The big news at Google’s developer conference I/O might be the music streaming service we’ve all been hearing about for the last year. Google reportedly wrapped up the necessary music partnerships to get it off the ground, according to The Verge.

The new licensing deals include Sony Music Group and Universal Music Group that will enable Google to use their music on YouTube and Google Play. Google also reportedly struck a deal with Warner Music Group earlier in the year. This opens Google to some of the most major players in the music industry — an hurdle any music streaming service has to jump before it can be successful.

The service will likely resemble Spotify, according to The Verge. That is, it will serve up music the user chooses on a subscription basis, as opposed to an online streaming radio model. We are not sure what Google will charge for the service, but the New York Times reports that it will not offer the music free at any level. Spotify, by comparison, costs $10 per month for a premium version.

It will have its own internal competition, however, in YouTube, which many people already use to listen to music throughout the day. A mobile version of the streaming service, of course, would make the product much more alluring.

Apple is also said to be working on its own streaming product that will likely take Pandora’s model over Spotify.

We have reached out to Google and will update this post upon hearing back.

Man laughing with headphones via Shutterstock

Jeff Yasuda, the founder of “people-powered radio” Fuzz, is planning something much bigger for media. For now, it’s pretty hush-hush, but we know it includes a $1.1 million found of funding and a name: Feed Media.

“Fuzz is important, but it’s just a small piece of what we’re trying to do [with Feed Media],” Yasuda told VentureBeat.

Source: http://mikasalmi.com/

Mika Salmi, Feed Media investor.

We spotted a filing with the Securities and Exchange Commission earlier in the week saying that a company called Feed Media raised $1.1 million of a desired $1.5 million round. It included investment from Julie Allegro, who runs Allegro VC, as well as Mika Salmi, Fuzz’s executive chairman and the former president of global digital media for MTV. Both Allegro and Salmi are on Feed Media’s board, as is Yasuda.

Other investors may have been involved but are not listed on the filing. Yasuda declined to share any such names with us.

Salmi created a company in 1998 called Atom Films, which he sees as a precursor to YouTube, according to his website. Viacom (which owns MTV) bought it for $200 million in 2006 after the company merged with Shockwave to become Atom Entertainment — a gaming company. Yasuda, who spoke highly of Salmi as an innovator and entrepreneur, also told us Salmi “discovered” Nine Inch Nails before they were big — meaning he knows his way around the music scene. (On an unrelated note, NIN front-man Trent Reznor is working on his own streaming service, called Daisy, with Beats Electronics.)

On April 17, Yasuda tweeted, “Epic day for us!” which could have been a reference toward the funding as the filing lists the date of first sale as April 16.

So, what is Feed Media? According to the filing, the company was incorporated in 2011. Yasuda confirmed that Feed Media owns a handful of media properties, including music service Blip.fm (a Twitter for streaming music) and Fuzz, which transforms social playlists into Internet radio stations to determine the music you listen to rather than suggesting songs based on algorithms (like Pandora does).

It’s easy to assume that Feed Media will have something to do with music, but that’s all speculation, as Feed Media is staying silent. A music-based focus would make sense since it already has some licensing deals in place for Fuzz that could translate over to other music properties — something that Stickybits did with Turntable.fm and new music service Piki. Still, investors are willing to sink some serious cash into it, which is enough to keep us interested.

Jeff Yasuda image via Twitter

Pandora may have had a good fourth quarter in 2012, but CEO Joe Kennedy is on his way out.

“As part of our board discussions of the road that lies ahead, I reached the conclusion and advised the board that the time is right to begin a process to identify my successor,” Kennedy said in a statement today.

Kennedy has led Pandora since 2004, and he’s remaining as CEO until Pandora finds a successor.

Strangely, Kennedy’s resignation comes as Pandora is reporting fourth-quarter 2012 revenues of $125 million, a 54 percent increase year-over-year. The vast majority of that came from ad revenue, which accounted for $109 million. (The company’s stock is up 20 percent in after-hours trading.)

But reports say that Apple is planning to step into Pandora’s streaming turf, rumors that have left the company’s investors a bit jittery as of late. The good news, however, is that Apple’s efforts to undercut Pandora on price have been faced with some heavy resistance from record execs. This gives Pandora a significant, albeit temporary, break.

Elsewhere, Pandora has been hit with significant backlash over its recent decision to cap free streaming for mobile users at 40 hours per week. The move, which Pandora says only affects roughly 4 percent of monthly active listeners, is a reaction to ballooning royalty rates, which will increase by 9 percent this year alone. (You can see this pretty clearly in Pandora’s Q4 losses, which spiked to $14.4 million from $8.1 million.)

Clearly, things are getting a bit dicey in the world of online music streaming, and Kennedy has found an opportune time to drop out.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Those who have a free Pandora account will no longer be able to listen to more than 40 hours per month via mobile devices, the company announced today.

The company first removed listening caps on its desktop and mobile versions back in 2011 in an effort to stay competitive with rival services like Spotify and attract more users.  Pandora said the reason its bringing those listening limits back is due to the high cost of music royalties, which it’s previously advocated to lower several times in the past.

“Pandora’s per-track royalty rates have increased more than 25% over the last 3 years, including 9% in 2013 alone and are scheduled to increase an additional 16% over the next two years,” wrote Pandora founder Tim Westergren in a blog post. “After a close look at our overall listening, a 40-hour-per-month mobile listening limit allows us to manage these escalating costs with minimal listener disruption.”

The move is basically an indication that Pandora isn’t making enough money through advertising to pay for all that music people are listening to, especially when it comes to mobile usage. That doesn’t bode well for a company that can’t seem to get out of the red, despite record listener usage and revenue growth.

That said, Pandora indicates that the average user listens to about half the total cap (20 hours) each month, and only about 4 percent of users will be affected by this change. Those that are consistently hitting the listening cap do have the option to sign up for Pandora’s premium subscription service, or head over to the desktop version for unlimited streaming.

Spotify’s music service has gained a lot of popularity since it emerged in the U.S. market last summer. However, a new report says Spotify has fewer paid subscribers than expected.

According to unnamed sources associated with music labels that have made deals with Spotify, Spotify hasn’t gained much traction and there are fewer paid subscribers than the labels expected, the New York Post reported. They also told the Post that “People aren’t 100 percent happy. Spotify overpromised,” although it’s unclear if the “people” referred to are Spotify users or the music labels.

The Recording Industry Association of America (RIAA) reported at the end of March that music services, including Spotify, Rhapsody, and Rdio, have generated a 13 percent bump in revenue. Not only did the RIAA’s report show that people were purchasing more music, it also revealed that digital royalties paid by music services rose as well —  a win-win for music labels.

Originally launched in Sweden and then extended across Europe, Spotify made its way across the pond to the U.S. nine months ago and was a hit. Since then, it’s signed up more 3 million paid subscribers worldwide in 13 countries. Out of that 3 million, 600,000 people in the U.S. are paying to use the service.

Spotify has tried to entice is users to pay for a subscription by limiting how much music you can listen to for free. Recently, the company has loosened the reigns by giving people an apparent music free-for-all. Rumors have flown that Spotify is raising a large round of funding that would value it at $3.5 billion, which would mean the company wouldn’t be hurting for cash.

Spotify’s paid subscribers pale in comparison to those of Rhapsody, a 10-year old company that has one million subscribers in the U.S. The music streaming service giant charges $10 per month for web music streaming and $15 per month to play music on a mobile device, slightly more than Spotify.

What do you think? Is Spotify’s paid subscription worth the money?

Phorus, a stealthy 16-person, Los Angeles-based startup, has plans to make sharing music around the various speakers and devices in your home much easier.

“Phorus?” you say. That’s right. It’s a name you’ll want to remember come January.

The startup is announcing $2 million in its first formal round of funding Tuesday, but plans to reveal, at the Consumer Electronics Show in Las Vegas, partnerships with manufacturers, which will bring its PlayCast music playback ecosystem to market.

“Listening to music should be simple,” said Phorus CEO Dannie Lau in an exclusive interview with VentureBeat. “Today, people can enjoy almost any song they want, anywhere and on any device … but when you get home and you take off the earbuds, some of these things get very complicated,” he added.

“We really started this company to make the whole home audio experience simple and fun,” Lau said.

To that end, Phorus has developed PlayCast, a platform-agnostic wireless technology that will be integrated into speakers and allow end users to stream songs via PC or mobile device over Wi-Fi, and stream to multiple speakers at the same time.

Phorus will face steep competition in the battle to deliver streaming audio around consumers’ homes. For instance, Sonos is planning a holiday season push to make its wireless speaker system front-and-center in consumers’ minds. Apple’s AirPlay technology does something similar, and has the benefit of Apple’s pre-existing brand and retail reach. So what’s the difference?

“AirPlay can only stream to one speaker at a time,” Lau said. “Sonos was a technology created 10 years ago for when Wi-Fi wasn’t working very well,” he explained. “Sonos uses a proprietary wireless system; it’s not based on Wi-Fi. You have to buy, in addition to a Sonos speaker, a Sonos bridge … which makes the overall system quite expensive.”

Phorus, however, won’t be developing or selling its own line of speakers — it’ll leave that job to seasoned manufacturers. So, theoretically, in a few months time you could pick up a reasonably priced home audio system at your neighborhood consumer electronics store and get the added bonus of Wi-Fi streaming via PC or mobile, powered by Phorus’s PlayCast technology.

The startup remains mum about its exact plans for roll out. Lau did say that PlayCast-enabled speakers will come to market in 2012, and that we’ll all hear a lot more about his company at CES in January.

Alas, the startup’s vision for a better home audio experience remains but a dream for the time being.

The S&P 500 crashed through a level of support — a numerical value that sends a signal to automatic trading algorithms to stop selling stocks — the index held at around 1,150 during a massive market sell-off in early August, but it quickly re-established that level of support throughout the rest of the month. The index closed Thursday under that same level of support at 1,130 at the bell. Falling through a level of support is usually a bad sign for the major indices and indicates that further losses might be en route.

The NASDAQ composite index (pictured above), which includes a number of the largest tech companies in the world, fell 3.3 percent while the Standard & Poor’s 500 index fell 3.2 percent. The NASDAQ composite index established a level of support at around 2,475 after a brief crash through that support level during August’s massive sell-off. The tech-heavy NASDAQ closed at 2,455 today — below its previous level of support.

Other technical values suggest continued weakness for the tech-heavy NASDAQ. The index’s 20-day moving average (beige line), a widely-followed technical by investors, remains well below its 50-day moving average (red line). Both moving averages dipped below the 200-day moving average (green line) during August’s broad market crash in what’s typically called a “death cross.”

That doesn’t bode well for fresh initial public offerings (IPO), which fell broadly during regular trading on Thursday. Only Zillow and Pandora, two web services that tackle real estate and music streaming respectively, notched gains amid the market’s sell-off. Spotify, a competing music streaming service to Pandora, announced today it would work with Facebook to simplify streaming music on the website.

Here are some of the market’s most recent initial public offerings, and how they performed as of the end of trading on Thursday:

LinkedIn (Debut: May 19) — $76.07, down 3 percent

Zipcar (Debut: April 14) — $16.84, down 1 percent

Renren (Debut: May 4) — $5.02, down 9 percent

Pandora (Debut: June 15) — $10.05, up 1 percent

Zillow (Debut: July 20) — $28.00, up 1 percent

Fusion-io (Debut: June 9) — $15.11, down 10 percent

Tudou (Debut: August 17) — $16.92, down 15 percent

Upcoming IPOs may encounter stronger headwinds given the market conditions. For example, in July Zynga filed to go public, hoping to raise up to $1 billion at an expected valuation between $10 billion and $20 billion. It made around $90 million in 2010 and $11.8 million in the first quarter this year. Despite that strong performance, investors may still prove skittish.

Groupon isn’t looking quite as rosy, with significant losses in its first operating year. A pair of $100 million IPSs in insurance software provider Guidewire and revenue performance management software provider Eloqua are in the pipeline. And Yelp chief executive Jeremy Stoppelman said his company is on track to file for an initial public offering later this year.

“My sense is that if you have a very compelling story, a robust business and there’s moats around it and it isn’t going away over night, the IPO window is still very much open,” Stoppelman told VentureBeat in an interview.

Consumer electronics super-giant Apple fell 2.5 percent while enterprise tech provider and computer manufacturer Dell was down 4.7 percent. Online retailer Amazon was down 3.7 percent while search giant Google was down more than 3.4 percent.

This week, MOG introduced a new approach to free streaming on its service while Rdio said it planned to offer a free element to its service soon. Both companies, along with Spotify, are expected to take part in Facebook’s upcoming music service, which I expect to be Facebook letting you stream music from several companies through Facebook itself rather than needing to go to another site or download other software. The new Facebook offering is expected to be announced at its f8 conference next week.

Even if you can stream your music through Facebook, you’ll still likely be beholden to the pricing and plans to get the most of each partnered service. On that note, let’s take a closer look at the best companies allowing you stream millions of songs to PCs, tablets and smartphones. In this article, we’ll only be considering music companies that let you subscribe monthly and listen to anything in the catalog at a single click. This leaves out big-name services like Pandora, Turntable.fm, Last.fm and iheartradio because they aren’t truly on-demand. We’re also leaving out music lockers like Amazon Cloud Drive and Google Music.

Let’s get down to business.

#1: Spotify

Price: Free version w/ ads, $4.99/month for web, $9.99/month for web and one mobile device
Catalog: Over 15 million songs
Sound Quality: Between 192 kbps and 320 kbps
Mobile Apps: iOS and Android

Spotify has been given a ton of headlines and hype since its launch in Europe in October 2008, based mostly on the fact that it let users stream a lot of music for free. But the service has changed and evolved since then, and it finally launched in the U.S. in July. At present, it’s the best streaming music service running today.

The best feature the service offers is integration with your personal music library on top of its 15 million streaming songs. I have a ton of music and some of it simply isn’t available through streaming services. (Artists like The Beatles and Led Zeppelin, for example, don’t have their music licensed for streaming anywhere.) The other aspect where Spotify shines is social integration with Facebook and the ability to collaborate with friends on playlists. You can also subscribe to other people’s playlists that you find on the web.

Spotify loses points for making you download a native application to stream, but I’m willing to accept that so I can also play songs off my hard drive. It also loses a little clout for having mobile applications that aren’t as robust compared to its peers. To get the most out of the iOS and Android apps, they must sync with playlists you make on the desktop rather than being truly independent in letting you find and access music.

#2: MOG

Price: Free version w/ ads/incentives, $4.99/month for web, $9.99/month for web and one mobile device
Catalog: Over 12 million songs
Sound Quality: Web default at 320 kbps, mobile streaming and downloads up to 320 kbps (must be manually turned on)
Mobile Apps: iOS and Android

MOG comes in at a very close second on this list. The company has been trying to make a name for itself since 2009, and it has evolved quickly into one of the best music services around. It features a recently launched HTML5-based interface (see above) that is all around excellent, making it easy to create playlists, maintain a long queue of songs, search for music, and create a calibrated radio station based on an artist you pick.

MOG’s greatest aspect is that it has best-sounding catalog, with music streaming at an enviable 320 kbps. It also gives you the option to manually set up your mobile iOS or Android app (BlackBerry is coming soon) download songs at 320 kbps for offline playback. If you’re an audiophile like me, this is your service.

The service’s biggest detraction is non-existent social integration. Because Spotify and Rdio feel designed for sharing and interaction with friends, MOG makes you feel isolated in comparison. Using the service’s new HTML5 interface, you don’t have social networking features besides being able to post what song you’re listening to on Facebook or Twitter. However, if you’re only using a streaming service for tunes alone, MOG’s lacking social features may not be an issue.

#3: Rdio

Price: $4.99/month for web, $9.99/month for web and one mobile device, bulk family plans
Catalog: Over 11 million songs
Sound Quality: Will not officially disclose
Mobile Apps: iOS, Android, BlackBerry and Windows Phone 7

Rdio was launched to some fanfare last year by the founders of Skype and Kazaa, with the intention of combining a good streaming music catalog with powerful social networking features. While its 11-million-song catalog is smaller than some of its peers, it helps makes up for it with a well-designed user interface and above-average mobile apps that promote discovery and sharing.

The social side of Rdio really is worth highlighting. Rdio makes it easy to explore playlists and artists from big names and friends alike, create and share your own playlists, and it even can embed songs into your Twitter posts.

The biggest drawback of Rdio is sound quality. The company said it offers up to 320 kbps streams if it is “available,” but would not be more specific than that. So we don’t know how many songs are actually encoded at 320 kbps and what the lowest bitrate its songs are encoded at. In my own testing, I thought Rdio’s bitrate usually sounded somewhere between Spotify and Rhapsody.

#4: Rhapsody

Price: $9.99/month for web and one mobile device, $14.99/month for web and three mobile devices
Catalog: Over 12 million songs
Sound Quality: 128 kbps on web and mobile, 192 kbps on Verizon LTE-enabled phones and tablets
Mobile Apps: iOS, Android, BlackBerry and Windows Phone 7

Rhapsody is one of the oldest players in streaming music, and surprisingly enough it’s still relatively good. It boasts that it has more than 800,000 subscribers, and it’s the only company on this list willing to admit how many subscribers it has. Rhapsody has a hardy selection of songs, a well-rounded interface and easy ways to explore genres. To help it keep up with the likes of Spotify and Rdio, the company just added new social features, including Facebook and Twitter integration and playlist sharing.

Rhapsody loses points when it comes to pricing because it does not offer a $5 a month plan for web-only listening, though the unique $15 per month plan option with three mobile devices is interesting. It also lacks in the area of sound quality with its paltry 128 kbps streams, which during my tests easily sounded worse than the rest of the services.

#5: Napster

Price: $5/month for web, $10/month for web and mobile devices (cheaper annual plans available as well)
Catalog: Over 14 million songs
Sound Quality: Between 128 kbps and 256 kbps
Mobile Apps: iOS, Android and BlackBerry

Napster is best known as the peer-to-peer program that started digital music piracy, but it’s now a pretty decent streaming music service owned by Best Buy. While it’s somewhat unexpected, the service has a strong catalog, several ways to explore genres and a way to stream music directly from Billboard’s charts going all the way back to 1966.

Napster’s best aspect is its catalog of more than 14 million songs (17 million(!) in the U.K.). That sort of wealth means you’ve got an even better chance of finding that obscure track you used to enjoy 15 years ago. Another admirable aspect is the option to pay a lower monthly cost if you pay yearly rather than month-to-month.

On the downside, the service has the most lackluster interface of its peers with a separate browser window pop-up for playing music. It also does not feature a considerable amount of social integration outside of sharing single songs on Facebook and Twitter and allowing you to use your Facebook photo for your profile.

Honorable mention: Grooveshark

Grooveshark is a strange beast that lets you search and stream a massive catalog of manually uploaded tunes for free. It technically counts as an on-demand music service, but it’s not as robust and accurate as its peers. Predictably, the company has been in legal trouble as of late because it doesn’t have the licences to the songs it streams. It’s seen so many complaints that its native iOS and Android apps were pulled from their respective stores. Still, it deserves an honorable mention for ease of use, the ability to upload and listen to songs, and a good radio player that streams similar tracks to ones you’ve played.

But enough about us. What’s your favorite streaming music service?

MOG has been making a name for itself with unlimited streaming since 2009, but it has been slightly less prominent since Spotify’s hyped U.S. launch in July 2011. One of Spotify’s biggest assets is its free service, which lets users hear what Spotify has to offer while enduring some ads between songs. Now MOG can play on a similar plane and introduce more new users to its service, which has a library of more than 11 million streaming songs.

The new free service from MOG will be a little different than the simple ad-supported model Spotify is currently touting. MOG users will have what the company calls a “virtual gas tank” in the top left corner that tells them how much free music they have available for listening. To get more gas in the tank, users can perform actions like sharing playlists with friends on Facebook, referring friends to the service or listening to promoted artists in MOG’s library. MOG’s free service will be ad free for 60 days while users get acclimated.

Like other subscription music services such as Rdio and Napster, MOG charges $5 a month to access unlimited music through the web and $10 a month to access unlimited music through the web and mobile apps. Ideally, the company wants users to try the free service and then sign up for premium features that guarantee unlimited streams without advertising or jumping through any digital hoops.

The Berkeley, Calif.-based MOG last raised $9.5 million in funding in February 2010, with the round led by Menlo Ventures and Balderton Capital. It has raised $24.9 million total.

To me, MOG’s premium version is one of the best subscription services today, along with Spotify. Ever since MOG launched its slick HTML5 beta at the end of June, it has featured one of the best interfaces compared to its peers. Another area the service excels is sound quality, as it uses 320 kbps streams — something that is sure to attract audiophiles.

Will you give MOG’s free service a shot?

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Social networking site Facebook will launch its long-rumored music service at its annual developer conference f8 this year, according to a report by CNBC.

Facebook will not actually host its own music but will partner with other services to stream the music, people familiar with the matter told CNBC’s Jon Fortt. That could bypass a lot of the legal hoops music streaming companies have to jump through and make it easier for Facebook to get the service off the ground quickly.

Facebook has scheduled its f8 conference for Sept. 22 in San Francisco. The all-day event is where the company’s engineers and product teams will highlight “new tools along with best practices for developers and partners building the next generation of social practices.”

The conference is late this year, but it is likely tied to the company’s schedule for big upgrades. Facebook last held its f8 conference on April 21, 2010. At that event, it introduced a number of new features, and chief executive Mark Zuckerberg delivered a keynote speech in which he introduced the Like button and talked about Facebook Credits.

VentureBeat has contacted Facebook for additional details.

The patent in question, No. 5,636,276, was filed in 1995 and is listed as a “device for the distribution of music information in digital form.” The vagueness of the patent makes it applicable to almost any streaming music service.

Spotify said it will strongly contest PacketVideo’s claim. The company’s full statement reads:

“In just under three years, Spotify has become more popular than any other music service of its kind. This success is, in large part, due to our own highly innovative, proprietary hybrid technology that incorporates peer-to-peer technology. The result is what we humbly believe to be a better music experience – lightning fast, dead simple and really social. PacketVideo is claiming that by distributing music over the Internet, Spotify (and by inference any other similar digital music service) has infringed one of the patents that has previously been acquired by PacketVideo. Spotify is strongly contesting PacketVideo’s claim.”

PacketVideo was an active startup several years back that focused on streaming video to mobile devices, and in 2010 the company was acquired by Docomo. PacketVideo had nothing to do with the patent originally and only purchased it a few years ago, according to TechDirt.

Sweden-based Spotify initially launched in Europe in October 2008. It currently has more than 10 million users worldwide, with 1 million paid subscribers. The company has raised $120 million thus far and is valued at around $1 billion.

What do you think of Spotify? Do you think the lawsuit is fair?

Spotify will launch with three tiers for pricing and service. First, there’s Spotify Free, which lets users listen to music from the service on their computer for nothing and pays for itself using advertising. To get access to the free version, users must have an invitation.

If you’d rather not wait, Spotify offers $5-a-month and $10-a-month subscription plans. For $5, users can listen to Spotify’s catalog on their computers without ads. For $10, they can listen to high-quality music on their computers and on mobile platforms like the iPhone and Android.

To join the service, you have to first download Spotify’s software.

Sweden-based Spotify initially launched in Europe in October 2008, and much to the envy of U.S. music fans, Europeans talked about the 15-million-song service as if it were the greatest thing since the invention of the Internet. Finally U.S. users are getting a taste with today’s launch.

“We’re so excited to bring what we humbly feel is the best music service in the world to the U.S. today,” said Ken Parks, Chief Content Officer and Managing Director of Spotify North America. “The response has already been amazing and we hope that people in the U.S. will love Spotify as much as they do in Europe.”

Two areas Spotify hopes to stand out with are social experience and the catalog. With social, the company lets users share tracks and playlists with friends with a single click. Users can sign into Facebook for even more integration with already established connections. The other area is the company’s music catalog, which consists of 15 million tracks.

The biggest established competitors to Spotify in the U.S. are MOG, Rdio, Rhapsody, and Napster. Spotify hopes to challenge those properties with hype, the promise of free music, and a strong financial backing that includes support of the all the major U.S. record companies.

Spotify currently has 10 million users worldwide, with 1 million paid subscribers. The company has raised $120 million so far and is valued at about $1 billion. It recently finished raising a round of financing from Russia’s DST, the investment company that has previously backed Facebook, Groupon and Zynga.

Spotify’s U.S. introduction video is below:

Individuals who signed up for an invitation on the site when the company announced it was coming to the U.S. last week will be able to access the site. Others can sign up for one of the site’s subscription services.

Spotify had been successful providing cloud-based streaming music in Europe but will face competition from larger companies working on music streaming projects once it enters the U.S. market. Google jumped into the streaming music space with Google Music, which lets Google users upload their music to remote servers and stream it to any device for free. Apple is expected to come out with its own music streaming service after purchasing music streaming service Lala.

Pandora, which offers a similar streaming-music service, recently raised $235 million in its initial public offering. In addition, Rdio, Last.fm and a number of other services provide streaming-music services in the U.S. Their growth has been helped in part by the fact that Spotify has been well-known but unavailable in this country.

Spotify offers a couple of subscription options and a free version with ads. Its unlimited subscription costs €4.99 (around $7.22) a month, and its premium service, which lets customers access music on their mobile devices, costs €9.99 (around $14.46) a month.

Users can listen to music by searching for artists, albums, titles, record labels and genres. The service features music from most major record labels. In May, the service was only available in Finland, France, the Netherlands, Norway, Spain, Sweden, the United Kingdom and Denmark.

Spotify is based in Sweden and has 10 million users around the world (1 million of whom are paying subscribers). The company has raised $120 million and is valued at around $1 billion. It recently finished raising a big round of financing from Russia’s DST, the investment company that has backed Facebook, Groupon and Zynga.

VentureBeat has contacted Spotify for more details.

A Spotify spokesperson declined to give any details about the U.S. launch when asked about the report and said the company doesn’t comment on speculation.

Spotify provides cloud-based steaming music in Europe but announced last week that it would hit the U.S. “soon.” The service currently offers three models to European customers: a free version supported by ads that allows 10 free hours of streaming per month, an unlimited subscription for €4.99 (about $7.22) a month, and a premium service, which lets customers access music on their mobile devices and costs €9.99 (about $14.46) a month. The biggest established competitors to Spotify in the U.S. are MOG, Rdio, Rhapsody, and Napster.

Sometimes an invite-only process can help fuel demand for a new service. Google+, the new social networking service from Google, currently requires people who already have the service to pass along invites to friends, family, and other connections. Google+ demand, in turn, has skyrocketed and it even had so many people jumping on to the service that it briefly “ran out of disk space.”

Are you looking forward to Spotify’s launch?

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

European streaming music startup Spotify is finally about to open its service to people in the United States.

U.S. residents can now sign up on the company’s main website to receive an invitation to the online music service when it becomes available. But the company has not disclosed a specific U.S. launch date.

Spotify provides cloud-based streaming music in Europe, but will face competition from larger companies working on music streaming projects once it enters the U.S. market. Google jumped into the streaming music space with Google Music, which lets Google users upload their music to remote servers and stream it to any device for free. Apple is expected to come out with its own music streaming service after purchasing music streaming service Lala. Pandora, which offers a similar streaming-music service, recently raised $235 million in its initial public offering. In addition, Rdio, Last.fm and a number of other services provide streaming-music services in the U.S. Their growth has been helped in part by the fact that Spotify has been well-known but unavailable in this country.

Spotify offers a couple of subscription options and a free version with ads. Its unlimited subscription costs €4.99 (around $7.22) a month, and its premium service, which lets customers access music on their mobile devices, costs a €9.99 (around $14.46) a month.

Users can listen to music by searching for artists, albums, titles, record labels and genres. The service features music from most major record labels. In May, the service was only available in Finland, France, the Netherlands, Norway, Spain, Sweden, the Untied Kingdom and Denmark.

Spotify is based in Sweden and has 10 million users around the world (1 million of whom are paying subscribers). The company has raised $120 million and is valued at around $1 billion. It recently finished raising a big round of financing from Russia’s DST, the investment company that has backed Facebook, Groupon and Zynga.

Shares were trading as high as $26 after the company made its debut on the NYSE on Wednesday. But that slowly tapered off throughout the day, and Pandora ended the day trading at $17.42 at the bell. The price has since fallen by about 50 percent to close at $13.26 at the bell on Thursday. That’s 17 percent below the company’s IPO pricing.

Pandora is the second high-profile Web 2.0 company that has skidded and has failed to generate a positive income for the majority of its operating history. Renren, another high-profile Web 2.0 company that made its trading debut on the New York Stock Exchange, hit the ground running on its first day of trading as well. But investors had a reality check and immediately began selling off shares of the company. The company’s share price went from $18.01 to $13.49, or a drop of about 25 percent, in a week. They ended trading at around $6.78 on Thursday, which is down about 62 percent from the closing price after the company made its trading debut.

Like Pandora, Renren has faced losses for consecutive quarters. The company lost around $64 million in 2010 and around $70 million in 2009 even though the company’s revenue grew 64 percent to $76.5 million, up from $46.7 million in 2009. The company jumped from a profit of around $8 million in the third quarter of 2010 to a loss of $34.2 million in the fourth quarter of 2010, and up from a loss of $10 million in the fourth quarter of 2009. Of the past 8 operating quarters, Renren has posted an eight-figure loss in five of them.

Pandora brought in $51 million in the first quarter this year ending April 30, more than double its revenue of $21.6 million in the first quarter last year. The company lost $6.8 million in the first quarter this year, up from around $3 million in the same quarter last year. Pandora brought in $137.8 million in its 2011 fiscal year and lost $1.8 million during the same period.

By contrast, LinkedIn’s trading debut last month went extremely well and the company now has a market cap of around $7 billion, well above the valuation of $4 billion it claimed when it priced the shares of its initial public offering between $42 and $45. But LinkedIn is also profitable, with the company reporting that its first quarter revenue in 2011 was up 110 percent to $93.9 million over the same quarter a year earlier. Net income increased to $2.08 million in the first quarter of 2011, up from $1.81 million in the first quarter last year.

Groupon, another high-profile Web 2.0 company that will soon make its public trading debut, has also faced similar problems to Pandora and Renren. Groupon has consistently lost money each quarter except for one — the first quarter of 2010, when it brought in an $8 million profit. Groupon lost $456.3 million in 2010 and $6.9 million in 2009. The company lost $146.5 million in the first quarter this year. It filed to go public earlier this month.

Pandora runs an online service that lets its users pick genres, songs and musical groups and then builds a radio station that caters to that style of music. Listeners can access the service through a website or a desktop application. Pandora also has applications for the iPhone, Google’s Android mobile operating system and other mobile devices.

The company now has about 94 million registered users and 800,000 songs in its online music library, according to its most recent filing. That’s up from 53 million users in the first quarter last year and 82 million registered users at the end of its 2011 fiscal year. Of those registered users, 34 million are considered active users as of the end of April, up from 18 million at the same time last year and 29 million at the end of its 2011 fiscal year.

Advertising has accounted for more than 90 percent of the online radio service’s revenue for most of the site’s life, according to the filing. But revenue from Pandora’s subscriptions, which let subscribers skip the ads that otherwise come on occasionally between songs, has been growing steadily. Subscription revenue now accounts for around 15 percent of the site’s total revenue as of the end of April.

Pandora’s lackluster first day raises questions of whether the rest of the companies planning to go public in the most recent batch of Web 2.0 companies — which also includes  group-buying web service Groupon — will continue to appeal to investors.

Shares of Pandora Media rose as much as 63 percent from their initial public offering price of $16 and were trading as high as $26 after the company made its debut on the NYSE. But that slowly tapered off throughout the day, and Pandora ended the day trading at $17.42 at the bell. Shares of Pandora were down around 0.2 percent from its price at the close to $17.38 most recently in extended trading after the bell.

By contrast, LinkedIn’s trading debut went extremely well and the company now has a market cap of around $7 billion, well above the valuation of $4 billion it claimed when it priced the shares of its initial public offering between $42 and $45. Shares of LinkedIn traded as high as $122, giving the company an implied valuation as high as $11 billion shortly after its IPO. But LinkedIn is also profitable, with the company reporting that its first quarter revenue in 2011 was up 110 percent to $93.9 million over the same quarter a year earlier. Net income increased to $2.08 million in the first quarter of 2011, up from $1.81 million in the first quarter last year. By contrast, Pandora has not posted profits in 2010 or 2011.

LinkedIn’s glamorous IPO as well as some of the hyper-valuations of other Web 2.0 companies have sparked some concerns about whether Silicon Valley is entering another tech bubble. Companies like Facebook, Zynga and Pandora have seen ballooning valuations unconnected to their underlying financials, as investors have rushed to snatch up as many shares as possible ahead of what could be some of the most high-profile tech IPOs to date. Facebook, for example, was valued at $50 billion after its most recent round of funding, although it is trading at a higher price than that on secondary markets.

Pandora on Tuesday night set the price for 14.7 million shares at $16 a share in its initial public offering, which raised around $235 million. That’s up from the company’s original IPO pricing of between $7 and $9, which gave the company a valuation of $1.3 billion. LinkedIn also followed a similar strategy, ramping up its IPO pricing to increase its claimed valuation from $3 billion to $4 billion in less than two weeks.

Pandora runs an online service that lets its users pick genres, songs and musical groups and then builds a radio station that caters to that style of music. Listeners can access the service through a website or a desktop application. Pandora also has applications for the iPhone, Google’s Android mobile operating system and other mobile devices.

The company now has about 94 million registered users and 800,000 songs in its online music library, according to its most recent filing. That’s up from 53 million users in the first quarter last year and 82 million registered users at the end of its 2011 fiscal year. Of those registered users, 34 million are considered active users as of the end of April, up from 18 million at the same time last year and 29 million at the end of its 2011 fiscal year.

Pandora brought in $51 million in the first quarter this year ending April 30, more than double its revenue of $21.6 million in the first quarter last year. The company lost $6.8 million in the first quarter this year, up from around $3 million in the same quarter last year. Pandora brought in $137.8 million in its 2011 fiscal year and lost $1.8 million during the same period.

Advertising has accounted for more than 90 percent of the online radio service’s revenue for most of the site’s life, according to the filing. But revenue from Pandora’s subscriptions, which lets subscribers skip the advertisements that otherwise come on occasionally between songs, has been growing steadily. Subscription revenue now accounts for around 15 percent of the site’s total revenue as of the end of April.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple CEO Steve Jobs shed some light on the fabled “iTunes in the cloud” rumors today, but it wasn’t quite what everyone expected.

Jobs announced iTunes Match, a $24.99 per year service that will match music you’ve ripped from CDs with iTunes’ library of 18 million songs, ultimately giving you the ability to listen to your music anywhere via iCloud on iOS devices or PCs.

Jobs made sure to point out that iTunes Match will sync up your library with iCloud much faster than Google Music or Amazon’s Cloud Player, both of which require you to actually upload files to their servers. Jobs said that iTunes Match could synchronize huge music libraries in minutes, since all it’s doing is checking metadata in music files with songs in iTunes’ library.

Songs that are properly matched with the service will be stored as high-quality 256Kbps AAC audio files on Apple’s servers. But those that aren’t matched will have to be uploaded just like Google and Amazon’s offerings.

Jobs didn’t mention any licensing deals that are allowing it to legally offer iTunes Match as a service, but it’s likely what the company has been pursuing for months with its record label talks. We reported last week that Apple may have spent between $100 million and $150 million licensing music from the four major labels. Both Amazon and Google launched their services without working out licensing deals, which is likely why they don’t yet have any similarly convenient library matching services.

Apple has also snagged a decent price for iTunes Match. Google Music is currently free while it’s in beta, but that could change in a few months. Amazon charges $20 a year for 20 gigabytes of storage on its Cloud Drive (although you can receive 20GB of storage free by purchasing an MP3 album from Amazon). Since Apple is giving users access to music it already has on its servers, it can also effectively offer consumers an unlimited amount of streaming music via iCloud. (Though we don’t know if uploaded music will factor into a user’s 5GB of free iCloud storage.)

Apple won’t be able to lord this feature over Amazon and Google for long, as both companies are reportedly still pursuing deals with music labels. But even then, both Amazon and Google won’t be able to offer as seamless a digital music ecosystem as iTunes.

This model has not deterred growth, as paid users have grown over 300 percent since early 2010. Only three months ago, CEO Daniel Ek said at the conference that the company had 750,000 paying subscribers. Even at that time, Spotify claimed it had more paying subscribers than any other similar service in the world.

Spotify provides cloud-based streaming music in Europe but hasn’t entered the US market. Even so, Spotify’s company blog announced that over 200 million playlists had been created.

The company’s announcement comes on the heels of having raised a large round of financing from Russia’s DST, the investment company that has backed Facebook, Groupon and Zynga. That deal reportedly valued the company at $1 billion.

The service, which launched in 2008, now has 7 million users across countries like the U.K., Sweden and France. The company is trying to change existing models of music consumption by offering free, advertising-supported access to streaming songs. A premium version is available for around $15 a month, depending on the exchange rate of each country, which includes a mobile app that caches songs and playlists.

He said that the U.S. version might be “slightly different” from the European one, suggesting the company is still having trouble securing the appropriate rights agreements to bring a free version to the States.

He later gave a more detailed answer after being asked by an audience member.

“The most important thing when it comes to the U.S. launch is that we want to build the best product possible and get all our ducks in the row with the publishers,” Ek said. “In Europe, we’re sort of used to doing a deal with a collecting society and a couple publishers. But here you have to strike deals with 5,000 publishers or more. And then the collecting societies. And then the labels. It’s a huge task. The big thing for us right now is the next generation of Spotify.”

One more update with detail on Spotify’s relationships with the labels: (Ek gave a much more detailed answer in response to a different audience question even later during the keynote.)

“I’ve been dealing with U.S. labels from the start. It’s not a new relationship to Spotify. What makes this an interesting market and why it takes a lot more time is that this is the world’s biggest music market. We have the potential reach of 170 million people in Europe. North America obviously has 300 million people. When you look at the online population and how much people spend on music, it’s considerably higher here.

The industry is looking at new revenue opportunities and are generally positive on them. But nothing in digital has really been able to counter the decline in traditional revenue sources. People are looking at how can we support Spotify and help it find growth. But they’re also concerned with how to ensure that people don’t stop buying CDs. There’s early evidence of this sort of success with 320,000 subscribers. If you also look at Sweden, between 15 and 18 percent Swedish population actually uses Spotify. The music industry revenues are up there. Legal music revenues are up. Everything is up. It’s only a few percentage points but it’s up.

In the U.K. market, we’re seeing the same thing. Online music is growing rapidly. Spotify is a large part of that. I just think that this is a new phenomenon. The music industry has used the freemium model. We are seeing a lot of support. It’s just about getting our ducks in a row.”

Instead of giving specifics about the U.S. launch, Ek focused on how the company might adapt to the rapidly developing smartphone marketplace. He demonstrated a version of Spotify on an Android-based Sony Ericsson phone. He started to browse the phone and found a South by Southwest themed playlist. It could slide up-and-down album covers and work in the background. A mini-player appeared on the phone’s screen that allowed you to play, fast-forward and rewind songs.

“We’re never going to be content with just an app,” Ek said. “We tend not to take the web approach by releasing early and often. When it comes to key functionality, we spend a lot of time developing it.”

He also alluded to Spotify availability on a number of devices including set-top boxes and home music players.

“From Spotify’s perspective, I think music is the most social object there is. If you can access music from all these different devices, I think a lot of hardware manufacturers are going to want to add this,” he said.

Ek talked about the changing realities of the music industry and said that profit will come from a variety of business models.

“People will pay. They will either pay with their time through targeted advertisements and we’ll see results through that. Or they’ll pay with money,” he said. Ek said that the company’s advertising was becoming more promising as agencies switch their marketing budgets toward online properties.

He added that Spotify could be one avenue to monetization by introducing fans to new artists, allowing them to pay for more on top of commoditized tracks.

“What I want is a special edition or an album for the artists that I really like,” he said. “I’m more than happy to pay $100 for a set with good notes. Another person might be willing to pay for a live edition with extended tracks. A third person might be willing to pay for live events. The reality of the music industry today is that there isn’t one business model. It’s about how to use downloads, subscriptions and merchandise to make money today.”

Ek said the challenge today is helping artists find an audience amid all the other entertainment options vying for consumer attention.

“With all the noise, how are you as an artist going to get heard?” he said. “These are the questions that need a lot of thought. I won’t say that Spotify is not the answer. We want to be a platform where artists can reach out to audiences.”

Interestingly, he said that he viewed Apple’s iTunes store as having a freemium model too.

“The vast majority of people’s libraries are free from Limewire or trading through friends. And then there’s a small portion of tracks that they’ve bought,” he said.

When asked about Apple’s future direction, Ek pointed out that the company was moving toward cloud-hosted music, but said it might not be on the front burner for them. (Apple acquired music streaming startup Lala in December.

“They recognize that we’re moving toward a more cloud-based model, but I’m not sure they’re as committed to a subscription model like we are,” he said. “It makes a lot of sense for them to do something. I don’t know how high of a priority it is for them. I don’t have any magical insights into Apple. If I did, I wouldn’t be sitting here.”

Ek elaborated on Spotify’s business model, saying a paid version would be key for the company. Ek stressed that Spotify couldn’t exist on advertising alone.

“We want to make sure there’s a conversion rate,” he said. “We want to make sure that we have users paying, because that’s the only way we’ll be self-sustainable.”

Still advertising comprises one revenue stream for the company on top of paid subscriptions. He said by studying music preferences, Spotify could offer personalized advertising. Ek said music tastes often coincide with preferences for other physical goods. For example, he said, if you target a user with a BMW or Audi ad, chances are high that another user with the same taste in music will prefer the same car model.

Wired journalist Van Buskirk asked Ek whether the industry was done with digital rights management.

“That’s an interesting question. We want to make the most user-friendly product there is,” Ek responded. “I think we can protect the content and give users the flexibility they want. The old days when you were told that you could only use this on three computers — those days are gone.”

Ek strongly defended his current business model of offering both free and premium access to users, adding that a major inspiration to him was Napster.

“I really believe that if music could be legally available on any device that you wanted… I think the music industry would be radically bigger than what it is today,” he said to applause.

He pointed out that record labels and lawyers weren’t the only barriers to this vision, but that device or platform-specific standards had hindered development as well.

“It’s easy to blame the music industry, but we’ve also had a lot of proprietary standards in the technology industry as well,” he said. “However, with inventions such as Android, Chrome, Chrome OS, iPhone OS, even the Blackberry OS, I think we’re making progress toward making software open.”

When asked whether Spotify would go in a more of a social networking direction, Ek said the company would stay focused on music.

“We never want to be a social network ourselves. We’d rather piggyback on their networks to help with discovery,” he said.

The new funds will help the company develop mobile apps that let users stream music on the go, cut deals with hardware companies to have MOG come pre-installed on a host of devices from TVs to music players in cars and launch in Europe where it will go head-to-head with Sweden’s Spotify. Unlike rival Spotify, MOG doesn’t offer free, advertising-supported streaming. It gives prospective subscribers a free trial, then they have to pay $5 a month for the service.

“We built this with the original goal of being ad-supported but we realized you can’t make the numbers work,” said David Hyman, MOG’s chief executive, who is skeptical that Spotify can secure the contracts to make a free U.S. debut. “We know that music is already free, so for $5 we want to give you a better value.” He told us this in an interview earlier this year.

Hence, MOG has built the Swiss army knife of music streaming services; it accommodates all kinds of ways of listening to music. You can use it to search through 7 million songs or listen to it Pandora-style where it will suggest songs that are similar to one of your choice. It also has some Last.fm-like features where you can follow what other friends have been listening to. On top of that, MOG supports a blogging network that posts 7,000 articles a week about bands.

The round adds to $12.5 million in earlier fundraising from Menlo Ventures and Simon Equity Partners. With this round, Dharmash Mistry, a partner at Balderton Capital, joins MOG’s board.