Here’s how the new feature will work: Onebox will let users stream songs directly from Google’s search result page, and will also include additional content like tour information and music videos (the actual content shown will vary depending on the partner — more on that later). Enter a query for “Use Somebody”, and you’re going to see a small ‘play’ button in your search result that lets you stream the Kings of Leon song in its entirety, or buy the song. Clicking on the play button will bring up a small browser window that will immediately start streaming your song. If you enter the name of an artist rather than a song title as your search query, Google will present a handful of popular songs by that artist with multiple ‘play’ buttons.

Here’s what the results page looks like, when multiple songs are being presented:

The new feature is being powered by two entirely different services: Lala, the innovative music site that lets people buy ‘web songs’ for ten cents, and iLike, the popular streaming music and artist hub that was recently acquired by MySpace. In an interesting twist, iLike’s appearance in OneBox will be short-lived — MySpace branded widgets will soon be taking their place. This is an important step in MySpace’s transition to being seen as a media/content hub rather than a pure social network. MySpace is also leveraging some of the new features it has recently rolled out since the iLike acquisition, including its artist dashboard and extensive library of music videos — you’ll be able to jump to a music video for a song directly from MySpace’s Onebox results (this is impressive given that the site only launched those services a week ago).

Likewise, this is also a massive win for Lala. We’ve been big fans of Lala since the site relaunched back in October 2008 with a unique business model that lets users build their music libraries in the cloud for cheap — you can purchase an entire streaming version of an album for around 80 cents, or 10 cents per song. The service’s only problem has been establishing traction, and this will certainly help with that. Expect the service’s userbase to see a big jump as millions of people on Google are exposed to Lala for the first time.

The joint partnership comes with a few quirks. Google will basically be doing a coin toss with each eligible query to determine which service will be serving up the widget. That will help the service distribute load and perhaps leaves the door open for Google to include multiple other music services, but I’m not sure it will provide the best user experience — some users may get confused when a feature in one widget isn’t available in the other.

Google VP of Search Products and User Experience kicked off the event,talking about how Google has expanded its search offerings over time, with Images (2201), Book (2003) and Maps (2007). “Music” is one of Google’s top ten searches of all time, as is “lyrics”. But it hasn’t always been easy to actually find music, which is why Google is looking to offer full song streaming directly from Google.

Google has also partnered with Gracenote to provide full lyric search — if you type in the lyrics from a portion of a song, they’ll identify the song. Song purchasing partners include imeem, Rhapsody, and Pandora, who will help with music discovery.

Google passed the baton off to MySpace, with MySpace Music President Courtney Holt outlining how much growth MySpace Music has seen and how happy the site is to be working with Google. Ali Partovi, iLike’s former CEO (and MySpace’s current SVP Business Development) took the stage, first taking the time to congratulate MySpace on acquiring iLike. He was joking, but what he says has some truth to it: MySpace made an offer on iLike before iLike could talk about the Google partnership, which iLike had been working on for a long time. In other words, MySpace lucked out with the deal.

Lala’s Bill Nguyen next to the stage, saying that Lala has always been about finding music, and then discovering more that you might like. He says that for the last ten years, music has been about business models, not discovery. Once you wind up on Lala, you can follow other users and see what they’re listening to.

The new feature will be gradually rolling out to users, with a small percentage (1-5%) having access today and rolling out gradually over the next couple days to everyone in the US.

Here’s the Lala player:

Here’s MySpace’s widget (you’ll be seeing an iLike widget temporarily, but eventually they’ll shift over to look like this):

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On Pandora’s main playback pages you will now see a new set of buttons next to the traditional playback ones. These include a Twitter button, a Facebook button, a mail button, and a gift button. Clicking on any of those allows you to send the current station or current song you’re listening to via those respective services.

For Twitter, Pandora is using the API to launch its own tweet box that allows you to select whether to tweet the song or the station, as well as edit your 140 character message that is being sent. If you’re going to be tweeting a lot and don’t feel like doing this over and over again, you can select “Always use this option and message” and Pandora will remember it, allowing you to skip that step.

For Facebook, Pandora uses Connect to allow you to post songs and stations to your Facebook profile and News Feed. You’ll also be able to play song previews (30 seconds) right inline on Facebook.

For the gifting feature, Pandora takes you to a page that allows you to create a customized station based on either an artist or a song. You can choose up to 5 artists or songs for one station. You then name the station, choose a skin for the message, and enter the email addresses of those you wish to send it to, along with a personal message.

This gifting feature, which has existed in the past, but was previously hard to find, is totally free. And it will feature a new holiday option when that time of year rolls around, we’re told. “It’s sort of our version of making a mix tape for someone,” Pandora CTO Tom Conrad tells us.

And it’s another another way to monetize a bit better. When a user receives the gift email and clicks on the link, they are taken to a gift mix custom page that is sponsored. From there, a user has to click one more time to launch their station.

When users on Facebook and Twitter click on the Pandora links sent out, they’ll be redirected to a redesigned landing page that will allow them to either play a 30 second preview of a song (if it was a song that was sent out) or a link to launch the Pandora station (if it was a station that was sent out). If it’s the former, there is also a big button to create a new station based on that song.

So why is Pandora doing this? Well obviously moving into the 21st century where people share via Twitter and Facebook rather than email should help increase usage. But Conrad is quick to note that sharing is the key to this, not massive viral tweeting. There will be no auto-posting to Twitter nonsense, we’re told.

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A large number of web services are geographically restricted, such as Hulu, Pandora and Spotify. The reasons are usually to do with content licensing restrictions, or because US visitors (or visitors from other advanced economies) are of a higher value from a monetization perspective. A web application can only guess at the location of a visitor based on an IP address and other information, such as browser language and regional settings.

IP addresses are mapped to countries (and in some instances, further to states and cities) using large commercial datasets such as GeoIP from Maxmind, which is a ‘best guess’ database based on data it has collected (how, I would rather not know). The system is accurate enough to enable services to block on a country level, but often fail at a more local level.

But the nature of the web means that geographically restricting web services is next to impossible, because those who are technically adept have known how to find and use proxy servers (both open and private) and VPN services to masquerade as being from another country.

The demand for such services has become so popular that more apps are being released that make this process almost as easy as installing any other application – one-click VPN/Proxy install and then pick a country you want to be surfing from (default USA). Even better, there are now VPN solutions available for free – some of which are outright free, others which are ad supported.

If you find yourself outside of the USA and wanting to watch Hulu, outside of the UK and wanting to checkout the BBC, or wanting to rig a web poll, here are some tips:

Proxy Servers

Easy to find, easy to setup. Some sites have become smart enough now to check if the IP address you are coming in from is an open proxy server and will attempt to deny it – but this is most often the easiest solution. The key is to find an open proxy server that everybody else, or even worse, Eastern European crime syndicates, are also not using.

The best source if you are a blogger is to check your spam comments. Most of those IP addresses will not only be open proxy servers (you just have to work out the port – or if you host your own blog, start logging the port), but will be virgin proxy servers.

Otherwise there are a ton of lists available online, often updated each minute, as well as services where you can test your proxy.

FoxyProxy is a Firefox plugin that allows you to easily switch between proxy servers (many Chinese web users are very familiar with having to juggle proxy servers and use such plugins, or browsers that have similar features built-in)

VPN Servers

Similar to a proxy, except that a VPN is an encrypted link to a server that will route all of your network traffic (your computer, in effect, becomes part of the network).

FreeVPN – thefreevpn.com – A completely free VPN client and service for Windows machines. No ads, and a fast service. Not sure what the business model is, which is why I wouldn’t trust it with any personal or private information and restrict it to just movie watching or poll rigging. Best free VPN service and super easy to install (see review here)

Feeedur - www.freedur.com – A commercial VPN/anonymizing service that works well.

HotSpotShield – hotspotshield.com – Another free VPN service, but forces you to click on an ad. Working with Hulu again.

UltraVPN – www.ultravpn.fr – cross platform (OS X support). Both free and anonymous.

The Web Is Flat

Using a proxy or a VPN to bypass geographic restrictions or to preserve anonymity online has been known and used by more advanced users for years. More modern services and tools are making it easier for the average internet user to take advantage of the same techniques.

There are entire business models that depend on geographic targeting, so there is a constant cat-and-mouse game between providers of these services and those seeking to bypass the set restrictions. Those who are seeking to access content are winning though, and they will continue to win, as the very nature of the Internet and web make it near impossible to detect where somebody actually is if they refuse to let you know.

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Popular music service Pandora is a huge hit on the iPhone, and they were one of the first Palm Pre apps available as well. But when it comes to Android, the company has at best always been “meh.”

In July 2008 Pandora CTO Tom Conrad said “I need Android like I need a hole in the head,” adding “the last thing from a technology standpoint that i need is another OS platform that sits on top of buggy firmware.” The relevant video clip is here (skip to the 55 second mark).

“We’re going to put your face next to that quote when you launch an Android app,” I said at the time (check!). Conrad later clarified his position.

Anyway, back to reality, Pandora has now launched an Android application, and it’s pretty darn cool. Unlike the new Facebook for Android, it doesn’t skimp on features. In fact, it’s the first mobile Pandora application that integrates with the built in music player so that you can create stations from the artists and songs in your local collection. It also integrates with the Android home screen widget system.

So overall I give the product an A, and I give Tom Conrad an A+ for creating drama around an otherwise less interesting launch. Well done.

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An enraged reader, Josh Vickers, writes in today to complain about Slacker’s premium online radio service. Like Pandora, Slacker streams music to users for free. And like Pandora, Slacker limits the number of times you can skip songs each hour, and has advertising.

Both services allow users to remove those limitations if they pay a yearly fee. Slacker charges $48/year. Pandora charges $36/year for their Pandora One service.

The frustration from users isn’t that Slacker charges more. It’s how they market the premium product. Pandora straight up says they’ll charge you $36 to upgrade. No misleading marketing statements. You pay $36 and you get Pandora One for a year.

But Slacker tricks you. They give you a seven day free trial and say it’s $3.99 a month after that. But you get billed for the whole year – $48 – after that seven day period is over. And if you don’t want want to pay for that year, you have to cancel during the seven day period.

Compare the Slacker marketing pitch above to the straighforward way Pandora handles premium subscriptions in the image to the right.

Back to that enraged user. After seeing a $48 charge from Slacker on his credit card when he expected $3.99, emailed Slacker for an explanation, and then tried to cancel. He was denied (messages in chronological order):

Slacker: We hope you have been enjoying the benefits of Slacker Radio Plus. Your subscription has reached its renewal date. Your credit card was charged $47.88 on 08/26/2009 and your Slacker Radio Plus service will continue uninterrupted. Your auto-renewal date is: 08/18/2010. To adjust your account settings at any time, simply log into your Slacker account and enter the Account Management section. Thank you for listening, Slacker

Customer: i was under the understanding I was going to be billed monthly at 3.99 per month. Please advise.

Slacker: Slacker subscription are billed annually. We don’t currently offer a monthly billing plan.

Customer: Please cancel my subscription – thats misleading – should consider revising your message.

Slacker: Once the subscription has past the 7-day trial, you can go through our web site as described below to cancel your subscription so that, once your current subscription has expired, you will not be renewed for another subscription. However, the subscription has to be canceled within the 7-day trial per the contract you agreed to when you signed up for the free trial in order to avoid being billed.

So if you sign up for the free seven day Slacker trial, don’t be surprised when you’re billed for a whole year and can’t cancel. Pandora, by contrast, does give partial refunds. I contacted the company today and they said “It’s a year agreement, but we of course do refunds when people call to request them.”

The difference in how these companies market to customers and then treat them later is night and day. No wonder Pandora is so much more popular – tricking a few people to pay you $48 is fine, but clear messaging and proper customer service will win in the end:

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Music plays a large role in our lives. Since the web now plays an even bigger part, combining the two together has become unavoidable. The greatest thing about this powerful duo is that you don’t need to spend a lot of time searching for music you like  — just use this nifty guide list and you’ll find just about everything you need to enjoy hours of good music. The sound quality changes from service to service, but overall, it’s good enough for regular web usage.

Please note that this is a list of services that you can use over the net without the need to download anything to your computer. This is why I’m not listing any P2P software: i.e., Spotify, as well the fact that most of us can’t really test it or use it for all that matter. This is also only the first half of this guide; part two will include more web music players (including MySpace Music, Streamzy, and others) as well as music search engines and services that make it easy to share songs on Twitter and other social sites.

Music Recommendations:

Pandora is a service that can be used only in a specific locale, this one being within the U.S. Luckily, I had the chance to test the service when it was first released and became available to everyone. Launched way back in July 2005, the project had been in the initial testing phases for five years prior to launch date. Pandora recommends music to you by matching similar musical attributes. All you really need to do is choose an artist or a band you like, and Pandora will do the rest. Pandora delivers high quality 128Kbps audio streams, offering recommendations similar to the artists you have chosen. Pandora’s player looks like a radio, you can open up to 100 stations and navigate through them quickly. Registering for Pandora will provide you with a free account (advertising-supported). Free Pandora accounts will play up to  40 hours of music for free per month, you also have the option to pay 99 cents for unlimited listening hours for the rest of that month, or pay $36 to upgrade Pandora for one year. If you want to download music from Pandora, you can do it through iTunes or Amazon. You can see our past Pandora coverage here.

With almost 3 million unique visitors a day, Last.fm is one of the most powerful social music communities on the Web today. Like Pandora, the service allows you to enjoy music that you like, but unlike Pandora, Last.fm analyses what you and your friends listen to and like, and then suggests more music based on that analysis. When you recommend music to a friend or you tag it, or you write about it, or simply just listen to it – you shift the song’s importance on the site, and will in turn get recommended to more people. Based on the music you’ve already listened to, Last.fm will recommend new music you might like, as well as suggest other users with a similar music taste to yours, which you might be interested in friending, and you can also easily communicate with them. If you live outside the U.S., U.K. or Germany, you can listen with a free 30-track trial or subscribe for a low price of $3/month for unlimited radio streaming. (Launched in 2002!)

This is how BlogMusik, looked in 2006, and this is how Deezer (formerly BlogMusik) looks today – pretty impressive change, don’t you think? The French-based service is one of the largest and happens to also be a very successful music recommendation search engine. Once registered here, you can create your personal profile and reach the Deezer community. You can create playlists, send messages to your contacts, leave comments, add artists and albums to your favorites, and more. But here’s what I like the most – The SmartRadio, which is an intelligent radio that automatically generates 3 hours(!) of continuous listening based on one artist – completely free. Priceless! You can see our past coverage of Deezer here.

I think the first Adobe AIR application that I ever tried was Finetune. Finetune provides you with the most interesting new playlists of related music from your choice of artists. Besides the site’s community where you can browse, listen to music, create a profile, connect with other users and more, Finefune also has some cool feautures to complete their suite, and each tool gives you an extraordinary music experience. Take for example the Finetune Wii project (which can be played also over the web), it’s a great sight and sound for the eyes and ears. Just enter an artist’s name and Finetune will create a playlist with similar music that will play for hours. Best of all it’s free, and you also get an iPhone, Facebook and a Desktop app that all sync with your music playlist, no matter where you play it from. You can see our past coverage of FineTune here.

Also worth mentioning in this same topic group are, of course: Ilike.com (acquired by Myspace), and music.strands.tv

Independent Music:

Amie Street is a home for musicians. The service allows music fans to discover new and independent music. Visitors at the site can search for new music based on genre, region, or recommendations. Fans can also search for music according to its price -  Amie Street is actually the only marketplace where listeners determine the price of the music. How does it work? Every song is originally priced free or very inexpensive and increases in price, up to 98 cents, as more and more users purchase it. Musicians then get 70% of the revenue from each sale. Additionally, Amie Street matches you with music that you might like, for example: I couldn’t locate Coldplay on the site, but I got more than 70 results that sound similar to the band. Obviously, this exposes me to music that I’ve never heard before, which is always a welcomed experience. You can see our past coverage of Amie Street here.

Why is Jamendo one of my favorite music services? It offers the largest catalog of music under Creative Commons licenses – worldwide. And, not only are all of the albums free to download, there’s also a large chance you won’t know any of the artists. If you already have an open mind about music, surely it won’t stop you from listening to some new albums, right? The best way to find music at this site is to search by the genre tags. Found something that you like? You can review, comment, rate, share and as I’ve said download it for free.  The service is available in seven languages, and has an iPhone app that you can download for free. Business model? Yes they have one too.

SoundCloud is by far the best looking music application there is today. It offers a great interface, a great user-experience and above these all, great music! SoundCloud lets music professionals receive, send and distribute their music. The service allows professionals (and non-professionals) to exchange, and follow music and musicians at the site. It’s a full community where people can easily communicate with each other based on shared tastes, but it is also a place where musicians can store and showcase their music using high quality standards. With the free account, you can only upload 5 tracks maximum per month, but if you are an industry fanatic and you find this plan to be somewhat lacking, you can check the pro page for packages that are more suitable to your needs. See our past coverage here.

TheSixtyOne allows artists to upload their songs and lets thousands of listeners decide whether they like it or not. The most popular songs hit the front page. Think about it as a Digg for music, the more people heart a song, the higher it goes. The site connects musicians and fans, giving them all the tools to communicate with each other. For artists, it’s good place to promote their work. For anyone else, it’s a wonderful place to discover and support new music.

Create & Listen to Playlist:

I’ve never been very much of a Project Playlist fan, but I have to say it’s a good service. Ultimately, it’s a community based on playlists. You don’t have to register to be able to listen to the music, but once you do, you can start building your playlist and enjoy more features such as the Playlist IM, which is a chat system similar to Facebook where you can connect your ‘playlist’ friends or even friends from AIM, Facebook, Yahoo Messenger, etc. What else? You can write blog entries, upload photos, privately connect with other members, browse thousands of other music playlists, comment, share, and much more. My guess is that people use this site mostly to share their playlist on their blog/site or social network. Playlist allows you to grab a playlist code and embed it anywhere you want. One thing that bugs me though is that the member’s search feature is missing. Today, when everything is so connected to your identity, this is a must have feature. On the other hand, I was impressed to see they saved my playlist from 2006…

Jiwa.fm allows you to create personalize playlist and share it in the Jiwa.fm community or with friends & family. As a member, you are able to share, exchange, and explore music. You can also expand your tastes with the SmartRadio tool. I found this service to be unique in a way because no matter what you are doing at the site, it won’t prevent you from listening to your playlist, it just plays in the background. Amazingly, when you click on an artist from within a mixed artists playlist, it will automatically create an album playlist of that artist. You might find the site to be a bit cluttered at first time, but once you get it, it works like a charm – highly recommended.

At Jogli, you don’t really need to create a playlist – they create it for you. Think about it as a giant web-based CD store where you can search for an artist, see all of his/her albums, and then listen to them exactly as listed in original CD  Let’s take Michael Jackson for example: Here you can find all his discography, and listen to his CDs one by one. Clicking on the button ‘Play Radio’ will open a radio station generated from music you might like from similar artists. As a registered member, you are able to save playlists, write reviews, and more. You can also import your playlists to Last.fm or iTunes to make it a video playlist. Check out our past coverage of Jogli here.

MixTube would have been better and easier if they allowed you to search for Youtube videos on their site to create a playlist. But no, you have to supply them with a Youtube URL, which means, you’ll have to go directly to Youtube, search for a song, then copy-paste that song URL back into MixTube. Thus, I found it to be frustrating. But looking at the bright side, you can always search for someone else’s playlist, and save yourself time and agony. One word about the Youtube music integration – lots of services use it, but unfortunately, it doesn’t offer you much control of your playlist, and what plays today, may not play tomorrow..

Lala is another great music store/playlist maker that we’ve covered extensively since the site relaunched last year. It allows users to listen to any song they want one time. If you want to listen to a song more than that, you buy a 10 cent ‘web song’ that lets you stream the song from the cloud as many times as you want (you can also purchase a full download of the song as you would from iTunes or Amazon). The site has a great integrated music player and a variety of pre-made playlists built by other users.

Worth mentioning: Imeem, and Maestro.fm

Music Visualization:

There’s no doubt in my mind that Musicovery has a strong following of avid users. The site is an interactive and personalized webradio enabling its users to generate in a few clicks a musical program adapted to the various listening situations and their preferences. Their unique mood matrix proposes a relationship between music and mood in an ergonomic and attractive manner. I’ve submitted this item about the service to Digg in 2006 and it’s good to see the site still works . But things have changed. You have limited navigation if you’re not a pro user ($15/3 months or $48/12 months), but once you are – the sky is the limit. In any case, this service will blow you away.

CitySounds.fm is perhaps just a mashup site, but it’s a good one! CitySounds.fm collects music from SoundCloud and pictures from Flickr to create a wonderful music experience from a single page. You can listen to the latest music from cities all around the world. At the top are the most active cities and the list is constantly changing as new music is being created.

Web-Radio:

Very similar to Last.fm in concept, Jango allows you to create your own custom radio stations and share them with friends. Just type in what you want to hear – and your station will immediately play the music you want along with similar favorites of other Jango users who share your tastes. You can customize your stations further by adding more artists and rating songs. Each artist get a page, containing the web-radio, the music playlist, biographies, events list, comments from members at the site, and fan list for easy communication. The service claims to be legal and says it pays royalties due to all labels/artists every time a song is played. Moreover, Jango runs a program called Jango Airplay. This program gives emerging artists an unprecedented opportunity to be proactively exposed to the millions of visitors at the site. See our past coverage of Jango here.

RadioBeta is an efficient way to locate radio stations in your area or around the globe. You can search stations by geography, genre, band, language or tags. You can listen without signing up, or you can log in and create your personal dashboard with favorite stations that  you can then listen to on a daily basis. We mostly hear radio on the go, but now you can easily track your favorite radio stations on the web. All the radio stations are public so you aren’t asked to pay anything to use the site.

OK, TheRadio is also one of my favorites because of its simplicity. Entering an artist or a genre gets you custom channel, but if you go over the channel listing, you will find much more interesting suggestions. I don’t know about you but I actually like when someone else picks the music as long is it in the range of my request. Anyway, TheRadio does a great job on finding music that I like – it simply works.

Aupeo fits in the Recommendation list as well as this category. The service lets you experience music in a fours different ways: by Stations, Artist, Mood, and Personal. The Stations area is pretty limited if you don’t have a pro account, but you can still get the feel of it. In the Artist zone, you enter your favorite name and choose from a variety stations suggested. The coolest way is the Mode area, which plays music based on your chosen mode. These stations are created by music experts, says Aupeo.  The Personal station streams music based on your music behavior at the site. Overall, very intensive and powerful!

Worth mentioning: Tun3r, Mugasha, and  Play.fm

That’s it for Part 1 of this music guide. If you have any other suggestions related to these groups, you are more than welcome to add them in the comments. In the next part of this post, I’ll offer the best options for Music search engines, Music web-players, Twitter-Music craziness, and more. Stay tuned!

Image by RossinaBossioB on Flickr.

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Technically, Wowza is a Flash media server company. That means that it competes with the likes of Adobe and Microsoft to offer up streaming media solutions for all types on content, including streaming Internet radio. While the company has long seen success in this field outside of the U.S., where the royalty rates aren’t as imposing, it was a tough sell in the U.S. with the rates being proposed. But with the new deal in place, the company sees a whole new range of possibilities.

Wowza, which has over 25,000 licenses around the world, notes that a lot of online radio is still being served through the likes of software like WinAmp. But it sees a clear trend towards doing everything with Flash, as the installed base is something like 98% just through the web browser. And it says it can easily convert stations that were going through solutions like WinAmp to be done in Flash. The hope is obviously that there will be more successful web radio services like Pandora — which is, of course, easier said than done.

But getting Internet radio streaming companies to come aboard and use its Flash streaming solution is just the first step the company envisions. Its service has also been extended over the years to provide solutions for Quicktime, Silverlight, and a host of other formats. This means even more opportunities to reach other kinds of devices, such as the iPhone, for example. As we all know, the iPhone doesn’t play Flash content, but it does play Quicktime files. The way YouTube and some others get their Flash content on the iPhone is to covert it to H.264 to play in Quicktime. That’s a solution Wowza offers as well.

Expect to see a lot more interest in Internet radio with the new royalty deal in place. And that, in turn, should lead to some other interesting opportunities for companies.

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MG Siegler and I ran into Pandora CTO Tom Conrad on Saturday evening at dinner gathering in San Francisco. He was still glowing from all the good news at his once troubled startup: a reasonable settlement around online streaming royalty rates quickly followed by a healthy round of funding that should take the company to profitability sometime next year.

We waited patiently until Conrad was 3-4 cocktails in and then pounced, dragged him outside and stuck a camera in his face. The result is above.

Clearly Conrad was still too sober to tell us all the juicy details. But he did once again confirm the funding and he gave some updated Pandora user stats – 30 million registered users, 12 million monthly uniques and 7-8 million iPhone app installations (plus 2 million more on Blackberry).

Toasts all around. Pandora is still standing, and making music lovers everywhere happy.

Full transcript is below, care of SimulScribe:

INTERVIEWER: I’m here with Tom Conrad, the CTO of Pandora.

Mr. TOM CONRAD (CTO, Pandora): Hey, Mike. How are you?

INTERVIEWER: We’re just all having dinner inside. Actually, MG(ph) is here as well. So, we dragged you out here to the middle of the street to get some information from you…

Mr. CONRAD: You’re going to need a waiver from that guy.

INTERVIEWER: We need some information on this funding…

Mr. CONRAD: Yeah.

INTERVIEWER: Because you’re not saying much. You gave us confirmation last night but it is really not much. So, we want a little bit more from you now. So, tell us like – first of all, the south exchange settlement, like, what happened there exactly…

Mr. CONRAD: Yeah.

INTERVIEWER: Because at this time last year, everyone thought you guys were done.

Mr. CONRAD: Yeah. So, we’ve been – I guess, two years and four months ago, not that we were counting, this royalty rates decision came down from the Copyright Royalty Board that adjusted the statutory licensing rates for internet radio up by basically a factor of three to the point that everybody on the webcasters side and frankly a bunch of the more enlightened people on the rights holders side agreed like internet radio couldn’t survive these kinds of rates. And so, for the last, you know, almost two and a half years, we’ve been kind of…

INTERVIEWER: Waging a PR and legal battle.

Mr. CONRAD: Yeah. Kind of constant negotiation with the rights holders and finally…

INTERVIEWER: Including threatening to shut down your business last year.

Mr. CONRAD: Yeah. I mean…

INTERVIEWER: That got some price(ph).

Mr. CONRAD: Without question…

INTERVIEWER: Yeah.

Mr. CONRAD: Pandora could not have continued with the old rates.

INTERVIEWER: Right.

Mr. CONRAD: And so, happily last week, SoundExchange announced that a new license – they call it the Pureplay license, that’s the license that’s being offered exclusively to companies who basically, their exclusive business is internet radio. And the deal basically – you can think about it this way. We traded off a guaranteed minimum 25 percent of our revenues in exchange for a lower per track rate. So we’ve made the greater 25 percent of revenue or this newly adjusted lower per track rate. The rate that we had been sort of fighting about was adjusted per track rate.

INTERVIEWER: What’s a per track rate?

Mr. CONRAD: The – it kind of ramps over the years. One of the great things about this particular settlement is it’s through 2015…

INTERVIEWER: Yeah.

Mr. CONRAD: So, we won’t be dealing with this again next year. And the way I usually think about it is in the number of cents per hour that we pay, and so it’s about – it starts at about 1.2 cents and it ramps to just over 2 cents over the period versus, I think, the old rate in 2010 would have been almost 3 cents.

INTERVIEWER: And you can live with 2 cents?

Mr. CONRAD: We can.

Unidentified Man: Yeah. In 2015, it’s going to be basically what they wanted it to be. Is that right? By the time it gets up to there?

Mr. CONRAD: It’s – by 2015, it’s getting pretty close. I think it’s still – my math says it’s still that there is only 2.2 cents and 2.7 cents, so there’s still some difference.

INTERVIEWER: So, you – that happened and then you immediately close this funding around, so obviously, that was – those were tied and tied together, right?

Mr. CONRAD: You know, they weren’t so much tied together, but I do think it is…

INTERVIEWER: Did you close the funding after the settlement?

Mr. CONRAD: You know, we’re not really talking about the specifics of the funding.

INTERVIEWER: So, they weren’t really tied together except for the fact that you closed the funding five minutes after the settlement was signed.

Mr. CONRAD: Well, yeah. You know, we don’t really, we have this long history of not talking about the funding that’s going in to Pandora.

INTERVIEWER: Right. So, let’s talk about the funding. So, what are you saying? Rumors – it’s 35 million. What are you saying?

Mr. CONRAD: I can’t talk about how much we’ve raised.

INTERVIEWER: Are you saying, it’s not 35 million? Or are you just saying, I’m not commenting in anything?

Mr. CONRAD: No comment at all.

INTERVIEWER: How much did you raise before that round?

Mr. CONRAD: We’ve never talked about that.

INTERVIEWER: Oh, because it all leaked out, at least, I thought it had. We have something in our data base on it.

Mr. CONRAD: You know something, it’s not clear to me that it’s accurate.

INTERVIEWER: No, you’d be in a position to know.

Mr. CONRAD: I would.

INTERVIEWER: And David Sze from Greylock is joining you at work.

Mr. CONRAD: David Sze is from Greylock. That we’re really excited about happening. David’s great, Greylock is a fantastic investor, you know. We’re really, really happy to have David.

INTERVIEWER: So, what’s it like to have someone you really wanted and then you had David as a back-up and took him, because that’s what you said of David.

Mr. CONRAD: David was the guy all along.

(Soundbite of laughter)

INTERVIEWER: And what’s the evaluation on this 35 million dollar round?

Mr. CONRAD: Yeah, I’m also not talking about that. What started talks about that? Come on.

INTERVIEWER: How much stock do you have personally in the company? OK, I’m just kidding. I’m just kidding. You get it, the no comment route. How many users?

Mr. CONRAD: We’ve got about just over 30 million registered users, then we had about 12 million users listed last month. It’s seven or eight million iPhone installs, two million BlackBerry.

INTERVIEWER: How do you measure plays? Do you like, count number of play hours per day or song stream per day? How do you – what do those steps look like that you wanted to talk about?

Mr. CONRAD: You know, we don’t really talk about the hours dimension so much probably. I can say this though, we are easily the largest in –

INTERVIEWER: Are you willing to admit that you are an internet radio start-up?

Mr. CONRAD: Yes, we are. We are, wow!

INTERVIEWER: Will you say how many songs -

Mr. CONRAD: When we lose the light, is this over?

INTERVIEWER: It’s pretty early, yeah.

Unidentified Man: Then we get the spotlight out, right on you.

INTERVIEWER: Any other questions?

Unidentified Man: And you guys are still planning on turning a profit next year?

Mr. CONRAD: Yeah, yeah. That’s the really exciting thing about that, that’s happening is to have this royalty dispute resolved, you know. It really sets us up to have our first profitable year next year and…

INTERVIEWER: I think if we go stand right here, the light will get a little better for the very end. So, just tell me, come on. Just tell us how much you raised. I mean, the least that is, it gets the data base right on that.

Mr. CONRAD: Let’s go have a drink Mike.

INTERVIEWER: It’s enough to get you profitable? You never have to raise again? Do you think that?

Mr. CONRAD: Yeah, I think that’s true, I think that’s true. That’s the hope.

INTERVIEWER: All right. Remember, like I was there when you guys launched back in -
Mr. CONRAD: You were. I’ve got a great story about that for another day.

INTERVIEWER: Bar Camp ‘05? TechCrunch is about a day old when you guys launched.

Mr. CONRAD: It was, yeah.

INTERVIEWER: And look how far you’ve come.

Mr. CONRAD: I may have been the last entrepreneur that you chased for a story.

INTERVIEWER: I did, yeah.

Mr. CONRAD: You did.

INTERVIEWER: Oh, no. We’d still chase people for stories, yeah. Thanks, man. Thanks very much.

Mr. CONRAD: Thank you, Michael.

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Pandora is being mum on the huge number, but is saying that Greylock Partners led the round and that Greylock partner David Sze will be joining Pandora’s board. Greylock joins existing investors Crosslink Capital, Walden Venture Capital, Labrador Ventures, King Street Capital, Hearst Corporation, DBL Investors, and Selby Ventures in the funding.

Assuming the $35 million is correct, that’s a huge numer and actually more than all of Pandora’s previous rounds combined. Pandora had previously raised slightly over $20 million, but the last round was in 2005.

But this new funding comes when Pandora expects to be profitable by next year, and is coming off its best quarter in terms of ad sales yet. “New funds will be used toward the continued growth and development of Pandora” is all the company will say on how they plan to use this large chunk of change.

This is no doubt a case of investors hopping on board now that the skies seem clear for Pandora. It’s one of the most popular streaming radio services, and the fact that it looks on the verge of making money is a good sign.

[photo: flickr/dan4th]

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For those not familiar with what was going on, basically the streaming rates for Internet radio were in danger of being raised to levels that would have made it very hard for companies like Pandora to stay afloat. But a resolution has been reached between webcasters, artists, and record labels, Pandora CTO Tom Conrad tells us.

“Pandora is finally on safe ground with a long-term agreement for survivable royalty rates,” Conrad says.

The key part of the resolution involves SoundExchange agreeing to a 40-50% reduction in the per-song-per-listener rates. In exchange, Pandora is giving up a 25% share of its U.S. revenue. [Update below, if that 25% figure is higher thank the per-song-per-listener number.] This agreement runs through 2015.

But Pandora also had to give up a little more. Because the rates agreed upon are still quite a bit higher than other forms of radio, the service is going to have to put limits in place for users of its free version. Apparently, this will only affect 10% of the user base, as it’s basically just anyone who uses Pandora over 40 hours per month. If a user hits that wall, it will only cost them $0.99 to go unlimited for the remainder of the month. Seems fair.

Users of Pandora One, the pay version of the service, will continue to have unlimited listening.

I asked Conrad if this 25% kickback or new per-stream rate will effect Pandora’s stated goal to be profitable by next year. “It’s a great outcome. Expensive, but I think we can still be profitable next year. These are workable rates,” he says.

Update: Just to clarify one thing, the new deal will see Pandora pay either 25% of its U.S. revenue or the new per-song-per-listener rate, whichever is higher. That’s an important distinction because it likely means Pandora will actually be paying more than the 25% figure. [Thanks to MediaMemo's Peter Kafka for pointing that out.]

Find the rest of the details in the email below.

Many people played a role in getting here. Pandora listeners provided support in extraordinary numbers in Congress, and a group of reasonable and constructive voices on the label and artist side of the table at SoundExchange helped forge a middle ground that, while perhaps not meeting all of our aspirations, still represents a thoughtful and reasoned outcome under the circumstances.

The deal we’ve crafted is an industry-wide solution for all “pure play” Internet webcasters. The core of the compromise is that SoundExchange has granted a 40-50% reduction in the per-song-per-listener minimum rates in exchange for us giving them a 25% share of our US revenue. The deal extends through 2015 and has special carve outs for the so-called “Small Webcasters.”

While we feel this is a substantive victory, the revised royalties are quite high – still much higher than any other form of radio. As a consequence, we will have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the free version of Pandora. In any given month, a listener who hits this limit can then opt for unlimited listening for the remainder of that month for just $0.99. In essence, we’re asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours. We hope this is relatively painless and affordable–the same price as a single song download. Alternatively, they can upgrade to
“Pandora One”, our premium version which offers unlimited monthly listening in addition to its other benefits.

Q2 was our best quarter to date and dramatically exceeded our plan both in terms of user growth and revenue. Mobile adoption continues to be very strong with uptake on the BlackBerry looking like it will meet or exceed iPhone levels. Still, the unresolved licensing issues have hung over us like a dark cloud for two years. It’s a great feeling to have the road cleared of that obstacle.

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Imeem Mobile for the iPhone, which we were the first to report on back in May right before it launched, already accounts for 1/3 of Imeem’s mobile users, we’re told. It’s been consistently in the top 5 music apps and near the top 50 overall in the App Store since then. But does that mean that it’s better than the Android version? No, in fact, it’s worse for one reason: It can’t run in the background.

That of course, isn’t Imeem’s fault. Rival Pandora suffers from the same problem because Apple will not allow these apps to stay open while you do other things on your phone, or put its screen to sleep. That may change eventually, but it seems likely that this isn’t happening anytime soon. So, for now, Imeem has decided to continue this fully two-pronged approach to the mobile app world: Android and iPhone.

On one hand it now has the sexy iPhone app, which gives them access to all those iPhone users. On the other hand, it has its fully-functional Android app, which offers much higher engagement. In fact, Android listening session lengths are more than twice as long as they are on the iPhone, Imeem CEO Dalton Caldwell tells us. And the Android platform offers another advantage in that Imeem knows that its app is now on 2 out of every 3 Android phones out there right now. That’s pretty crazy. And 1/3 of the users who install the mobile version of Imeem are completely new to the service.

Of course, all of these things are just fairly inconsequential stats if the service isn’t monetizing them in some way. There has been of a lot of speculation about Imeem’s future, after reports surfaced that some of the major music labels which had been backing it, were not seeing returns on their investment and were backing out. Warner Music was the one in particular that was unhappy. But reports today indicate that they’re back in the mix after renegotiating some kind of deal with Imeem. Caldwell wouldn’t comment on that, but we’ve heard that Warner is back in as well. This follows Imeem raising more money to continue onward last month.

In terms of monetization, Caldwell said that Imeem beat their Q2 goal for ad sales, and that they’re particularly excited about the mobile ad numbers they’re seeing. And there’s apparently a growing interest in cross-platform ad buys, from advertisers who want access to the site, the mobile apps, audio ads, and the widgets that Imeem makes, all in one package.

Pandora told us last month that it had been seeing some great numbers with regards to music downloads being driven by their app. Caldwell sounds less enthusiastic about those, but said the click-through rates are always good in that area because there’s such a high intention rate when it comes to buying music through the app.

So with a million mobile installs and a firm commitment to the iPhone and Android platforms, what’s next for Imeem in the mobile space? Well, the company is taking a wait-and-see approach. When asked about the hot phone of choice right now, the Palm Pre, Caldwell is cautious. “We’ve been very judicious in our use of resources,” he says. But he notes that they are watching the Pre closesly (Pandora was one of the phone’s launch partners), and sounds much more interested in that platform than any of the other ones out there not named the iPhone or Andorid. “They [the other platforms] don’t have a great distribution model. It’s a total pain to install anything on the BlackBerry.”

Instead of an expansion to another platform, we’ll have to make due with an update to the Imeem Android app, which is due shortly.

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Most TechCrunch writers are iPhone users. And while we’re still debating whether when what time we will be upgrading to the iPhone 3G S next Friday, we are excited for the iPhone OS 3.0 next Wednesday. We’ve had a few requests to publish the apps we use on our iPhones – and we’re going to share that information with you now.

The following list is by no means all of the apps we have on our iPhones. There are plenty of apps we only use a couple times a month (e.g. Shazam), but when we need them, they’re great. We’ve also linked to any TechCrunch/CrunchGear/MobileCrunch reviews of the apps. Let us know which apps you use in the comments below.

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Pandora

The feature, which is already live on the web, shows you concerts you might like based on music you have rated, bookmarked or stations you’ve created on Pandora in the past. It shows you these concerts based on your location. But there’s a catch. It’s not actually a part of the Pandora app itself, but rather is an advertisement, sponsored by Amstel Light, you can click on to be taken to the personalized listing of concerts. From there you can buy tickets to shows.

This seems like a smart play for both Pandora and SonicLiving as this type of ad should lead to a solid number of click-throughs. The concert recommendation space has been heating up recently, with Livekick going live and Songkick launching a large update to its service. But using Pandora’s music recommendation data, which millions of people already use on a regular basis, through its API, seems like it could be a better way to recommend shows.

Of course, I’m not really sure how this is going to work for Pandora One users, who pay a yearly fee not to see ads — including those on the iPhone.

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While the advertising-based model is working for a select few, for most, it’s simply not proving to be a very good stand-alone model. Pandora is one of the companies that web-based advertising is actually working pretty well for. But even they’re not expecting to turn a profit until next year — and that’s based on projections. I bring them up because they recently decided to move forward with a freemium model in a serious way for the first time last week. As a large service with a rabid fan-base, this seems like a brilliant move. And I wonder if the time isn’t right for more services to try this?

The freemium model is hardly a new idea. VC Fred Wilson has been talking about it since 2006 — though the name came a little later — but the model was around well before that also. The idea that you have a core set of features that are free to all users, and charge a fee to the smaller subset of users who will want more advanced features, makes a lot of sense. But now it’s easier than it has ever been for startups of all sizes to be able to take payments for such a structure, thanks to a number of companies and new platforms, like app stores. And there are plenty of startups popping up around this space to further help with this, like the soon-to-launch Contenture.

But I think for the freemium model to work in today’s environment, it has be along the lines of the opening paragraph of Wilson’s post in 2006:

Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.

Rather than launching a service with a freemium model, I think it’s important to gain a large and passionate user-base first. That’s exactly why I think the model will work very well for Pandora. And that’s the same reason why it would work for Twitter, if it ever decides to go that route. Jason Calacanis has been talking about his desire to pay for premium features on Twitter since 2007. And plenty of others have since brought up the idea.

As part of its bid to make money, Twitter is said to be launching premium tools by the end of this year. But that would apparently be for businesses — I think a lot of personal users would be just as willing to pay at this point. I know I would. And that got me thinking: What services would I pay for?

I’ll start with the ones I already pay for:

• Pandora. An easy choice for me. For $36-a-year, they remove all advertising, give you better quality music and a nice desktop app among other things. I paid for it immediately.
• Flickr. Another site that was a no-brainer for me. At $24.95-a-year, you get unlimited storage space for all your photos online. I’ve been a happy member for a few years now.
• Tweetie. An interesting one in that it’s a Twitter client. You have to pay for the iPhone app, but there’s also the new desktop app which offers a free ad-supported version, or a paid ($19.95 one-time fee) version minus the ads. Twitterrific, another Twitter client, has a similar model, but also has a free version of its iPhone app, alongside its paid version.

And here are some ones would I pay for:

• Twitter. While I’m already paying for some Twitter clients, I would gladly pay something between $25-$50 a year for a more robust version of the actual Twitter site if it included things like power-searching, analytics and filters.
• Facebook. Unlike the very simple Twitter, I think Facebook is already too complicated, so I wouldn’t really want or need any more features. But if it ever came down to it and Facebook really needed to make money and started shutting off features (which would raise a shitstorm like no other among its users), I would gladly pay to keep some of them intact. Again, probably in the $25-$50 a year range.
• FriendFeed. I would gladly pay a lesser fee, maybe $10 to $20 a year to use FriendFeed — especially if they gave me something like an iPhone app.
• Gmail. At some point soon, I likely will be paying to use Gmail, as I’m almost out of my free storage space. 10 GB is $20 a year, a bit high, I think, but I’d pay it.
• Digg. I’d pay to user Digg particularly if I get could easy ways to view more interesting data that they have, and the ability to sort and filter to see what other “Pro” users do. Digg’s comments are quite often absolutely ridiculous, but I think could actually be useful if I could only see ones by users who care enough to pay for the service, rather than trolls. I’d pay about $10-$15 a year for Digg.
• YouTube. Same as Digg, I’d pay to use YouTube to see only comments by other “Pro” users. And I’d pay for higher quality, longer uploads and a goddamn nicer player than that cheesy big-button box. I’d probably pay up for $30 a year if I could use YouTube to store long, HD videos.
• Instapaper. This is the service I use to bookmark nearly everything I want to read on the web. It’s very bare-bones, which is one of the reasons that I like it, but I would certainly pay a fee to add search and some other advanced options. I would probably pay like $10 a year to use this. Interestingly enough, like the Twitter clients, Instapaper does have a free and pay version of an iPhone app.

Those are just the ones I would personally be willing to pay for. I’m sure everyone else will have their own list that they would pay for as well. And that’s why the freemium model is so great — it gives users the options to pay for only the services they use the most. And for certain really popular services, I think this could be huge. Pandora CTO Tom Conrad told me last week that he expects only 3-5% of Pandora’s users to sign up for its premium version, but I wouldn’t be surprised if it goes higher than that — especially if Pandora adds more features to the service over time.

One of the keys to this in my mind is the yearly fee. While it might look nice to offer a service for $3-a-month, that recurring charge is ugly. I’d much rather pay a still low $36-a-year and not have to worry about it after that. And let’s add it up. Even if I paid for all of the services I listed above, depending on where the prices fall in the ranges I gave, it’s only $200 – $250 a year. That’s for 10 services, that I love and use every day.

Think about it this way: Before I was able to move away form the colossal rip-off that is Comcast cable, my cable bill was nearly $200 — a month! How people pay companies like Comcast over $2,000 a year for mediocre content and shit service is beyond me. I would rather pay a bunch of hard working start-ups (and yes some bigger services like YouTube — owned by Google — and Flickr — owned by Yahoo) all that money. And I wouldn’t even have to, under the rates I outlined above, I would be paying them just about 10% of that!

The freemium model doesn’t always work. It didn’t for Pownce, for example. But to go back to what I said earlier, getting the users is they key to this. If you can get a ton of them, and get a certain percentage to be very loyal, they’re more than likely going to be willing to pay. And while it may not be enough for every company to only use that model, it at the very least would be a nice compliment to the ad-based model.

And, as I hinted at above, there are other ways to look at this now. With the rise of mobile app stores, it’s becoming a decent business model to have a service that has a pay app. This has worked for the aforementioned Tweetie. An app can be a very simple advanced feature under this freemium model, and extends the possibilities for the model.

But back to the web, just imagine if Facebook has a few percent of its users paying each year. They have over 200 million users, so say just 5% paid. That’s 10 million people paying, let’s say, $30 a year. That’s $300 million — or in other words, nearly its entire projected revenue for this year. If it were able to get 10% to pay, it’s be more than it’s projected revenue. Of course, Facebook isn’t likely to use that model, instead it will focus on micro-transactions and other means of making money — but still, it’s worth thinking about.

There are quite a lot of services out there that I would pay to use, but they won’t let me. Maybe they should.

[photo: flickr/striatic]

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The most obvious feature of Pandora One is the removal of ads from the site (this was the only feature of the previous subscription version) — that means not only the ads on the page but the in-stream audio ads as well. And there are five other keys to Pandora One that you get with your $36-a-year subscription price: The biggest one is access to a very solid Pandora desktop app. The others include high quality streaming, a personalized look, a mini player and extended player timeouts.

All of those should be fairly straightforward, but just to hit on some of the key points:

• With its new desktop app, you no longer have to keep Pandora open in a web browser to enjoy it. And you can still do all the same voting/bookmarking/skipping that you do on the site from within the app. You also have access to all of your stations and can create new ones. The app is built on Adobe’s AIR platform, so it will work on either a Mac or a PC. Note: Pandora did try to release an AIR app once before, but it was basically just the Pandora web version ported to AIR — complete with ads. We didn’t like it too much, and neither did Pandora, which killed it. This new one is a lot like the iPhone app, which is to say, awesome.
• Pandora One will enable streaming of music over the web at 192Kbps — that’s by far the best quality you’ll find when it comes to streaming music on the web, Pandora CTO Tom Conrad tells me. For some perspective, that’s higher quality sound than iTunes used to sell its music at, until recently when it upgraded all its tracks to the iTunes Plus format. And if the 192Kbps stream is proving too much for your Internet connection, you can always take it back to regular quality.
• With no more ads, Pandora’s background would look pretty barren. That’s where the personalized look features come into play. Basically, you can select from a handful of different nicely designed backgrounds ranging from feminine to masculine.
• Extended player timeouts means that you can leave music streaming on your computer for up to five hours now without worrying about Pandora cutting off your stream. With the free version, Pandora would stop music after an hour of inactivity — they did this because it obviously costs them money to stream the music and sometimes people leave their computers with the site still open. But this longer time out is great if you actually plan to leave the site open while you’re doing something else.

The ad model is of course what keeps Pandora alive. And it’s actually doing very well. Pandora is coming off of its biggest ad sales quarter in the history of the company, Conrad tells me. Ad sales were up 80% over the year ago period and the company is tracking to make $40 million in revenue for the year — which would double last year’s total. More importantly, it means that 2010 could be the first profitable year for Pandora, according to Conrad.

Of course, that doesn’t matter if the lingering online streaming radio royalty issue isn’t resolved, but that could be coming shortly as well. “We’re optimistic about the prospects of a resolution in relatively short order,” Conrad tells me.

So things are looking up and up for Pandora, but at the same time, the company, which has always focused on being a sustainable business (unlike some of the other music startups out there), feels the time is right to branch out a bit. It’s affiliate sales model (which lets users of Pandora buy music through iTunes or Amazon), is already proving to be a nice little secondary model — one that is growing thanks to the iPhone. But it’s the freemium model that could really be a more significant source of money.

The reason is that while the company knows that it will always be just a very small percentage of its user base that will pay for the service, that small percentage is actually a lot of people given Pandora current usage numbers. Right now, Pandora is seeing 10 million monthly users on its website, and it has 5 million members using the iPhone app and another million now using the BlackBerry app (it’s the leading music app on both platforms). If just 3 to 5 percent of its audience signs up for Pandora One, that’s not an unsubstantial amount of money for the company.

Other services in the space have played around with this model as well. Notably, Last.fm has a monthly subscription option — but it also requires that all users not in the U.S., UK or Germany pay a fee to use their service. Of course, Pandora is currently only available to users in the U.S., so it doesn’t have to worry about some of the tricky advertising situations around the world.

In terms of how Pandora One will affect the company’s popular iPhone app, premium subscribers will also have ads turned off in the app as well. Unfortunately, the 192Kps streaming quality is limited to the web version and the desktop app only right now, though Conrad says it’ll look into possibly giving premium users on the iPhone the ability to stream high quality over WiFi. Likewise with the BlackBerry app — and Pandora will have an app ready to go for the launch of the Palm Pre on June 6, Conrad says.

It’s worth noting the that desktop app is a feature that was added at the last second when Pandora’s lawyers informed them they had to disable another planned feature from Pandora One: The ability to see the next artist set to play if you skip a track. Internet radio’s often odd rules prohibit you knowing what song is going to play next, but what’s amusing here is that Pandora was only going to show the next artist — not the actual song — but apparently that’s a no-no as well. So instead we get something much cooler: The desktop app.

Conrad and his team were planning to launch the desktop app in a few weeks anyway, but hunkered down the past week to get it done in time for this launch. I’m playing with it right now — it will definitely rival iTunes as the source of music constantly playing on my computer. And unlike quite a few other AIR apps, Conrad assures me that it has none of the memory leak and CPU-usage problems.

Sadly, you will have to sign up for Pandora One to use the app. And while the company isn’t expecting too much, that may just be the leading perk that gets people to sign up.

For roughly 95-97% of Pandora users out there, this news about Pandora One may not ultimately mean too much. You’re likely to continue to use the service exactly as you have been — for free — and Pandora’s fine with that given how well ad sales are going. But for the other 3-5%, Pandora One will undoubtedly be a must-buy as $3 a month is nothing to wipe out ads, get higher quality and a nice desktop app, if nothing else. And yes, if you happened to be one of the people that actually had the subscription version of Pandora before, you will be upgraded to Pandora One with your membership.

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The Imeem app has already been submitted for App Store approval and could be released any day, we’re hearing from a reliable source. In terms of what it will offer, you can probably expect it to be about the same as the Android version. That means access to Imeem’s library of music and perhaps more importantly, access to your own collection of songs from the cloud, if you use Imeem’s upload service to put your music on their servers.

Of course, you have to pay for that. But if you’re willing to shell out $99 a year for their most premium plan, it means you can access 20,000 of your songs from your iPhone from anywhere (there are lower-cost version with less storage as well).That’s around 80GB of music, obviously a lot more than an iPhone or iPod touch can hold. But one tricky thing about this on the iPhone is its close ties with iTunes, which means that many of its users probably have some DRM-protected music, which won’t work over Imeem’s streaming service. But I assume the new iTunes Plus, DRM-free variety (which the entire iTunes store was recently converted to) will.

And I’m sure you’ll be able to buy new music you hear on the Imeem app with one click that takes you to the iTunes store on the iPhone. This has been working out pretty well for Pandora.

Cloud-based streaming of music makes a lot of sense. It gives you a single place to access your music from anywhere, without taking up valuable space on your devices. Lala is another service doing this with a still unreleased iPhone app that we got an early look at. It makes so much sense, in fact, that I suspect Apple will eventually get into this game as well. It almost has to with HD movies and television shows at some point because most people simply do not have enough storage space even on home systems to buy that content to their heart’s content — which of course, Apple would love. Naturally, Apple would want to have an option to pull your music off of the cloud to take on trips where you don’t have web access as well — that’s something that won’t work so easily with Imeem’s solution.

Imeem’s iPhone application will undoubtedly have another major downside that the Android version does not: The inability to run in the background. That’s one of the killer features of the Android version — I can turn it on and leave it on while I do something else. Compare this to Pandora on the iPhone which shuts off as soon as you exit it. Seeing as Apple doesn’t allow third-party apps to run in the background, that will be the case with Imeem too.

Still, given the range of music Imeem offers and this cloud-based option, I’m definitely looking forward to this iPhone app. The Android version actually won the Crunchie this year for Best Mobile Application — even beating out Pandora for the iPhone. Look for the iPhone version soon in the App Store.

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Users are buying about a million songs a month now from these affiliate links on Pandora, CTO Tom Conrad tells me. Of those, a solid 20% are coming directly from Pandora’s iPhone app, which includes an easy link to open the iPhone’s iTunes app, and buy a track. That’s really impressive considering that it’s just one phone that a relatively small percentage of their users use.

But really, I’m not surprised by this at all, because Pandora has always been a brilliant music discovery service. And when paired with the iPhone, you have an all-in-one new music machine. And Pandora was actually the top downloaded app on the iPhone for all of 2008. But last month, when Apple completed removing DRM from all its iTunes tracks, it created an even a greater incentive to buy music that way. Now, I can buy music on the go, sync it back with my computer when I get home, and listen to it anywhere.

Another feature driving affiliate sales is the bulk music purchase option. This allows you to bookmark songs on Pandora, and with one click buy them all on either iTunes or Amazon. 10% of web users who are buying music through Pandora are using this bulk buy feature, Conrad says.

Here’s an interesting way to think about these affiliate sales. If Pandora is selling 1 million tracks a month, that’s $12 million in sales a year (though Apple and Amazon make the majority of that). But Pandora is still only less than 1% of all radio when you take into account the terrestrial and satellite varieties. Say hypothetically that Pandora made up 100% of radio, the potential sales of these affiliate tracks would then by $1.2 billion a year, as Conrad notes.

That of course is very unlikely to ever happen, even in Pandora’s wildest dreams, but still Conrad says that from Pandora’s own research, they know that for every song purchase Pandora drives, users are likely to buy 3 to 5 more songs on top of the one they found. At this 100% model, that would make Pandora a $3.6 to $6 billion a year business.

Why play such a hypothetical? Well because the total recorded music industry revenue last year was only $4.6 billion. Affiliate links can be big business on the web and on mobile.

Even before the iPhone app, Pandora was one of the top affiliate purchase drivers for Amazon and iTunes. And amazingly, their main competition wasn’t other online music sites, but instead was search and shopping engines like shopping.com. Given the boost Pandora is already seeing from the iPhone in this regard in just a matter of months, it seems pretty clear that mobile purchases could be a big deal down the road.

And just imagine if Apple one day lets apps access iTunes right from within the apps to ease the process even more. With in-app purchases coming in iPhone 3.0, something like that could be possible one day.

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Dora is actually an API mashup of three popular web services: the music streaming service Pandora, the micro-messaging service Twitter and the URL-shortening service Bit.ly. When you load Dora, you may think it’s just Pandora, but at the bottom of the page is the Dora overlay which provides you with an easy way to tweet out what you’re listening to. Before you do this, you must authenticate yourself on Twitter, but that gives you the ability to send a tweet out with the title of the song you are listening to (and a message in the remaining characters) with one click. There is also an option to append a link to the song shortened using Bit.ly.

Unfortunately, there are a couple weaknesses with Dora. First, before you can tweet, it authenticates your Twitter information over the OAuth protocol. This is nice as it’s a secure way to send information, but it adds a step to the tweeting out process. A lot of users are likely already signed into Twitter in their web browser, and could pass the song information that way. But the OAuth authentication wouldn’t be a bad way to go if Dora didn’t make you authenticate each time you revisit the site. That’s just annoying.

Another problem is that links Dora sends out to Twitter, link back to Pandora. The problem with that is that Pandora doesn’t allow you to access full versions of individual songs anytime you want to. Instead, it takes you to a page on Pandora for the song and gives you the option to preview it. Sure, you could create a new Pandora stations around this song, and it may pop up first, but that’s more complicated than it should be. Pandora has to do this because the rules of Internet radio streaming prohibit users from picking the individual songs they want to hear.

But Blip.fm, isn’t technically a Internet radio service, so it doesn’t have to adhere to such rules. And, as such, when you tweet out a song from Blip.fm, anyone can click on the link and immediately start listening to the song as well. Blip.fm also offers its own way to sign-in to Twitter without using OAuth. You have to give Blip.fm you Twitter name and password, but it’s more seamless. Another service in this space is Twt.fm. It’s similar to Blip.fm, but uses imeem’s catalog of music to find and tweet songs out.

If you’re addicted to Pandora, or really just want to share the titles of songs you are listening to, Dora is a nice solution. But if you want others to subject others to your musical tastes, Blip.fm is still the way to go. At least until it gets big enough to raise the ire of the record industry.

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Not only is Goom clearly trying to play the popular music card with a website littered with the likes of Coldplay, Kanye West, Beyonce and Britney Spears, but it promises to have “passionate programmers” and DJs. I don’t know about you, but I had two core reasons that I stopped listening to traditional radtio long ago: Crap music, and DJs. Goom, apparently, sees those as strong suits.

Not that there’s anything necessarily wrong with that. Pop music got that name for a reason, it’s popular. And popularity on the web means users. And users means people you can serve ads to and get paid — which is Goom’s business model for the time being, according to VentureBeat.

To be fair, you can also tailor your own stations based around your musical tastes, just as you do on the aforementioned Pandora. And you can upload your own music to the service to stream yourself from anywhere, just as you can with imeem. And the services promises high quality with its proprietary HD sound. But Goom is clearly putting resources into hiring “experienced” DJs, conducting interviews and even dishing out news (presumably about music). And it has raised a $16 million round of funding from Wellington Partners Venture Capital, Elaia Partners and Partech International to help it do all of that.

The service features the tagline “redefining radio for the digital generation,” but I wonder if the other services that already exist in the field haven’t already done that? Instead, Goom looks to be a way for the digital generation to rediscover traditional radio. And at a time when web radio is struggling to monetize against high streaming royalty fees, is bringing in DJs and programmers really the best use of funding?

You can sign up to be a part of Goom’s beta launch on its site.

Update: Goom contacted us to let us know that one of the key advantages it feels it has over its competitors is its solid executive team, which consists of a team with more than 20 years of experience inside both the realms of radio and technology. This includes CEO Rob Williams who previously was the President and Market Manager for Clear Channel New York. A fair point, though that doesn’t change my opinion about how the product is being sold to the public.

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Heck, they’re even prepared to act as middleman for connecting freelance web developers with companies looking to leverage their API. Hard not to love that type of company.

Boxee is today also introducing a new test version of the Boxee alpha version for Mac and Apple TV (get it here for Intel Mac OS X 10.4+), adding two applications that were built using the brand new API. The new Boxee alpha comes with a lot of music goodness as it includes both Pandora, the popular music streaming service, and RadioTime, which enables their users to access over 100,000 traditional radio stations from across the globe.

This comes right off the heels of the introduction of a (basic) iPhone application.

The new version of the software for Mac and Apple TV features support for Hulu too, but in the work-around way, i.e. using a custom browser built on top of Mozilla technology (sort of like a stripped down Firefox). As you know, Hulu is doing everything it can to keep its content from being streamed on Boxee, while Boxee is doing much of the same to do the exact opposite.

Boxee says it’s now working on updated versions for Ubuntu and Windows.

As a PC user, I can hardly wait.

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The company, which has raised $7 million in venture capital to date from undisclosed investors, is evidently doing this out of fear about the outcome of the multibillion dollar lawsuits it was slapped with by music labels like Warner Music, Capitol Records and EMI.

We reported earlier that SeeqPod has become quite the target of the music industry, which went so far as going after developers who merely leveraged the SeeqPod API. They silenced Songbeat and forced Streamzy to put itself up for sale on eBay as a result.

SeeqPod has developed interesting and powerful technology that is able to quickly crawl the web for playable media (MP3s, slideshow presentations, videos, etc.) and enables users to play it on-site. It doesn’t actually host any files on its servers, but the downside of the technology from a legal point of view is that the crawling engine picks up pirated music files from across the Web too, which is why the music labels are so eager to sue the company behind the service, especially since it spawned so many third-party services which use the engine as the basis of their online offerings.

It’s worth noting that many search engines index copyrighted material too and are shielded from legal actions against them under the DMCA, so it seems rather arbitrary that the music industry is picking on SeeqPod specifically (the startup is huddling under the DMCA protection too). Maybe this is because of the fact that SeeqPod enables visitors to play files directly, and because it has reportedly been slow in setting up negotiation talks with the labels.

SeeqPod recently started selling its source code to developers (price tag: $5,000) in the hopes of creating a legion of ‘mini-SeeqPods’ which could prove difficult for the music labels to kill one by one, but it’s unclear if this strategy has paid off so far, and yesterday’s Chapter 11 bankruptcy petition doesn’t bode well for the startup (or its investors, who are often wiped out in such proceedings).

To be continued.

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The company says the application should be available here, but I’m not seeing anything there yet so maybe we should just be patient until they get around to effectively have the app up for download on Android Market. (It’s also nowhere to be found when you actually search from the G1).

Update: it’s available from the phone now.
Update 2: app is listed online now too.

First impressions: music quality is fine but not staggering, the streaming speed is ok, the tagging process is seamless and it’s really cool to discover similar artists when you’re listening to a song from your mobile phone. Also, you get to purchase songs straight away via the Amazon MP3 store on Android.

The application enables users to access their Last.fm profile and millions of streaming tracks on Android-powered phones, and supports ‘background playback’ so you can listen to music while you access other programs. Last.fm has been offering an application for the iPhone / iPod Touch for about 6 months now with the same feature set apart from the background playback functionality.

Last.fm, which was acquired by CBS in May 2007 for $280 million, was recently forced to reduce its headcount by 20 percent but continues to report impressive growth figures.

One of their competitors, social music network Imeem, has been available on the Android platform since October 2008 (get it here), and their mobile application also took home the award for Best Mobile Application at the recent Crunchies ceremony. Now all we need is an Android application for Pandora and the race is on.

It’s also worth noting that we could find 3 unofficial Last.fm-related apps on the Android platform (Last.fm: Android Edition, Last.fm Player and Last.fm Client) although these generally received poor ratings and reviews, so there was an apparent need for a better, official one.

Co-Editor’s Update (Erck Schonfeld): I’ve been testing out the Last.fm app today. It works great, and I especially like the ability to create stations by tags or artist. But the stream just doesn’t sound as good as imeem’s, even though Last.fm is streaming at 128 kb/sec and imeem is streaming at 64 kb/sec. The reason for this is that imeem streams in AAC format, whereas Last.fm streams in MP3 format. As a result, the imeem app sounds twice as good at half the bit rate. Last.fm should consider switching to AAC as well.

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Pandora Radio, the cool personalized radio station that recommends songs based on its Music Genome Project, has started serving audio ads. The high royalty costs associated with streaming licensed songs seem to have finally caught up to the service, which until now has primarily used image-based advertising. The ads seems to be fairly sparse, but have received enough attention that the company’s official Twitter feed just annouced “So you know, we did not take on audio ads lightly. We try to be extremely respectful of your listening experience, & promise to be prudent.”

We’ve confirmed that the ads are appearing on Pandora’s main web-based service, and are trying to find out if the ads will begin appearing on Pandora’s incredibly popular iPhone application, which was the most-downloaded application on the App Store for 2008. The iPhone app launched over the summer without any advertising, and began implementing new image overlay ads in September.

Update: Pandora CTO Tom Conrad says that the iPhone version of the application is not currently running audio ads, but that they will likely appear at some point in the future (though there are no immediate plans to include them).

This isn’t the first time Pandora has experimented with embedding audio advertising into its streams – in early 2007 the company experimented with some ads that were met with an overwhelmingly negative reaction.

Users that are really can’t stand the ads (seriously, they’re not that bad) are invited to sign up for Pandora’s $36/year premium membership.

Thanks to Richard Bowles for the tip.

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MOG has a history of doing cool new things around music. The service today includes a media player plugin that records and analyzes your music habits, a website that has a dedicated page for every artist, album and song with user generated reviews and posts, and an advertising network that provides revenue for 300 top music blogs. Users can also stream music via an excellent front end to Rhapsody.

All of that brings about 5 million unique visitors a month to their network, and the company says they should bring in about $5 million in revenue in 2009.

Now they’ve created a new music streaming product that breaks away from Rhapsody and its limitations. Like competitor ilike, which also uses Rhapsody, users can only stream 25 songs per month for free. That doesn’t compete well with free streaming services like MySpace Music, iMeem, Last.fm and others.

The new service, dubbed Mog 3.0 internally, is a fully free music streaming service that lets users play whatever songs they like on demand. The user interface is as good or better than LaLa, a service that we love despite the fact that streaming isn’t completely free. Founder David Hyman and VP Product T Jay Fowler gave me a demo of Mog 3.0 earlier today.

The service combines the ease of use of LaLa with free, which is enough to get our attention. But it also has a recommendation service that rivals Pandora when it comes to discovering new music.

The interface is genius. Users search or browse songs, artists or albums and then start listening to the music. More songs from that artist are suggested and added to the results as you play the songs. And if you move the slider to the right (see image to right), related music is added as well. That lets the user decide if they want a playlist-driven on demand music experience, or to change things up and add Pandora-style related music to the mix.

It doesn’t stop there. Users can also create playlists with the best tool on the market – it’s easier to create and share playlists than even Project Playlist offers, and users can associate a name, description and image with each playlist as well.

MOG plans to make other changes to the service as well, including adding streaming music to content pages, and creating user profiles that highlight the music you listen to and like. It brings in the best social aspects of Last.fm.

The product is compelling.

But it will quite possibly never launch.

MOG has label deals with Sony BMG and Universal locked up. They’ll provide streaming music rights for free in exchange for a revenue share. But Warner and EMI remain on the sidelines, and MOG says they won’t launch unless and untill they have all four major labels under agreement.

I, for one, really hope to see MOG 3.0 launch sometime soon. And if the last two labels don’t jump on board, MySpace should strongly consider buying MOG. MySpace has label deals locked up but their product continues to have unacceptable technical glitches. The music player is very slow to load and songs have an annoying tendency to skip during playback. Perhaps the MOG team can put that right for them.

More screen shots below – top image is the playlist tool, below that is a user profile page.

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Pandora Radio, the personalized internet radio service that has remained among the most popular iPhone apps on the iTunes App Store since its inception in July (and that I’ve previously called the iPhone’s killer app), will be releasing its most significant update yet later today.

Dubbed Pandora 2.0, the application will now include artist biographies, streaming samples for songs you’ve bookmarked, and perhaps most notably, the ability to create a station using a single song (much as you would using the iTunes Genius features). Other features in the new release include a CoverFlow-like view for song history, the ability to share stations with friends using Email, and a song progress bar (which has long been annoyingly absent).

Pandora has been around for years, offering a very powerful music recommendation engine powered by The Music Genome, which employees professional musicians to describe each song using over 150 attribute (or “genes”). Its iPhone app closed out 2008 ranked as iTunes’ top free application overall, and it doesn’t show any signs of slowing down.

Update: It looks like you can download the application now here. The application page still shows the older version, but you’ll download the 2.0 version of the app.

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