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Apple‘s iTunes music-downloading service and its iPod music players disrupted the music industry’s CD business. TuneCore is helping to complete that process.

That’s how the company just raised $7 million in a first institutional round of funding from Opus Capital. The Brooklyn, N.Y.-based company allows artists to distribute their music, videos and films to iTunes and a host of other online vendors.

Jeff Price, an 19-year-music-industry veteran who started TuneCore in 2005, admits that he is a middleman. It’s interesting that he figured out that, even in an age where artists can reach fans directly through sites such as MySpace, middlemen are still necessary.

TuneCore does all the coding, billing, and other infrastructure work necessary to take a song or other digital content and make it available as a paid download on a bunch of e-commerce web sites, including Amazon.com, MySpace, Facebook, Rhapsody, and iTunes. And it has to do the delivery in a secure way so that the content won’t be pirated along the way.

Within six hours, TuneCore enables an artist to publish his or her work on just about any site for a simple $32 fee. The artist then gets to keep all of the proceeds, minus the commission taken by the website that sells the content. Because of these cheap fees, TuneCore removes all of the barriers that stand in the way of artists getting their albums or videos into the market. It has distributed millions of songs.

“We take out the filters and let everybody in,” Price said.

Both famous and unknown artists are participating. TuneCore’s customers include Jay-Z, Keith Richards, Public Enemy, Nine Inch Nails, Ricky Skaggs, Paul Westerberg, MGM Studios, Warren G, Bjork, Moby, High School Musical cast members, Ali Lohan, Cirque Du Soleil, Starbucks, Joan Jett, Rockstar Games, David Byrne, MGMT, and tens of thousands more. The company has 150 to 250 releases a day and has generated $15.5 million in sales for its artists.

One of the most popular songs that TuneCore has distributed is “Shoes,” by Liam “Kelly” Nelson, who has generated more than $1.4 million in revenues from the song. (You can see the video here on YouTube, where it has scored more than 21 million views. Not exactly safe for everybody, by the way, as it uses the F-bomb). You can bet that a music label wouldn’t have gone for this one, and that TuneCore was one of the only paths for it to be a hit.

Gill Cogan, general partner of Opus Capital, has joined the TuneCore board of directors with Guitar Center CEO Marty Albertson and TuneCore CEO Jeff Price. The company will use the money to get better known through marketing efforts. TuneCore is launching its own streaming media player in a month. Cogan said he screened a lot of music Internet companies but didn’t find any that could do what TuneCore does.

The company has a strategic alliance with iLike, the social music discovery service for independent musicians. iLike has 30 million registered users who like to share music. It also has a deal with Guitar Center, which operates a chain of 315 guitar stores as well as a bunch of music-related online stores.

The company has 16 employees.


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