wax&wires

Just a few days after MySpace disabled the Project Playlist app, Facebook decided to do the same.

For those that aren’t as familiar with Project Playlist, it’s a web application that lets you create, share and manage music you enjoy. After creating a playlist of your favorite songs, you can then embed your playlist onto any site; most notably MySpace, Facebook, Friendster, hi5 etc. Project Playlist boasts “the largest music search engine on the net” and the “most popular music widget in the world”, according to their site…

Well now Project Playlist has found itself in a decent amount of trouble with the RIAA. The largest issue with Project Playlist was that they allowed users to stream entire songs on their sites, rather than 30 second clips like you would find on iTunes or AmazonMP3. Because users were able to stream entire songs, the entire catalogue of songs on Project Playlist needed to have proper licensure, which evidently was not the case. Now, Warner Music Group, Universal Music Group, and EMI are suing Project Playlist for copyright violation. In an attempt to distance themselves from any fallout or legal ramifications, both MySpace and Facebook have pulled the plug on Project Playlist after initially being asked to do so by the RIAA last summer.

To be fair, there have been talks about Project Playlist working out a deal with the labels to gain access to streaming the songs legally, so they have shown some sings of getting in the right. Some are seeing this shakedown as a move by the labels to cut out Project Playlist’s primary market in an attempt to force them into a deal with the labels, upon which Project Playlist could resume operations on the social networking giants. This wouldn’t be new ground, as Warner has done the same with Imeem and Universal has done the same with MySpace before. So it would seem that shake downs usually preface partnerships in the world of label/site relations.

The bigger question to me is whether or not Project Playlist can survive when their cost of operations skyrockets from having to pay licensing on so much music. I’m not convinced that strictly ad-supported, free music sites can work once they have to start paying copyright fees. We’ve seen Pandora have its financial woes, cutting 14% of its staff just two months ago. Pandora has directly blamed the Copyright Royalty Board and RIAA for the troubles.

Facebook’s de facto music service, iLike, has put itself on the market just as iMeem did two months ago. In a not so encouraging move, iMeem laid off about 25% of its staff around the same time. Gaining revenue from more than just advertisments, iLike has reportedly generated most of its $16 million from Ticketmaster concert ticket sales, giving just enough sustenance to stay afloat for now. Rumors of iLike being purchased by Real Networks, Facebook, and Ticketmaster are equally unlikely by my estimation. They have likely now realized that without an actual product, and with very limited avenues for gaining revenue, they are not likely to survive on their own. A buy out may be the only way iLike stays in business, which shows little promise for other web 2.0 music applications.

So the question is: how can internet music services like Pandora, iMeem, iLike and last.fm stay in business while operating legally, and without subscriptions? Maybe the bigger question is simply: Can they?

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