7.5 million, Hara Software raised $25 million, Jobvite raised $15 million, nPario raised $5 million, Datameer raised $9.25 million, and MongoLab raised $3 million.

Comments | Reprints | Share:          

Can you be a composer without being a musician? Thanks to the latest generation of music authoring software, the answer is yes.

Take me, for example. I played the trombone in high school, and I can still read music (bass clef anyway), but I would be very hard pressed to strum a guitar chord, keep the beat on a drum set, or sing on key through a whole song. Compared to friends like Greg Huang, who’s a bassist for the Boston band Honest Bob and the Factory-to-Dealer Incentives, or Graham Ramsay, who’s been writing fine instrumental and choral works since he was a teenager, I would never presume to call myself a musician. But none of that has stopped me from using the new iPad version of Garageband, Apple’s $4.99 music authoring program, to assemble a few bars of material.

I want to talk today about Garageband and why I think it’s so important, but first I invite you to give my pieces a quick listen. It’s a stretch it to call them “songs”—let’s go with “ditties.” The first one was conceived as a lighthearted soundtrack for a dogs-at-the-beach video.

The second, somewhat darker ditty doesn’t have a video to go with it—just click the play button below to listen. If you’re a fan of the Fox TV sci-fi series Fringe, it may help you to know that I put together this piece after watching the season finale, and that I was thinking about Peter and Olivia—the star-crossed lovers pulled apart by an interdimensional war.

Peter’s Song – Wade Roush

I want to underscore again that I have no pretensions whatsoever to being a real songwriter. I hesitated about sharing these pieces at all, given their obvious amateurishness. But I wanted to give you a sense of what a rank beginner can do in a very short amount of time with Garageband. I put about two hours into each of these compositions.

For a taste of what a serious musician can do in the same amount of time, listen to this next piece, written and performed by Robby Grossman. In addition to being a singer/songwriter/guitarist, Robby is a software engineer at Cambridge, MA-based social media tools marketplace Oneforty. He gave me permission to republish the piece here. He calls it “Garage Band Jam.”

Garage Band Jam – Robby Grossman

In a March blog post, Robby explained that he wrote this piece for the same reason I wrote mine—to give Garageband a try. You’ll notice that he’s using a lot more instruments, including several real ones. (There are two electric guitars, two acoustic guitars, and two vocal tracks, all recorded using the iPad’s internal microphone, as well as a virtual bass and a virtual drumkit.) By contrast, all of the instruments on my songs were virtual.

It would have been hard for a non-professional to do any of this, let alone in a couple of hours, before Garageband came to the iPad. The amazing thing about the program is that it’s both a … Next Page »

Comments (1) | Reprints | Share:          

Back in 2008, TuneUp Media in San Francisco created a piece of software so cool that more than 3 million people have registered to use it. The freemium program sifts through your iTunes music library and automatically fixes missing or incorrect song, artist, and album data. It also grabs missing cover art from the Web. In other words, it brings order to the chaos you generate when—like most digital music collectors—you throw together tunes you purchased, tunes you ripped from CDs, and tunes you obtained in, shall we say, other ways.

In its three years, the company has helped music fans clean up nearly 2 billion tracks. In the process it has attracted several hundred thousand paying users and hired a staff of two dozen employees.

There are just two problems. Once you’ve used TuneUp to clean up your music collection, you’re done—you don’t really need it again unless your collection grows substantially. Also, the world of digital music is on the cusp of yet another huge transition, from an era when everyone owns their music and stores it locally on a CD or a hard drive or a smartphone to an era when more and more people stream all their music from the cloud.

For both reasons, TuneUp Media is already reinventing itself. Even as its original product continues to win new users, the company has begun adding new social and discovery features, in an effort to stay in front of users even after they’ve scrubbed every track—and, a bit farther down the road, after they’ve switched to the cloud for their music. “Our biggest challenge to date has been pivoting from this notion of being a cleanup utility to the notion of being an enhanced information application,” founder and CEO Gabriel Adiv explained when I visited the company a few weeks ago.

It’s a sobering lesson on the nature of innovation: if you stop to rest on your laurels, you’ll probably wind up choking on them. Fueled by a fresh $6.3 million from IDG Ventures and other investors in its recent Series B round, TuneUp intends to keep moving, by expanding upon a feature called Tuniverse that help users learn more about their own music, as well as other features that let users tell their friends what they’re listening to and find out about local concerts by the artists they like.

“People come in and, first off, they clean a huge ton of music in their collections that’s been messed up,” says Adiv. “After that, it’s not like people will re-clean their collections. That’s precisely why we created features like Tuniverse and concerts and sharing, so once it’s clean there is all this really cool stuff you can do with it.”

Adiv has spent the last decade in the digital music industry. He used to work at Emeryville, CA-based Gracenote, which maintains a huge database of music metadata (song titles, lyrics, acoustic fingerprints for music identification—the works). When the first Apple iPod came out in 2001, Adiv was enchanted—but almost immediately, he saw how it created a new problem. “The iPod absolutely changed the way I consumed music. Portability and accessibility are huge; I was re-engaged with my music collection,” he says. “Amidst that, the biggest pain point was managing 10,000 songs on a single device, as opposed to managing CDs or vinyl. It was a major issue.”

Gracenote was “a pretty phenomenal B2B shop, but they weren’t building any consumer applications,” Adiv says. So he resigned, bought a round-the-world plane ticket, and took six months to think about his next gig. “I decided I wanted to create software that would solve the monotony of having to clean up my digital music collection,” he says.

With a technical partner named Raza Zaidi—who became TuneUp’s chief technology officer—Adiv built a prototype and started showing it to investors. The software solved … Next Page »

Comments (1) | Reprints | Share:          

Seattle-based MOD Systems, which makes technology to deliver movie and music files through self-service kiosks, is putting some workers on unpaid furlough as it attempts to raise more money. The news comes via TechFlash, which says it confirmed the furloughs with CEO Anthony Bay today. TechFlash also notes this SEC filing from early last month that said MOD Systems had raised about $500,000 of a planned $8 million financing. MOD has been through rough waters recently: Co-founder and former CEO Mark Phillips was convicted of federal fraud and money laundering charges last month, and the company said late last year that it was cutting about a third of its workforce.

Comments | Reprints | Share:          

A juicy excerpt from billionaire Microsoft co-founder Paul Allen‘s new autobiography caused plenty of chatter around Seattle and the broader tech world this past week, and considering that he’s starting a book tour, I guess that’s the point. The stunning vignette, in the excerpt published in Vanity Fair, was a scene in which Allen writes that he caught co-founder Bill Gates and CEO Steve Ballmer conspiring to dilute Allen’s stake in the company while he was undergoing cancer treatment.

That blow-up, in Allen’s retelling, basically sealed his departure from day-to-day duties at Microsoft. Gates called Allen a friend in a reply statement, but did say he may remember events differently. In any case, I kind of thought the attention to that very noteworthy episode actually obscured the more nuanced, diverse portrait that Allen sketched of the two entrepreneurs’ relationship. Basically, it emerges as a complicated partnership—over the years traced in that writing, Allen is by turns amazed by, suspicious of, and angry at Gates. In any case, the whole book should be good reading.

—Amazon.com continued its march into new cloud-based businesses by rolling out a music player and storage service tied to Android devices. There was a lot of focus devoted to the spat that Amazon apparently kicked up by not securing licenses from the record labels. But the even more interesting angle may be that Amazon is leapfrogging ahead of other big-name competitors—especially Apple—by taking personal music collections up to the cloud for storage and playback in a variety of places. Basically, it looks like Amazon is trying to position its freemium service as iTunes for Android—which is a pretty nice market to pursue.

—I sat down with Don Merino from Intellectual Ventures, Nathan Myhrvold’s unique patent-licensing and invention firm in Bellevue, WA, to get an inside take on how the company went about setting up a first-of-its-kind modern, large-scale middleman market for intellectual property. Merino was a pivotal player in this tale, having personally purchased about half of the first 1,200 patents that Intellectual Ventures secured—the portfolio is said to number above 30,000 at this point. This topic gets more energy every week, it seems, particularly in mobile—just this week, Google announced it was going big in a bid for Nortel patents in a bankruptcy auction.

—We also checked in with the folks at Seattle’s Zipline Games, which rolled out its new Moai development platform and cloud-hosting service for professional game developers. Moai’s main selling point is that it tries to bust down language barriers in game building by letting developers use Lua, a familiar game coding language, and translating that work into the different formats needed to make mobile games … Next Page »

Comments | Reprints | Share:          

[Updated at 1:40 p.m. with more pricing info, see below] Apple’s iTunes has become the default music store, playback platform and digital locker for millions of consumers. But the market-owner certainly has limits—chief among them are terrestrial storage and a limited number of machines authorized to use a given account.

Seattle’s Amazon.com (NASDAQ: AMZN) is moving heavily into this space today with the unveiling of its Cloud Drive and Cloud Player, a pair of services that aim to take an iTunes-like experience into the always-there computing ether. And if the target on Apple (NASDAQ: AAPL) wasn’t obvious enough, Amazon’s new player also works with chief mobile platform rival Android.

This space has been begging for some innovative cloud-storage options that could go mainstream, and Amazon’s has a decent chance. Integration is the key: iTunes’ dominance has shown that lots of people prefer having all of their digital music arranged in a single place, without having to bridge between buying, storing, and enjoying. Amazon’s Cloud Drive and Player may be able to deliver that same kind of experience, with the additional feature of not having to clog up your hard drive or connect external storage every time you want to play a song.

But the real point here isn’t so much the player and cloud storage as it is Amazon’s MP3 store. The Cloud Drive starts with 5 GB of free storage, and offers a free upgrade to 20 GB if a customer buys an album on Amazon’s digital music marketplace. There are larger storage options, priced at $1 per gigabyte per year, in big chunks up to 1,000 GB. The web-based Player is free, and the Android Cloud Player also is bundled with the Amazon MP3 app, which includes the store. [Added the per-GB pricing info to this paragraph.]

So the free versions are simply loss-leaders to get people in the door of the Amazon MP3 store—somewhat similar to the video-streaming option that Amazon recently tacked onto its Prime premium shipping service. That’s a canny bet, and it’ll be interesting to see how many people make the switch. One thing we’ve learned about Apple is that it tends to go all-in fast enough that it defines a market, and millions of people wind up not even caring about the alternatives.

Comments (1) | Reprints | Share:          

More turbulence at Seattle’s RealNetworks: President and Chief Executive Bob Kimball has resigned, the company says today. Kimball had only been in the job since January 2010, although he’d been with RealNetworks (NASDAQ: RNWK) for about a dozen years.

Kimball replaced founder Rob Glaser as CEO and presided over a period of big change: The company spun off its Rhapsody music joint venture with MTV, laid off workers, and launched Unifi, a cloud-based consumer service for storing music, photos and video. In February, Kimball said the elimination of about 130 jobs marked the end of Real’s restructuring period.

That included Real doubling down on its core offerings—digital media management for consumers, and media software-as-a-service for wireless carriers. Real also acquired Canadian company Backstage Technologies as it sought to capitalize on social games for the GameHouse subsidiary. In Monday’s announcement, Kimball said the company’s transformation “removed more than $70 million in annualized operating expenses.”

You have to wonder what leads to a resignation after such a short period of time, but working through that much change and putting the company on a path forward would actually seem like a decent point to seek a different gig—or a new person to lead the company. That seems to be official line for today, but it doesn’t sound totally unbelievable.

Glaser has moved on to Accel Partners, the Silicon Valley-based VC firm, as a part-time venture partner focusing on digital media, social media, and mobile service investments. He remains Real’s chairman, but tells GeekWire’s Todd Bishop that he won’t be returning as CEO. Glaser praised Kimball in the company’s statement: “He has established a strong foundation upon which the company can build in the years to come.” Executive Vice President Mike Lunsford has been named interim CEO while the company’s board searches for Kimball’s permanent replacement.

Comments | Reprints | Share:          

A co-founder and former chief executive of MOD Systems was convicted of federal fraud and money laundering charges today in federal court. The U.S. attorney’s office says Mark E. Phillips, 36, of Seattle, could get up to 20 years in prison when he’s sentenced in late May. Federal prosecutors say Phillips transferred $1.5 million from MOD Systems to his own account for a down payment on a penthouse, and also spent company money that had been transferred into a girlfriend’s account. Seattle-based MOD Systems, which makes technology to deliver movie and music files through self-service kiosks, announced in December that it was cutting 35 percent of its workforce. It had better news last fall when it raised $6 million in financing.

Comments (1) | Reprints | Share:          

San Francisco-based TuneUp Media, which makes software designed to enhance the music and album information available in Apple iTunes and Windows Media Player, announced the second close of its recent Series C round today. The original $4.3 million round, provided by IDG Ventures and KPG Ventures last September, has now grown to $6.3 million thanks to an additional infusion from IDG Ventures. The company also announced the hiring of former Teleplace CEO Greg Nuyens as chief technology officer, and former Warner Pictures consultant Tim Mitchell as vice president of product management. ”TuneUp plays an important role for music fans who want to get the most from their digital music library,” said IDG Ventures managing director Phil Sanderson in a statement. “We believe that TuneUp represents a very large additive opportunity to the iTunes ecosystem and are excited about developments at the company and the talent they are attracting.”

Comments | Reprints | Share:          

Oakland, CA-based Pandora, the vastly popular personalized streaming music service, filed an S-1 form with the Securities and Exchange Commission today in preparation for an initial public offering this year. In the filing, the company said it hopes to raise as much as $100 million in a sale of common stock, and revealed that it is nearly profitable: It suffered a net loss of just $0.3 million in the first nine months of 2010, against revenue of $55.2 million. (The company earns money primarily on advertising through the Pandora website, though it also collected $5 million in fiscal 2010 for premium subscription services.) Venture backer Crosslink Capital owns the largest chunk of Pandora shares (23 percent), according to the filing; Walden Venture Capital, Greylock Partners, Labrador Ventures, the Hearst Corporation, and GGV Capital also stand to profit from the offering. Morgan Stanley and J.P. Morgan will underwrite the IPO.

Comments (2) | Reprints | Share:          

Cambridge, MA-based music gaming firm Harmonix has laid off 12 to 15 percent of its full-time staff of about 240, according to a report in the gaming blog Joystiq. Harmonix, the developer of the Rock Band, Dance Central, and original Guitar Hero franchises, was sold by Viacom (NYSE: VIA) to private equity firm Columbus Nova in December. In a statement this week, Harmonix said it is restructuring its organization to “bring it into alignment” with its “current product development plans.”

Comments | Reprints | Share: