VentureBeat

Ever since Napster brought free MP3s mainstream — and subsequently garnered the wrath of the Recording Industry Association of America — the music industry has been reeling.

No single strategy for listening to music online has come to dominate the market, as record labels, managers, artists, fans, Apple’s music offering, Internet radio and recommendation companies all jockey for position. But one thing is clear above all the din: Fans will not be denied their music — and most want it free.

Music network Qbox is the very latest to join the fray of companies hoping to stake a claim in this market. It’s releasing its beta Friday. It gives users who search for musicians in Wikipedia or Google a Qbox icon on their screen, which they can click to then hear music to go with the artist information that comes up in their search results.

CBS-owned music discovery service Last.fm has also just announced a freebee that it hopes will give it an edge: Users can now listen to the full track of any song three times for free. The company hopes this promotion will prime users for its upcoming subscription service launch. How will Qbox and Last.fm fare against the competition?

With such a variety of services on offer and so many developments within those services, it’s hard to tell. But in an attempt to give you some perspective on what the various free, or at least cheap, music offerings are — whether for the computer, mobile phone, or even the Nintendo Wii — we’ve compiled a list.

We tell you what the service does, what its business model looks like, and whether it lets users stream or download, among other things. The most useful categories may be 1) what we’ve termed “musicability,” or how easy can you find the song you want (this may be the best way to pick a potential favorite), and 2) “genre,” or how easy it is to search through a particular genre of music. Both are rated on a scale of 5.

Despite copyright restrictions, many of the sites manage to share music legally; others are dubious but are surviving anyway. We’ve most definitely missed several — we haven’t included most torrent or peer-to-peer (P2P) companies because there are simply too many of them and the majority operate illegally.

Many of the companies below have indexed their competitors’ sites — Songza started out scouring YouTube music videos for music, while Songbeat is a desktop application that uses Seeqpod’s engine.

We haven’t picked a personal favorite, in part because of the mind numbingness of the choices, but I will say that listening to music on the internet probably needs its own Crunchies. I was mystified by how many companies don’t allow searching by genre.

Anywhere.fm — “iTunes for the Web.” It lets users upload songs from their iTunes or desktop to a Web-based account. Users can share music with friends as “radio stations.”
Where: Desktop to Browser Mobile: No
How: Stream
Musicability (how easy is it to find the song you want): 5 Genre (how easy is it to search by genre): 5
Business Model: Advertising by inserting audio ads into music stream, premium accounts, and affiliate sales
Financing: Y Combinator
Status: Beta
Legal: Yes
Language(s): English

Deezer — the reincarnation of French site Blogmusik. It claims to be the first legitimate music search engine. Users can browse songs, create playlists, request songs not in the database, and listen to the exact song they select.
Where: Browser
How: Stream
Mobile: No
Musicability: 4
Genre: 4
Business Model: Ad-based revenue, links to Amazon and iTunes
Financing: N/A
Status: Live
Legal: Yes
Language(s): English, French, Spanish, Italian, Portuguese, others

Ezmo –an unlimited music storage space. Users can upload entire music collections and share with up to ten of their friends. Ezmo player runs on Adobe’s Flash Player, inside any web browser. Users upload from iTunes, Windows Media, Winamp, and File Folder and can change names of artists/album for their personal libraries.
Where: Browser/ Desktop
How: Stream
Mobile: Soon
Musicability: 4
Genre: 1
Business Model: N/A
Financing: Fully-owned subsidiary of FAST search company, which Microsoft recently bought
Status: Beta
Legal: Yes
Language(s): English, Norwegian, Spanish, French, German, Italian, Portuguese

Finetune — a Flash-based application. Users select songs, build playlists, share/embed playlists. Can be used on desktop and Nintendo’s Wii.
Where: Desktop/ Browser/ Wii
How: Stream
Mobile: No
Musicability: 5
Genre: 5
Business Model: Ad-based revenue
Financing: N/A
Status: Live
Legal: Yes
Language(s): English

Flytunes, a service that just released, offers users a music experience as an alternative to satellite radio — access to thousands of high-quality personalizable music channels for the iPhone (and other mobile devices later). Includes 30 minute caching when phone not in service range.
Where: Browser/ Desktop/ iPhone
How: Stream
Mobile: Yes
Musicability: N/A
Genre: N/A
Business Model: Targeted AdSense-like Ads
Financing: Company was originally Broadclip, inc. creators of MediaCatcher Facebook app. Received funding from Angel’s Lancaster Angel Network and the Investment Circle of York
Status: Live
Legal: Yes
Language(s): English

Freemusiczilla — a social music downloading service that lets users download free music from MySpace, imeem, Last.fm, Pandora, Myspace, eSnips, Mog, iJigg, Radio.blog.club and others
Where: Desktop
How: Download
Mobile: No
Musicability: 5+
Genre: 5
Business Model: Premium version to be released
Financing: N/A
Status: Live
Legal: Questionable
Language(s): English

Fuzz — a social Music service and label for listening to indie artists. Users can listen to, purchase, share and review music. Users can also create “mixtapes” and share/embed them.
Where: Browser
How: Stream/ Download
Mobile: No
Musicability: 3
Genre: 4
Business Model: Ad-based revenue, music store, label-related revenue
Financing: N/A
Status: Live
Legal: Yes
Language(s): English

The Hype Machine — a music search engine that indexes audio files on blogs. Users can search for an artist, and play the song. Songs have the blogs attached to them and a link to the blog, as well as links to iTunes and Amazon to buy the song.
Where: Browser
How: Stream
Mobile: No
Musicability: 5
Genre: 3
Business Model: N/A
Financing: Private
Status: Live Legal: Questionable
Language(s): English

iLike –Facebook’s top application is a social music site where users discover and share playlists. iLike’s iTunes and WMA Sidebar scans and recommends music from your library.
Where: Browser
How: Stream/ Download
Mobile: No
Musicability: 5+
Genre: 2
Business Model: Links to buy songs/albums from Amazon and iTunes
Financing: $15.8 million total. $2.5m from Khosla Ventures and Bob Pittman. $13.3 million from IAC’s Ticketmaster. Other investors.
Status: Live
Legal: Yes
Language(s): English

Imeem — a social network media site that features blogs, music, videos, and photos. Users listen, upload, watch, create playlists, embed and recommend allowed media content (digitally fingerprinted).
Where: Browser
How: Stream
Mobile: No
Musicability: 5
Genre: 5
Business Model: Ad-based revenue, licensing deals with the big four Record Labels, Viacom, and others. Artists paid by popularity of music.
Financing: Known investors include Morgenthaler Ventures and Sequoia Capital
Status: Live
Legal: Yes
Language(s): English

Jango — a social music service that lets you create and share custom radio stations. Embeddable MySpace JukeBox widget.
Where: Browser
How: Stream
Mobile: No
Musicability: 4
Genre: 5
Business Model: Ad-based revenue, purchase music through Amazon
Financing: N/A
Status: Beta
Legal: Yes
Language(s): English

Lala — hails itself as the “Complete Music Store.” Users can listen to full songs, buy physical CDs, or buy and download DRM-free songs directly to iPod. Users can also turn Lala into a music locker service with plugin.
Where: Browser/ Desktop
How: Stream/ Download
Mobile: No
Musicability: 5
Genre: 5
Business Model: Music Store
Financing: $9 million from Bain and Ignition Ventures.
Status: Live
Legal: Yes
Language(s): English

Last.fm — a social media radio site. Users can “scrobble” music listened to on an iPod or computer. That data is used by Last.fm to create a radio station based on your favorite music. It also uses music from users who have similar listening habits, as well as the ability to create a station based on any artist. Users have profiles, events, and widgets that are embeddable on MySpace, Facebook, your blog, and even Google gadgets.
Where: Browser/ Desktop
How: Stream/ Download
Mobile: No
Musicability: 5+
Genre: 5+
Business Model: Ad-based revenue
Financing: CBS acquired company for $280 million in May of 2007. Last.FM originally received $5 million in May 2006 from Index Ventures.
Status: Live
Legal: Yes
Language(s): English

Maestro — a social music locker where Users can upload, sync and stream music from their own and friends’ computers. MySpace widget.
Where: Browser/ Desktop
How: Stream
Mobile: No
Musicability: 2
Genre: 2
Business Model: N/A
Financing: Private
Status: Beta
Legal: Yes
Language(s): English

Media Master — provides users with an unlimited music locker service that hosts and stores music collections online to stream your music to computer, mobile phones, and internet-connected living room devices. Can embed widgets in blog, MySpace, and Facebook.
Where: Browser/ Desktop
How: Stream
Mobile: Yes
Musicability: 4
Genre: 4
Business Model: N/A
Financing: Privately funded — features former execs from Sony, Walmart, and Yahoo
Status: Live
Legal: Yes
Language(s): English

Meemix — lets users create music channels from preferences and individual tastes. Can also personalize a channel based on user profile, previous music selection and behavior.
Where: Browser
How: Stream
Mobile: No
Musicability: 3
Genre: 2
Business Model: Album sales, future revenue from ringtones and ads.
Financing: Undisclosed Angel Investors
Status: Beta
Legal: Yes
Language(s): English

Melodeo — A mobile multimedia company whose newest product, nuTsie, lets you access your iTunes library from the web or your mobile phone — with old iPod interface. Signed deal with China’s second largest telecom in a joint venture with Access Co, Sony BMG, Warner Music Group and Motorola.
Where: Desktop to Browser
How: Stream
Mobile: Yes
Musicability: 4
Genre: 0
Business Model: N/A
Financing: $17.4 million from Ignition Partners, Voyager Capital, GF Capital, and Intel Communications.
Status: Live
Legal: Yes
Language(s): English

Mog — a social Music blogging service to find new music, watch music videos, and read news and reviews that match your personal taste in music. Embeddable music player. Each user has own Mog page showing music they’re listening to.
Where: Browser/ Desktop
How: Stream
Mobile: No
Musicability: 5
Genre: 3
Business Model: N/A
Financing: $1.2 million 3.2 million from Undisclosed angel investors
Status: Live
Legal: Yes
Language(s): English

MP3tunes — an online music locker. Automatically syncs new music on computer. Available on PS3, Nintendo’s Wii, Windows Mobile, Nokia Phones, Tivo and more.
Where: Desktop / Browser/ Playstation 3/ Nintendo Wii
How: Stream/ Download music
Mobile: Yes
Musicability: 5
Genre: 3
Business Model: Unlimited tracks when upgraded to premium locker
Financing: CEO Michael Robertson, founder of MP3.com, Linspire, and SIPphone
Status: Live
Legal: Yes
Language(s): English

Musana — a music storage locker. Upload MP3s from your computer and listen to them through a browser-based player.
Where: Browser
How: Stream/ Download
Mobile: No
Musicability: N/A
Genre: N/A
Business Model: N/A
Financing: N/A
Status: Private beta
Legal: Yes
Language(s): French, English

MySpace — the US’s biggest social networking site.
Where: Browser
How: Stream/ Download as artists allow
Mobile: Yes
Musicability: 5
Genre: 5
Business Model: Ad-based revenue
Financing: MySpace’s parent company, Intermix, was purchased by News Corp for $580 million.
Status: Live
Legal: Yes
Language(s): English, French, Spanish, German, Italian, Russian, Portuguese, Japanese, Turkish, others

Mystrands — offers users a desktop application that builds a recommendation playlist based on your current music. Also can play music from a YouTube video search.
Where: Desktop — Windows/ OSX / Linux
How: Stream
Mobile: Yes
Musicability: 4
Genre: 4
Business Model: Ad-based revenue
Financing: $55 million from BBV, Ansenio, and Debaeque Sequel
Status: Live
Legal: Yes
Language(s): English, Spanish, French, German, Italian, Portuguese

Orb – Its “MyCasting” is remote storage for photos, music, videos, and live television from a home PC to any internet-connected device -– phone, PDA, laptop, etc. Users can stream and share playlists.
Where: Browser/ Desktop
How: Stream
Mobile: Yes
Musicability: 4
Genre: 4
Business Model: N/A
Financing: Backed by Morgenthaler Ventures
Status: Live
Legal: Yes
Language(s): English, Japanese, French, Spanish

Pandora — a service with more than 10 million registered users, generates personalized streaming radio for your computer, mobile phone or home entertainment system based on the Music Genome Project.
Where: Browser
How: Stream
Mobile: Yes
Musicability: 5
Genre: 3
Business Model: Ad-based revenue, $3/mo without ads. Users can purchase music on Amazon/ iTunes
Financing: $20.8 million from Labrador Ventures, Shelby Ventures, WaldenVC, and Crosslink Capital
Status: Live
Legal: Questionable
Language(s): English

Phling — a PSP service for your cellphone that allows you to relay multimedia between your phone, your IM buddy list, and your home computer. Stream music from PC to Phone. Also offers music storage.
Where: Mobile
How: Stream/ Download
Mobile: Yes (Only)
Musicability: N/A
Genre: N/A
Business Model: N/A
Financing: N/A
Status: Live
Legal: Yes
Language(s): English

Qbox.com — a social music network service launching Friday, gives users 18 million songs through social networks such as MySpace, Bebo, and YouTube. Qbox analyzes webpages such as Google or Wikipedia for song titles, and creates links to the actual songs on various social networks using the Qbox toolbar. Qbox has an embeddable widget that allows users to add music playlists on MySpace or blogs.
Where: Desktop/ Browser
How: Stream Mobile: No
Musicability: TBA
Genre: TBA
Business Model: TBA
Financing: Private Angel Investors
Status: Beta
Legal: Yes
Language(s): English

RadioBlogClub — a music search engine and store that features a buildable playlist. Is on Nintendo’s Wii, Facebook app, iGoogle widget, and can share/embed in a blog.
Where: Browser/ Wii
How: Stream/ Download
Mobile: No
Musicability: 5
Genre: 0
Business Model: Ad-based revenue, Amazon powered MP3 store
Financing: N/A
Status: Live
Legal: Yes
Language(s): English

Rerverbnation — a MySpace-like social network for artists, record labels, managers, venues, and fans. Makes “myband” facebook app.
Where: Browser
How: Stream/ Download as artists allow
Musicability: 3
Genre: 3
Business Model: Ad-based revenue, artists can pay to be featured
Financing: N/A
Status: Live
Legal: Yes
Language(s): English

Seeqpod — a search and discovery music engine born in the U.S. Department of Energy’s Lawrence Berkeley National Laboratory in Berkeley, California. The company plans to launch a search/discovery engine for all “playable” rich media fields to include video, audio, powerpoint presentations, slideshows, and other rich media.
Where: Browser
How: Stream
Mobile: No
Musicability: 4
Genre: 0
Business Model: N/A
Financing: $5 million from undisclosed investors. Lawrence Berk Lab owns five percent stake.
Status: Beta
Legal: Yes
Languages(s): English

SkreemR is a music search engine. It indexes audio files on the internet and can play through music player. Uses “AudioRank” algorithm, placing emphasis on higher quality audio files.
Where: Browser
How: Stream
Mobile: No
Musicability: 4
Genre: 0
Business Model: Ad-based revenue
Financing: N/A
Status: Live
Legal: Questionable
Language(s): English

Slacker — music radio for those of us who don’t want to spend time creating playlists. Music plays on the Web or desktop depending on user preference. Wi-FI Portable Radio player releases end of January. Users are only allowed to skip six times on any given radio station before that feature is disabled due to legal restrictions.
Where: Desktop/ Browser
How: Stream/ Download for a fee
Mobile: Yes
Musicability: 5
Genre: 5
Business Model: Ad-based revenue, upgrade to $7.50/mo subscription-based downloadable service
Financing: $53.5 million from Austin Ventures, Mission Ventures, Sevin Rosen Funds, and Rho Ventures
Status: Live
Legal: Yes
Language(s): English

Songbeat — a desktop application that allows users to search/stream/download MP3s using Seeqpod’s engine.
Where: Desktop
How: Stream/ Download
Mobile: No
Musicability: 4
Genre: 0
Business Model: Upgrade to songbeat pro, ad-based revenue
Financing: N/A
Status: Live
Legal: Questionable
Language(s): English, Spanish, German, Russian, Dutch, Polish, Turkish, Swedish

Songza — a jukebox/music search engine. Users search for, listen to, and rate songs, add to player and embed the player in other sites.
Where: Browser
How: Stream
Mobile: No
Musicability: 5
Genre: 0
Business Model: N/A
Financing: Founded by Humanized
Status: Live
Legal: Questionable
Language(s): English

SpiralFrog — an online music service with about one million songs that lets users download songs and music videos licensed from both major and independent record labels.
Where: Browser/ Desktop
How: Stream (video only) / Download
Mobile: Yes
Musicability: 4
Genre: 5
Business Model: Ad-supported revenue, signed with EMI and Universal Music Group. Record labels get share of ad-revenue.
Financing: $12 million in debt and financing.
Status: Live
Legal: Yes
Language(s): English

Streampad — lets users stream music from computer through internet connection and listen to others’ music and concerts. It recently partnered with MP3Tunes.
Where: Desktop to Browser/ Browser
How: Stream/ Download personal music
Mobile: No
Musicability: 3
Genre: 1
Business Model: N/A
Financing: N/A
Status: Live
Legal: Yes
Language(s): English

Virb — a cleaner-looking MySpace (once hailed as the MySpace killer) without as many musicians or fans. (I included purevolume, because it’s Virb’s sister company.)
Where: Browser
How: Stream/ Download — artist controlled
Mobile: No
Musicability: 3
Genre: 1
Business Model: Ad-based revenue
Financing: N/A
Status: Live
Legal: Yes
Language(s): English

We7 — an ad-supported music downloading service. Ads are 10-second audio clips from advertisers, Music is DRM free. Downloading is legal and revenue is shared with artist. Fans can review artists.
Where: Browser
How: Stream/ Download
Mobile: No
Musicability: 3
Genre: 4
Business Model: 10-second audio clip ad-based revenue
Financing: $6 million from Eden Ventures, Spark Ventures, Peter Gabriel
Status: Beta
Legal: Yes
Language(s): English

YouTube — the world’s most watched video site (and which has lots of free music).
Where: Browser
How: Stream/ Download (some videos, or with an open source downloader)
Mobile: Not yet
Musicability: 5
Genre: 3
Business Model: Google-based ad revenue
Financing: Google bought for $1.65 billion.
Status: Live
Legal: Mostly
Language(s): Major languages

A few days after social network site Facebook opened its platform to third-party sites, iLike, a popular music sharing site has scored 723,936 users on Facebook. It is by far the most popular application. We interviewed iLike chief executive, Ali Partovi. He compares Facebook’s platform to the web itself.

VB: Tell me about your experiences with Platform so far. You’ve been working on putting iLike on Facebook for several months now. Yet on the integration since Friday morning, there have been bugs and other issues on iLike’s end. What’s the status? Do you have enough servers now?

AP: So, first to give you the back-story on how we got involved: Over the past several months, we’ve pushed and pushed with Facebook asking for some sort of exclusive relationship.

They repeatedly said they won’t do an exclusive relationship, but would rather create a level playing field where we could compete with other third parties. We then gave up a bit, and we were actually a bit late to the game learning about the platform in detail. But when we finally did get access, our President, Hadi Partovi (my twin brother) took very little time to decide this was a huge strategic priority. That was a month ago.

We re-prioritized everything else, and started moving our people off other projects onto this. First two or three people, then a few more, and by the end it was a huge group of engineers pulling back-to-back all-nighters for a week-long sprint to the launch.

VB: What made iLike think that Facebook Platform would be a big deal? What stood out about it?

AP: Hadi has a strong background in the concept of platforms… at 24 he became the head of product management in the IE group at Microsoft, and was a key player in the browser wars. A month ago, even though the Facebook Platform wasn’t fully fleshed out, he saw just from the early beginnings of it that this could redefine web development.

What he said was, “in the history of computing, there was the personal computer, there was Windows, there was the web, and now the Facebook platform.” You can imagine that I and most our company was pretty skeptical. But he makes these calls so we followed him.

As to what stood out: it’s a combination of 3 things:

1) The technology itself — Facebook’s platform, like any platform, offers the developer building blocks to build apps faster than they could if they were starting from scratch, and to tap into a rich source of data & capabilities that would never otherwise be available.

2) The potential for viral spread — due to the way the Facebook news feed works, an app can spread across the community entirely by viral spread, as friends get notified when one person adopts it… this essentially bypasses the idea of trying to make your app “viral” as a standalone, because the Facebook is itself naturally viral.

3) The rhetoric from the Facebook management team, starting from the CEO himself, made it clear that they have a long-term commitment to a level playing field. For example, they absolutely refused to give us any special advantage, insisting that the market needs to see a level playing field… we offered them ownership in our company, money, etc — but they had no interest. Furthermore, they built and launched their own “video” app, but left it to “compete” on its own merits alongside other third-party apps rather than making it “pre-installed” for all Facebook users.

So, #1 and #2 made this something we had to jump on, and #3 made us comfortable with the long-term strategic implications.

VB: Some Facebook applications are still more viral than others… tell me why iLike is so popular?

AP: To be honest, we’re not completely sure! There is certainly some art and science to making an app viral, but also a healthy dose of black magic

But for one thing, iLike is quite different from almost all the other apps, in that it’s not simply a “widget” to add to your page, but an entire expansion of the Facebook feature set to add a rich music experience. For example, artist profiles — our app contains 500,000 and growing profiles for artists from major label acts to unsigned artists. It does include the ability to add songs to your pages, but also much more that you get on the app pages themselves — e.g. see upcoming concerts, who else in the community is going, etc.

VB: You’re able to incorporate information from Garageband, right? [Garageband.com is a companion site to iLike that features profiles of independent musicians.] From that, what sort of traffic are you seeing back to iLike.com and Garageband from the FB platform?

Thanks to Facebook, the moment a new user visits iLike [within Facebook], the very first page they see is automatically personalized to them already. Thanks to [the information on your profile at] Facebook, on your very first page view, we know your music tastes, your location, your list of friends, and their music tastes. So we can immediately tell you, “here’s one of your favorite artists with a concert near you, and these are your friends who might wanna go.”

We’re accomplishing the same thing on our own website (www.iLike.com), but you can imagine it’s much harder: first you have to tell us your music tastes, then invite all your friends, then they have to tell us their music tastes… Facebook solves the classic chicken-and-egg problem for a wide range of social applications like this because they already have all the chickens and eggs ready for you to use.

VB: How do you plan to monetize your Facebook user base, now that you have one?

AP: Rather than viewing our Facebook app as a way to get people to click through to our site, we view it as a self-contained site in itself, where we might even be able to build a bigger business than our own site. So, regarding monetization: We already make money from the links to buy music on iTunes or buy tickets on Ticketmaster. We also plan to place banner ads throughout the iLike app on Facebook.

The traffic on iLike.com was already quite substantial (well over a million registered users — I’m not going to disclose yet quite how many, but we’ll be making an announcement soon)… and to our astonishment the traffic on our 4-day-old Facebook app is already larger!

In terms of daily signups, iLike on Facebook trounces anything else we do… iLike on Facebook has been signing up roughly 200,000 new members a day — the only thing I can think of on the internet that’s growing faster than that is MySpace and maybe some of the free email/instant messaging services. And we haven’t even brought out the big guns to drive our growth (marketing to the existing iLike base, or paying for marketing on Facebook)

As for GarageBand, the number of MP3 streams and downloads has tripled almost overnight. It’s a very good time to be a GarageBand.com musician.

VB: As to the other question, about the Platform terms of service — based on what you’ve said already, you don’t see a risk of FB trying to develop its own music app that it favors, or charging iLike for its use of platform?

AP: It’s a mutually symbiotic relationship. This is just the very beginning of the race, and our only concern right now is to put distance between us and whoever #2 might be. But the longer term question is, what if Facebook themselves wanted to build their own? The answer is that we’ll be adding value in ways that will be hard for them to duplicate. Or rather, hard for them to duplicate simply by building some code.

There are two other hypothetical long-term worries:

1) Facebook starts taxing us. I think the way they are already taxing us is by keeping the prime ad real estate (top and left side), which they sell; maybe they’d consider increasing their pixels of ad space. but I highly doubt they’d actually demand revenue: they’re smart enough to know that the way to make money is to keep your slice of the pie small, and make the pie grow huge… rather than try to increase your slice of the pie and risk shrinking the pie.

2) Facebook technically can’t keep up with the demands of web app development… what if the FB Platform somehow breaks under its own weight, i.e. they can’t actually technically support all the apps? That is what has been happening a lot the last few days… that one is the only legit risk, but I think it’s a good horse to bet on!

VB: What do you plan to add that will let you keep that lead? Do you think that iLike/Garageband is already unique — hard for anyone to duplicate?

AP: For example, we’ll be collecting a lot more about people’s music tastes (right now we merely scan what they’ve typed into their profiles; soon we’ll hook up our iTunes applet that scans your entire music library to learn your tastes). We’re also letting people click, “I’m going,” or “I wanna go,” for any concert — this is building a giant database that makes our app more valuable, and anybody wanting to duplicate that would be starting from zero.

Imagine hypothetically, you’re wondering who to invite to the Arcade Fire concert. You can go to iLike, where millions of people are actively declaring which concerts they are going to, etc. Or you can go to the newly launched “official Facebook music” app that has just started and doesn’t have many users. Our service will actually be better than any challenger, because of the strength in numbers, because of the rich data we’re collecting.

VB: Have you had any communication with Facebook, especially their legal department, about iLike’s relationship with record labels? Or other licensing-type issues?

AP: iLike has never had a single copyright-related issue, we secure all the necessary permissions from the copyright holders in advance, whether that’s the labels or the teenage bands. What’s great is that Facebook has created a platform where you can be the winner without breaking the rules.

VB: So, if this is to be a long-term problem, it would assume near-infinite growth in the number of apps and in the number of people who use them?

AP: Well, we’ve already had some outages, mostly because we weren’t equipped to handle such instantaneous popularity, but in some cases due to issues on Facebook’s side. On day one, we added 10,000 users in the first ten hours. Then, mysteriously, we were shut down… we called Facebook and discovered that we had tripped an internal limit they had set for an app that receives 100,000 page views in a day. So they increased the limit to 1 million. We were shut down again 3 hours later because we had already tripped the 1 million limit.

Or, more seriously, today we experienced multiple very frustrating outages, which significantly curtailed our growth, and they were due to Facebook’s Platform having some issues… what’s worse is that the error page linked to our support email, which resulted in a ton of complaints to us.

I have sincere faith that if there’s anybody who can pull this off, it’s the Facebook guys — they are absolute professionals and unbelievably gifted engineers. Nobody had any idea how fast this would grow.

VB: What percentage of the problems you’ve experienced has been because of FB platform scaling issues as opposed to iLike scaling issues?

So far, 20% of iLike’s problems have been Facebook’s fault, and 80% our own fault (or that of third-parties on whom we rely for components of our service). We had dozens of servers ready to deploy, but we had no idea that this thing would eclipse everything else we’re doing quite so rapidly.

After a “deer-in-the-headlights” period, we decided to disable some of the features to reduce our load.

We also went on an emergency run to add servers… itself quite a story, because it’s not very easy to find 100+ industrial-strength servers in the middle of Memorial Day weekend! We spent Saturday loading a 24-ft truck from floor to ceiling with servers, and we spent Sunday “shucking” the servers (i.e. removing them from the boxes and styrofoam packaging), which itself takes many, many hours to unpack 100+ servers… all in preparation for the coming week. Facebook had told us that Memorial Day weekend is one of the slowest periods of the whole year for them. This is why we freaked out on Fri night when we saw that rather than slowing down towards the night as you’d expect, our traffic was still growing exponentially.

VB: What if, as some say, Facebook is the next Google. Google was search but now it’s building all sorts of apps (70+ at my last count). You’re saying FB won’t move in this direction? Tell me more.

AP: I think the more appropriate comparison is Microsoft. As we see it, Platform is to ordinary HTML what Windows was to DOS.

VB: What do you expect to be issues this week?

AP: Scaling to meet the demand. The best analogy I can make is that the spread of an app on Facebook is akin to the chain reaction that occurs in the core of a nuclear bomb… one atom splits, and sends particles in all directions, which cause neighboring atoms to split, and so on… In like manner, one person uses iLike, which notifies all their friends… In theory, there’s no reason why the growth would taper off at all — unless we run out of server capacity to handle it, or unless we begin reaching saturation of the entire Facebook community.

It feels a bit like Little Shop of Horrors… we keep adding servers to feed the beast and it keeps getting bigger and hungrier. Fortunately there are only a finite number of people in the Facebook community! Although I suspect Facebook’s own growth will accelerate dramatically, because people like us will contact their entire mailing list telling them to sign up for Facebook. The whole thing may seem insane, but remember, what’s at stake for us is the opportunity to become the music app for Facebook, which in turn could actually give us a shot at becoming the #1 music service in the world. Note that Facebook is the #1 photo service in the world, the #1 invite/event service in the world, etc.

A month ago, if I told anybody we could unseat MySpace in music, they’d say I was crazy. Today, it seems not only possible, but actually like it’s on track to happen unless we screw it up.

And that is an unbelievable turn of events, extremely eye-opening for me as much as anybody.

VB: Based on what you’ve experienced with platform so far, what are the main concepts that hackers/entrepreneurs and investors should understand.

As to wisdom with respect to Facebook, what I’d say is that anybody who is currently involved in building a consumer-facing website should be thinking about whether they should be building a Facebook app instead.

To me, the developers who don’t ask themselves that question are like the people building multimedia CD ROM software in 1996 who didn’t ask themselves if they should be building websites instead… i.e. companies that distributed maps of the country on CD Rom, or encyclopedias on CDROM, etc.

I think the Facebook platform is an epic, tectonic shift, a paradigm shift akin to Windows replacing DOS or the emergence of the Web itself.

Here’s a summary of the more compelling tips given by several tech industry luminaries — including Facebook’s Mark Zuckerberg, Google’s Gmail creator Paul Buchheit, Sequoia Capital venture capitalist Greg McAdoo — at the Y Combinator Startup School event at Stanford this weekend.

The event attracted more than 650 aspiring entrepreneurs. Mark Coker, a VentureBeat contributing writer, was on hand and here are his notes.

FaceBook’s Mark Zuckerberg: Hire only young technical people

FaceBook’s founder and CEO, 22-year old Mark Zuckerberg, believes his social networking platform will push the world to be a more open place. Without doubt, FaceBook is a true phenomena. According to Zuckerberg, FaceBook has over 20 million registered users, serving 1.5 billion page views daily.

Judging from whispers among the audience, while people love the service and admire his accomplishments, many find Zuckerberg arrogant. A Google search on “mark zuckerberg” and “arrogant” yields about 675 results, but surely, there must be other Mark Zuckerbergs in the world. Or maybe not.

Maybe it’s part of his charm. He’s the cute boy-wonder robo-geek who is either oblivious to how he rubs people, or he doesn’t care because he’s smarter than us.

He stepped on the stage wearing his trademark Adidas sandals (he bought ten pairs before they were discontinued).

“I want to stress the importance of being young and technical,” he stated. If you want to found a successful company, you should only hire young people with technical expertise.

“Young people are just smarter,” he said with a straight face. “Why are most chess masters under 30?” he asked. “I don’t know,” he answered. “Young people just have simpler lives. We may not own a car. We may not have family.” In the absence of those distractions, he says, you can focus on big ideologies. He added, “I only own a mattress.” Later: “Simplicity in life allows you to focus on what’s important.”

He said it’s important to hire mostly coders, even in the marketing department, so if they want to change something on the web site all they have to do is log into the back-end and change copy on the fly.

The value of having coders on staff, he elaborated, is that technology is highly leveraged. “You can create an app once and people can continue to use it.”

Zuckerberg stressed the importance of rapid application development and iterations. FaceBook ships new code every night, he says.

Several more times during the talk, he spoke of how an important part of his job was thinking about philosophies.

Someone in the audience asked how Zuckerberg balances the whole work and family thing. He answered that he works all the time, and besides, he said, his girlfriend is still in school at Harvard so he’s apparently not distracted by her too much. “But now she’s moving out here so we’ll see,” he added. Presumably, this the same girlfriend Zuckerberg was with when he reportedly shut off his cell phone, delaying acquisition talks with Yahoo for a week.

Paul Buchheit: Gmail’s creator shares startup advice

As Google’s 23rd employee, Paul Buchheit was the creator and mastermind behind Gmail, arguably one of Web 2.0’s first killer apps.

His advice to entrepreneurs was to redefine their measures of success. While financial reward is nice, aspiring entrepreneurs should first and foremost seek out risk-taking opportunities where they can learn. He said startups allow employees to take on projects for which they have no qualifications. He referenced his own multi-year assignment to Gmail as a perfect example.

Buchheit, no longer employed by Google, encouraged entrepreneurs to innovate where tech giants like Google are afraid to. He cited the enormous success of YouTube. Even though YouTube launched after Google Video, he said Google Video was a bad product because Google was politically afraid to offend its media partners.

Paul Graham Asks: What’s stopping you from starting a startup?

Paul Graham made his fortune selling his ecommerce platform Viaweb to Yahoo for $49 million in 1998.

More recently, he has become something of a 21st century messiah for tech company founders. His numerous essays about tech startup strategy, along with his work as a founding partner of Y Combinator, have allowed him to influence a new post-bubble generation of software programmers. Some entrepreneurs are said to listen to recorded copies of his speeches over and over again in an attempt to internalize his gift.

Over the last few years, Graham has encountered a few prospective founders who were unwilling to accept his teachings.

His Startup School presentation answered those objections (VentureBeat has paraphrased):

Concern: Am I too young?
Answer: Don’t worry.

Concern: I’m too inexperienced.
Answer: Do it anyway.

Concern: I’m not sure I’m smart enough.
Answer: If you’re smart enough to worry about that, you’re smart enough to start a successful startup.

Concern: I appreciate the predictability of a regular job.
Answer: Envision yourself as a medieval serf who will till the same soil for the rest of your life. Mind numbing, right?

PayPal Founder Max Levchin: Imagine him as a 15-year old girl

Max Levchin was a co-founder of PayPal, which was acquired by eBay for $1.5 billion in 2002. Today, he’s founder and CEO of Slide.com, a service that reaches 50 million people per day with its hosted images and slideshows.

Levchin offered attendees a crash course in product management. Product management, he says, is 85% user interface and 15% channeling the user.

For user interface, Levchin told the audience to measure how their visitors interact with the sites. Slide.com tracks mouse clicks, mouse overs, abandonment rates, the funnel, and more. Levchin and his team mine the data for intelligence that helps guide future iterations of the site.

For channeling the user, Levchin says founders must step inside the minds of their target customers. In Levchin’s case, he says he must imagine himself as a 15-year-old girl with attention deficit disorder who’s looking for digital bling to dress up her MySpace or Zanga web page, while at the same time she’s chewing gum, talking on the phone, instant messaging with five friends, listening to music, and twirling her fingers through her hair.

Levchin cautioned his techie audience to keep their customers in mind and not go overboard with technology for technology’s sake. He pointed to the early social networking site, Friendster, which lost critical momentum when it ran into scaling problems because of a “cool” feature that calculated friend trees, and caused page load times of up to a minute. MySpace.com, by contrast, was successful because it cared less about technology and more about the user experience.

As a final word of product development advice, Levchin encouraged founders to think about the Bible’s seven deadly sins - especially greed, sloth, envy, pride and gluttony. These characteristics, he said, describe many of the primal motivations for users.

Ali and Hadi Partovi: Brotherly super duo provide tips

For those who say lightning never strikes twice, they haven’t met the Partovi twins. Ali founded LinkExchage, which was acquired in 1998 by Microsoft for $250 million. Hadi founded TellMe, recently acquired by Microsoft for a rumored $800 million. The brothers now jointly run the music discovery service iLike, and its popular independent music web site, GarageBand.

The Partovi brothers’ presentation focused on the do’s and don’ts of startup success.

They said the best businesses are easily scalable, so that a doubling of revenues won’t require a doubling of expenses.

Founders should create naturally viral businesses, like the invitation automation service eVite.com, in which one user’s use of the service causes others to use it.

The sites should also exhibit network effects, so as the number of customers increases, the overall value to all customers increases.

The brothers encouraged founders to listen closely to their customers, and cited online shoe seller Zappos.com, as a strong example of a company which cares about customer experience. Zappos requires all new employees, even senior executives, to man customer service phones for at least four weeks as part of their training.

The brothers warned founders to maintain a razor sharp focus on their company’s primary purpose. Ideas are a dime a dozen, they said. Founders should pick one thing and do it well. They cited eBay’s acquisition of Skype as an endeavor that could spread the company too thin, and distract it from its main auction business.

They said companies must make hiring a top priority, and should cultivate and protect their company culture. Perhaps just as important, founders should learn to quickly fire bad hires, because a single bad hire can poison morale.

Lotus Founder Mitch Kapor: Don’t forget culture and diversity

Over his 30+ year career, Mitch Kapor has shown an uncanny knack for identifying disruptive waves of technology innovation early.

He created Lotus Development, one of the first spreadsheet companies. He was an early investor in UUNet, one of the first Internet service providers, as well as in Real Networks and Linden Lab, operator of Second Life.

Kapor also stressed the importance of creating a great company culture. He said founders set the culture, and it’s important to understand every action or inaction of the founders sends a message to employees. Hire great people, embrace diversity and resist trying to fit every employee into the same cookie-cutter mold, he said.

Kapor, who once worked at Valley VC firm, Accel Partners, advised entrepreneurs to tread cautiously with venture capitalists, and to understand where their interests are aligned and where they diverge.

Venture funds typically invest in a portfolio of 30 companies. They expect one or two big winners to supply the majority of the portfolio’s returns. Kapor says this can lead VCs to pressure their portfolio companies to go for the home run and risk striking out completely, when more sensible logic might dictate swinging for a single or a double instead.

Sequoia Capital’s Greg McAdoo: What VCs want in a start-up

Sequoia Capital is one of Silicon Valley’s oldest and most respected venture firms, investing in 550 companies, including Google, Yahoo, and Cisco.

McAdoo stressed the importance of clarity of purpose. Founders should articulate their vision for the company in a single sentence. When Cisco approached Sequoia, for example, they didn’t say, “We build routers.” Instead, they said, “Cisco Systems networks networks.”

McAdoo underscored the importance of the founders understanding their audience. He said good founders also exhibit intellectual honesty about the strengths and limitations of their technology, their management team and their competitors.

McAdoo said it’s impossible for a single company to create major waves of technology disruption, but stressed founders’ businesses should be built to ride the waves. Founders should also identify the trajectories of other trends that will impact the business, whether technology or political (such as likely changes to copyright law).

McAdoo says Sequoia prefers to invest in companies whose target customers have their “hair on fire,” meaning they’re desperate for an immediate solution, and don’t care if the fire hose comes in red or purple.

Asked if Sequoia funds companies outside of major tech regions, such as the Midwest, McAdoo said yes, but the firm prefers its funded companies locate in either Silicon Valley or Boston’s 128 corridor. Hiring is easier in the tech hot spots, and the support ecosystems are better adapted to meet the unique needs of tech startups.

Mark Coker is a contributing writer for VentureBeat. He’s founder of Dovetail Public Relations, a Silicon Valley technology marketing firm. He has no clients among the companies mentioned in the story, nor among their competitors. More on Mark at http://www.linkedin.com/in/markcoker