Currently still in private beta, Listen.fm is not going to be a ‘revolutionary’ service, says Anderson, but rather just a great place to listen to and discover new music that can legally be shared with others. The site has been in the works for nearly a year and should be launching in public beta some time next year.

As you may recall, Streamzy, a media search startup that used the late Seeqpod’s database as a content source but became a shell after Seeqpod folded, was recently put up for sale on eBay.

Anderson took notice of the sale, and picked up whatever was left of the project in a rush to see if some of the technology could be used to enhance Listen.fm. Turns out there wasn’t much left at all (the Seeqpod API didn’t work anymore and the YouTube API didn’t provide much benefit to what they were building either) although Anderson says they don’t regret ‘acquiring’ the Streamzy leftovers because it allowed them to play around with the backend, Google Apps Engine, in a working context.

Not that Streamzy cost him and his team a fortune: the auction closed at $2,700.

More on Listen.fm when they are closer to launching.

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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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Update: Streamzy co-founder Brian Krantz says it’s definitely not a joke.

The service amassed merely 2,400 registered users since its launch in early 2008, and has a monthly visitor rate of only 7,000. The back-end runs for free on Google App Engine and the Flex front-end code will be included should someone decide to pick up the site.

For context: the music labels aren’t only targeting SeeqPod anymore but also developers who use its API, so we’re not sure anyone will be inclined to bid, unless of course if it’s just for the name, logo and domain name.

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We’ve seen a number of music sites like Seeqpod and Grooveshark that leverage user-uploaded music scattered across the web to offer free, on-demand jukeboxes. These services manage to skirt legal repercussions by only serving content that is hosted on other sites, which makes them harder to sue (though some have tried).

Streamzy, a media search startup that launched earlier this year, has taken this approach one step further. Instead of trying to index user-generated content, Streamzy uses Seeqpod’s database as a content source, which it further refines by weeding out broken links. The site, which used to only support audio, has just introduced video playback as well.

Streamzy offers a streamlined (and much improved) interface for Seeqpod’s content, sporting a minimalist player that neatly labels each song by title and artist name. Beyond basic media playback, Streamzy also offers an intuitive drag-and-drop playlist maker that users can save for future reference. In the future the company plans to allow for users to embed playlists on their blogs and social network profiles.

Streamzy isn’t much more than a resigned interface for Seeqpod, but it’s a redesign that was badly needed. And while it will have a hard time differentiating itself from the likes of Jogli, Songza, Soundflavor and a number of others, it’s a good place to start for music on demand.

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