GigaOM

Online music discovery and sharing sites are a dime a dozen, but they still continue to launch. For those watching this phenomenon and wondering why new startups keep entering a crowded — and relatively unprofitable — market, look no further than Kasian Franks, CEO of Seeqpod, and Dan Kaufman, CEO of Jango.

Each CEO sees music as the killer application that will lead their users into more lucrative enterprises. With Jango, which is a cross between an Internet radio station and social network, the business proposition is to license the ability to stream the music as an online radio station (as opposed to striking deals with individual recording companies), build a social network around that streaming music, and then sell targeted ads.

Jango, which launched its beta in December and has raised about $2 million from angels, allows users to type in the name of an artist and immediately hear their songs. A list of additional recommended artists is also provided. The user clicks on each band or singer to create one or several personalized radio stations, and those radio stations are shared among Jango’s users.

Kaufman, who points to services such as Imeem, Last.fm and iLike as places where people can go to find music online, says Jango is more social, and notes that the social component leads to more page views and a targeted space for advertisers. Advertisers on the big social networks don’t know where their ads may appear, he claims, so it’s worth it for certain advertisers — especially those promoting artists — to sign up with Jango. In addition to ad revenue, Jango plans to make money on transaction fees for selling music on the site, and like Internet radio stations Pandora and Slacker, will charge subscription fees for those who want to avoid ads or get access to more features.

Jango’s model is fairly conventional, in that it relies on music to build an ad-supported social network that uses ads to monetize its users. Seeqpod is different — it’s using music as a way to sell its search technology and recommendation engine. The startup, which has raised close to $4.5 million from angels, has exclusively licensed search technology from the Lawrence Berkley National Laboratory.

Taking a cue from Chinese search giant, Baidu, which has a popular MP3 search function, Franks decided that music was indeed something universal enough to get users to try out the search engine. Visitors to the Seeqpod site see a search box similar to the one at the top of the Google homepage, but also get a list of currently searched-for music that scrolls underneath that box. After the user types in the song for which he is looking, Seeqpod searches for it on the Internet and begins playing it (but not hosting it, so as to avoid legal issues).

Songs related to the search inquiry are also shown as part of Seeqpod’s recommendation capabilities. Franks says Seeqpod plans to add video search and discovery in the future, and to advertise against its results, much like Google does. In a program similar to Google’s AdWords, Seeqpod plans to work with individual artists to show ads on their sites based on music searches and split the revenue from showing the ads. Franks maintains that music is the best way to get user adoption and for Seeqpod to garner the ad revenue associated with a successful search engine. A similar music recommendation site with an eye on larger markets is MyStrands.

“Music is a suberb strategic platform for rolling out services and promotion,” Franks says. “There’s no Powerset or Kosmix here. Consumers don’t care about the search engine; [search engines] are a transition point that enables them to get to another place on the web.”

Both startups are using music as a differentiator to get market share in a crowded space that is dominated by giants: In Jango’s case, music will have to push it past Facebook and MySpace, while Seeqpod has set itself against Google. Consumers may love their tunes, but hitting the right notes with enough of them will be a challenge.