It’s been two months since Rdio’s beta launch, with all four major record labels and indie aggregators including The Orchard and INgrooves on board since its early-June introduction. CEO Drew Larner wouldn’t say how many paying customers have signed up, nor would he discuss its conversion rate from free trials, but since the service is inherently heavily social, it’s apparent that Rdio is gaining some traction as play counts rise and playlists are shared. I’ve been using its Web service daily, and have lived with it on my iPhone for a couple of months. (Disclosure: I’m enjoying a free trial courtesy of Rdio.)

Rdio competes most directly with cloud-based rival MOG — which launched in December 2009, and added a mobile service for Android and iPhone last month — as well as legacy service Rhapsody and mobile-heavy Thumbplay. (If it ever launches in the U.S., the now-comically-delayed Spotify has surely lost potential paying customers to all of them.) I see Rdio sporting an edge in social features and seamless, pop up-free user interface, while MOG still sports a deeper catalog, better customizable radio, and a more feature-rich iPhone app. Rdio promises a revamp of its iPhone app soon (it’d help), and has already introduced more features for Android and BlackBerry handsets. MOG, it’s worth noting, has cleaned up most, if not all, of the glitches I reported in my last post about them; it’s also worth mentioning that MOG doesn’t yet support multitasking while Rdio does.

I’ve been fairly skeptical of the idea that cloud-based services will suddenly prompt people to rent music rather than own it, and have cited several reasons why the new services have left me a little cold. That said, Rdio has just addressed one of my concerns, adding gapless playback for albums whose tracks run together. It works (most of the time) during desktop playback only, but I’m told that mobile is next. While my gripe seemed nitpicky to some, this is actually a substantial differentiator for fans of classical and electronic music, prog-rock, and live albums, among others. Uninterrupted applause to Rdio for dealing with it; it’s passed my test already.

Even if the mobile versions are still a little clumsy at times, Rdio and MOG are inexpensive desktop options that reliably complement the music I already own, while offering superior experiences to free options like YouTube and Grooveshark. I still haven’t seen a service that has everything I want, but Rdio is a fine supplementary service, if not a replacement for music ownership. I’m still waiting for Apple and Google to make their moves in cloud music, but for an avid listener like me, at the very reasonable $5-per-month, all-you-can-stream price point for the desktop, it’d be hard to say Rdio isn’t worth it.

Although it was first to enter the U.S.-based market among the new wave of cloud-based streaming services when it launched its desktop service in December 2009, MOG’s entry into the mobile arena follows the arrivals of Rdio and Thumbplay, which offer similar desktop-plus-mobile plans that cost about $10 monthly. (Both Rdio and MOG also deliver streaming music to PCs for $5 a month.) MOG also goes head-to-head with Spotify in the UK market, though the latter’s promised U.S. launch has been delayed so often that it’s starting to appear apocryphal.

My week-long test drive of MOG’s iPhone app showed how far mobile streaming music apps have come since Rhapsody became the first U.S. subscription service to introduce an app last September. It also indicated how far they have to go. MOG’s feature-rich app allows many levels of micromanaging one’s music desires, offering on-demand queuing, playlisting, offline caching and multiple degrees of control over what appears in a radio stream, from single-artist shuffles to Pandora-like mixes of similar artists and songs via a unique slider interface. Some might even say the feature set clutters the app, but once I got used to it I found it to be the most flexible music app on my mobile phone, with functionality that outstrips its peers.

Still, I found MOG’s initial app glitchy. Once, it mysteriously defaulted to 30-second clips in the middle of an album, then delivered full tracks on a second try. It re-started a cached track multiple times by itself while I sat in a train tunnel, and on one occasion it suddenly repeated a song long after the album had ended and the phone sat idle. And like its cloud competitors, MOG still hasn’t solved the continuity issues around streaming an album with songs that run together; abrupt gaps occur as one song ends and the next is still loading. It’s like listening to a badly burned CD — something I associate with a free experience rather than a paid one.

MOG has improved its song catalog impressively since launch, and has filled in a lot of the gaps that the newer rival Rdio is still remedying. Both compete in an increasingly crowded music subscription field alongside incumbents Napster and Rhapsody, and that field seems ripe for a shakeout within a year or so, especially if handset makers or carriers decide to add music content to their offerings via acquisitions. MOG represents an increasingly attractive standalone offering, even if consumers have historically never demonstrated all that much desire to subscribe to a music library. Instead, it could be a viable takeover target, as a mobile music service bundled with an existing wireless subscription might finally produce the successful access model that has proven so elusive thus far.

Like several others in the marketplace, Rdio -– pronounced “AR-dee-oh” -– promises streaming, cloud-based access to a library of millions of songs for a flat monthly fee. (To learn more about cloud-based streaming, attend Structure, June 23 & 24 in San Francisco) Desktop and mobile access via iPhones and BlackBerrys costs $10 monthly, while desktop-only customers pay $5. That’s an increasingly familiar price point: MOG, which went live last fall and is now preparing its mobile launch, will have the same two-tiered price system, while Rhapsody and Thumbplay both offer desktop-plus-mobile plans for $10; European fave Spotify offers free ad-supported streams and a two-tiered premium plan. (See my report, Spotify Leads the Streaming Music Scene, on GigaOM Pro, sub req’d)

So what’s new? Rdio favors social music discovery via a Twitter-like model based on following other users. Music that’s frequently played among those users turns up in a “heavy rotation” list, a sort of musical version of Twitter’s trending topics. It’s an inherently non-private service, with your listening history as well as your collection of bookmarked songs on display for anyone to scrutinize. That may be a turnoff for some people, but it’s the key to Rdio’s discovery component.

I liked Rdio’s fast-moving, browser-based interface; there’s also a small desktop app that performs seamless playback and inspects your iTunes library in order to populate your web collection. I found the mobile app a little balky, but it survived a road trip test, notably in that since it includes offline caching of songs, I was able to access my favorites while in places where connectivity was sparse. As for the “lean-back” radio element, it’s fairly basic and not terribly flexible, using Allmusic Guide data to construct stations based on a single artist – not trait-based like Pandora or culturally driven like Last.fm, and without the clever slider functionality of MOG.

I’ve already written about some of my frustrations with cloud-based music services, and Rdio doesn’t solve all of my issues concerning interoperability and user experience. While its catalog of almost 5 million songs is growing, it’s still a little spotty –- all four majors are on board, but some but not all major indies are represented. Like its rivals, I see Rdio as a secondary service where I might discover and sample music on-demand, rather than something that can replace ownership of things I like.

Rdio does capably fill the gap between what I own and what I might want to hear but would never pay for — trouble is, not many people have demonstrated a willingness to pay for other cloud music services that do the same thing. (I do believe that paid access models are replacing ownership of music, partly but not completely, and very slowly.) Rdio smartly integrates the better elements of free services –- social connections, discovery, playlisting, radio -– with the paid all-you-can-eat model, bringing everything together into one place in the hopes that people will pony up. It’s a good product that its creators say will become more feature-rich, which is important as Spotify becomes more social and others trick out their services. But while Rdio may be satisfying for a niche of musically curious people, I’m not yet seeing why it would pull away from the pack to become a breakaway hit.

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• The Quest to Monetize File Sharing
• Spotify Leads the Streaming Music Scene

Established as a CD-swapping service in 2006, Lala repositioned itself as a forward-thinking cloud music site in 2007, offering a storage locker for its users’ MP3 collections while selling 10-cent web songs that gave buyers the right to stream tracks as many times as they’d like. It may have been ahead of its time; while relatively few buyers paid for web songs, the shift from owning music files to streaming them from the cloud (GigaOM Pro, sub req’d) appears to be gaining mainstream approval. Apple’s acquisition of Lala last fall augured a future in which the iTunes software allowed us to play songs from the cloud, although the company has yet to describe what that will look like in practice. Will it merely let us stream the song files we possess from any device, or will Lala’s innovative form of ownership — the ownership of a stream, at roughly a tenth the cost of an MP3 — be echoed in Apple’s new project?

Speculative reports have suggested that a new version of iTunes could appear as soon as June, although Apple has yet to reveal any new agreement with major record labels that would allow cloud-based streaming. (Lala’s license was reportedly non-transferable, should the company be acquired.) Any new agreement could involve a messy renegotiation in which Apple would make new concessions to the labels, as it did last year when variable pricing, DRM and bundling formats were in play.

Apple will issue iTunes store credit for Lala web song purchases as well as outstanding wallet balances.

As of today, Midomi has rebranded itself as SoundHound and introduced a new freemium model aimed at challenging Shazam on both free and paid music app charts. The company has also hired away Shazam’s former VP of business development, Katie McMahon, in an effort to execute on a partnership strategy to incorporate its sound-matching search tool into other sites and applications. Its ambitions could also make SoundHound a target for acquisition, since it does something Google and its rivals cannot.

Although SoundHound’s search is imperfect –- it doesn’t really work for strummed chords or harmonized vocals, and it relies on a crowdsourced website for its somewhat limited sing-to-identify database -– it outclasses by far any of the available melody search engines I’ve seen on the web. I’ve used it to identify wordless jazz standards I heard as a child and carried around in my head for decades; it picked them out in a matter of seconds. And it’s faster than Shazam when it comes to identifying recorded music, too.

Its first order of business is taking on its better-known rival by offering more functionality at the same price, with voice search, lyrics and videos built into the app — users can identify five songs per month for free, while a $5 premium app will provide unlimited IDs.

Over the longer term, SoundHound can branch out into other arenas, which I discussed with WaldenVC’s Larry Marcus, an investor in SoundHound parent company Melodis Corp. as well as an early Pandora stakeholder. (Melodis has raised $16 million from WaldenVC, Global Catalyst Partners, TransLink Capital and JAIC America.) The app currently makes money through mobile ads and affiliate sales of songs, but Marcus said SoundHound is exploring deals with carriers and device makers seeking to incorporate search into music apps, as well as extending its search functionality into existing music subscription services. Furthermore, the company is using sound matching to develop an advanced voice search technology that uses the sound of words rather than converting them to text – what Marcus called a “natural misspelling engine” that can also correct mispronunciations. Might Google be knocking on SoundHound’s door next?

The new price point reflects an industry-wide drop in the cost of all-you-can-eat music services, which deliver access to a large library of songs for a monthly fee, even as their providers add mobile functionality. Rhapsody has taken steps to evolve alongside newer subscription services such as MOG and Thumbplay, which offer cloud-based streams to both desktop PCs and mobile devices for about $10 per month, as well as free alternatives. Rhapsody traditionally delivered streams to the desktop, along with “tethered download” files that can be loaded onto certain mobile music players, for about $15, but added cloud-based access through its iPhone app beginning last September.

Rhapsody has also recently renegotiated its licensing fees with content owners, representing more realistic expectations from labels. While confidence in free streaming models is fading, Warner Music Group chief Edgar Bronfman Jr. said recently that the label is increasingly willing to experiment with paid subscription models.

Along with the ownership change and price cut, Rhapsody introduced an application that runs on Android phones, along with a new logo (pictured). Despite the overall reboot, existing subscribers will have to can either contact the company’s customer service department or update their accounts on the Rhapsody web site to sign up for the new pricing plan; otherwise they’ll continue to be billed at the old subscription rate.

Although some of its upstart rivals have garnered more attention lately, Rhapsody is still among the largest subscription providers in the market with more than 675,000 subscribers as of the end of 2009, according to RealNetworks, down from a peak of 800,000 earlier in the year. Competitor Napster, owned by Best Buy since fall 2008, no longer reports the size of its subscriber base, but was last known to have 708,000 subscribers around the time of its acquisition; Spotify recently said it had signed up 325,000 paying customers in Europe, and is still planning a U.S. launch, originally slated for late 2009.

Rhapsody’s spokesman said the company is forecasting profitability by the end of 2010, with revenues near $130 million. RealNetworks invested $18 million in cash as the company was spun out, while Viacom said it will contribute $33 million worth of advertising inventory to promote Rhapsody on its properties, including MTV Networks.

The model, which CEO Claes Loberg calls “engagement advertising,” allows an advertiser to choose specific songs to sponsor along with target demographic groups. Rather than interrupt the experience with a video ad, he says, advertisers can create branded pages that feature dynamic lists of songs with which the brand wants to be associated. Essentially, the model demands that consumers willfully click on a chosen advertiser’s brand name. The advertiser’s fee covers the retail cost of the song file, plus a little more for Guvera itself.

For consumers, the path between a search and a free song file is one of fairly little resistance. If I search for an artist and choose a song, I have to pick an advertiser and visit a “channel” page populated with a list of songs, one of which is the one I want. Although I don’t pay for my track, I’m required to use up a song credit, which can be earned by telling Guvera what some of my favorite things are -– foods, vacation spots and so forth. So by volunteering a bit of personal information and viewing a list of songs with which a consumer brand wants to be associated, I get a DRM-free MP3 at no charge.

Guvera has drawn comparisons to Atlanta-based FreeAllMusic’s service, which is still in private beta. That site offers an MP3 in exchange for watching a video ad of your choice. I’ve enjoyed FreeAllMusic for a couple of months, especially because I know the artists whose music I download are compensated, although I’ve felt little engagement with most of the ads I’ve seen. In fact I’ve already figured out which one of the available ads is the shortest, and I’ve chosen it repeatedly even though it’s hawking a product I’ll never buy. If advertisers are really paying $2 for each video ad impression they serve up as I fill out my jazz collection, in my case, they’re overpaying.

The same may be true of Guvera’s advertisers, who might sway me occasionally but whose pages I’ll probably click on without much thought. Each has a limit: Guvera allows brands to cap the amount they’ll spend on each consumer, making the service less scalable but also better tailored for grabbing a single song than a whole album, which might require more credits than the advertiser is willing to give. In that sense, Guvera plays to the consumer of hit singles first and foremost: Don’t buy the Lady Gaga song, let the hair product maker buy it for you.

Guvera’s U.S. launch is still incomplete. Although the song catalogs are searchable, the channel pages aren’t yet populated, so there isn’t any free music available just yet. (I was able to preview the Australian version early this week, which Loberg said about 50,000 Antipodeans are using.) Also, Guvera has signed up only two of the four major labels thus far, plus indie aggregators IODA and Ingrooves, although Loberg said a deal with a third major is imminent.

The U.S. launch may coincide with the rollout of a revamped version of the product. CEO Daniel Ek told a SXSW crowd earlier this month that a “more connected” edition of the product is on the way, with more social and sharing features; Ek has also outlined ways in which the service can serve as a platform for selling tickets and merchandise as well as providing a direct-to-fan communications channel. The Bloomberg report also says apps for BlackBerry and Palm phones are coming soon; Spotify already has iPhone, Android and Symbian apps.

That sounds great, but a lot can change in a few months. Spotify already faces increased competition as subscription services continue to spring up — each taking a slice of the paying consumer market it will need to capture. Spotify may also have to adjust its own model as content owners’ demands and expectations continue to shift, and Ek has acknowledged that the U.S. model will feature “slight changes” compared to what Europeans currently enjoy. He has insisted that the U.S. version will have a free component, although I have my doubts.

Spotify’s product is terrific, and it has won over investors. Its conversion rate is improving — it’s now about 4.6 percent, with some 325,000 paying customers among 7 million total users — and a Universal Music Group digital executive said in January that the company’s model appears to be sustainable, despite the need for a double-digit conversion rate. But Spotify once suggested it could come to the U.S. by the third quarter of 2009, then aimed for year’s end, and now says it won’t make it out until the summer. Forgive me for wondering if 2011 is a possibility.

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Rankings: Spotify Leads the Streaming Music Scene

So how come I’m still not ready to pay for any of them?

I’m a voracious music listener, one with varied but quite specific tastes and as such, a large collection of albums and songs in both physical and digital form. After taking several different subscription services for a test-drive, however, I found that they provide a good — but still very flawed — experience. Here are five reasons why:

There are still significant gaps in the catalog. As I’ve noted, the services may offer all you can eat, but their menus aren’t always complete, and they keep changing. It’s frustrating to pay for a service that doesn’t have songs you want, and even more frustrating when songs that used to be there aren’t anymore.

I still can’t merge things I own with things I just want to stream. Nearly all music fans have songs in their collections that aren’t on any subscription service. It could be an unlicensed mashup, your friend’s band, the Beatles or Led Zeppelin. But there’s still no subscription service that lets me make a party playlist that includes both Beach House and the Beatles. I choose not to own the former, and I’ve got MP3s of the latter, but I can’t have them both side-by-side. (Spotify, for one, may be working on a remedy for this, but as far as I know it hasn’t gone live anywhere yet.)

Ownership of music still provides a smoother listening experience. Try listening to Pink Floyd’s “The Dark Side of the Moon” or any live album with applause between songs on these services, and you might start wondering where your CD player is. When the next song doesn’t load fast enough to pick up where the previous one leaves off, you’ll hear an abrupt silence –- a major turnoff during album-length pieces with continuous “banded” tracks that run together. When I use iTunes, there’s sometimes an audible seam but no pause, with an option to crossfade; physical formats have no such issues. In this respect, the cloud-based experience can be a degraded one.

I can only share music with fellow subscribers. If playlists are the new mixtapes, as Spotify CEO Daniel Ek said this week at SXSW, I’d like to share them with my friends. In a market as fragmented as music-as-a-service is shaping up to be, playlist sharing won’t be that compelling until we’re all using the same service — or at the very least, compatible ones. This isn’t as big an issue when there’s a free component, as with Spotify and Rhapsody, but in general, until a critical mass of my friends are subscribing, there will be better ways to share. (I miss you, Imeem. You too, Muxtape.) The MP3 file is very flexible; cloud-based subscriptions still aren’t.

I can still hear things that I don’t already own without paying for them. I’ve already got a lot of music, and there are still new records I’d prefer to own, and for which I will happily pay. (You might be very different.)  But I can also hear an awful lot of on-demand free music via both legitimate and legally questionable channels: Hype Machine, Lala.com, Grooveshark, Play.me, YouTube, Blip.fm, FreeAllMusic, BeeMP3.com, Skreemr, MySpace and elsewhere. Pandora and Last.fm help me discover things through a sort of customized serendipity, while the blogosphere provides curated discovery. Yes, an on-demand subscription gives me more, sometimes in a better-quality experience. But for things I might not choose to own, free options are often still good enough. (Remember, more than 95 percent of Spotify’s users think the free version is good enough, too.)

Music subscriptions are improving, and I imagine that most of my quibbles will be dealt with in time. (See my further discussion of the services in this GigaOM Pro piece, sub req’d.) But for now, I still view subscription services as supplementary — not primary — sources of music, and ones that haven’t done much to change my preference for a hybrid of music ownership and free options.

As I said, I’m a voracious music listener with varied but quite specific tastes. And if subscription services’ numbers are any indication, there are millions of subscribers out there who are quite satisfied with what they’re paying for. So I’d love to hear more about how subscriptions work for you -– or don’t.

Post and thumbnail photos courtesy of Flickr user itchy73

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This article also appeared on BusinessWeek.com

Indeed, there are plenty of empty trays at the all-you-can-eat music buffet, though some will leave you hungrier than others. Use one for awhile, and the gaps in its catalog soon become apparent. Try two or more, and the inconsistencies among them become downright baffling.

Most of the services claim to provide access to the full digital catalogs of all four major labels and a slew of independently distributed recordings, most delivered via aggregators such as IODA and the Orchard. But why is MOG missing the first two Tom Petty albums, while Thumbplay has them all? Why does Spotify – at least the preview version I’m testing here in the U.S. – have only two or three Bob Dylan albums, when its competitors have dozens? Why is Rhapsody the only one that has Grizzly Bear’s “Veckatimest,” an acclaimed independent-label album that entered the Billboard chart at No. 8 last June?

As I’ve learned from conversations with subscription providers, obtaining a complete and stable catalog of music is hardly as simple as working out a contract with a label or distributor. Songs and albums are constantly blinking in and out of view as ownership rights change hands, reissues are prepared, and songwriters and performers change their minds as to where they want their songs to be heard. Some labels handle their own distribution rather than going through aggregators, meaning that individual deals have to be struck in order to make their catalogs available. Geography can be a factor, as licenses vary from country to country. What’s more, a glitch in something as simple and unsexy as the file metadata that identifies a song –- a missing capital letter here, a misspelling there –- can render a track invisible to the consumer, even if it’s properly licensed by the subscription service.

Filling holes in the catalog is time-consuming and labor-intensive. (As MOG’s director of content licensing, Buzzy Cohen, told me, “Finding the holes is harder than filling them in.”) Companies with deeper financial resources and more personnel will have the upper hand when it come to chasing down rights holders one at a time in an effort to maintain a more complete catalog, so it makes sense that the older companies are more successful at it than the new ones — and explains why Rhapsody’s service, which has been around for more than eight years, satisfies my searches more consistently than any of its upstart rivals.

Though the causes are manifold and the companies’ efforts to fill the gaps are admirable, it’s frustrating to music fans when our searches aren’t satisfied, and even more irritating when songs in a playlist disappear without warning. And as consumers choose from among several services — or choose not to subscribe at all — holes in the catalog can ultimately be a dealbreaker.

Post and thumbnail photos courtesy of Flickr user samsmith

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MOG’s cloud-based mobile service will cost $10 a month, double that of its well-received desktop-only product, which features custom radio and playlisting in addition to the on-demand component. Music service providers, including Rhapsody and Best Buy-owned Napster, have long hoped that adding on-demand mobile access would boost consumer interest in subscribing to music, sometimes derided as renting music. To date, the Rhapsody service -– which added offline storage will soon feature offline storage to on its existing mobile apps this weekend -– has gotten little momentum from smartphone adoption.

Daniel Ek, chief executive of European streaming music provider Spotify, is scheduled to deliver a keynote interview tomorrow at SXSW, prompting speculation that the company could finally launch in the U.S. Spotify is testing the freemium model for streaming music, offering free ad-supported streams to PCs and a premium ad-free service in both desktop and mobile versions. The free product has proven wildly popular in Europe, but the company hasn’t yet demonstrated that its conversion rate — thought to be less than 4 percent in a February estimate — is high enough to satisfy record labels.

Since last summer, when the extremely well-funded Spotify began gearing up for entry into the U.S. market, content owners have soured on free streaming, and called Spotify’s freemium model into question. Warner Music Group chief Edgar Bronfman Jr. recently said the label wouldn’t support “get-all-you-can-for-free” models in the future but remained happy to work with subscription services. Spotify long ago admitted that its model might look different in the U.S., and I’ve been hearing for months that a free version with all four major labels on board is unlikely to appear stateside.

Spotify’s desktop product is wonderful, but the European market has already shown that it’s more compelling as a free product than a paid one. If it’s to be just another subscription service in a crowded field on this side of the pond, Spotify may have fumbled a potential early-mover advantage by holding out for a licensing agreement with labels that would allow a sustainable free version. Running afoul of content owners and squandering a head start can really bring a company down, and in Spotify’s case, doing so has given other innovators an opportunity to sign up paying customers. That may be why investors on both sides of the Atlantic have doubled down on MOG.

For the GigaOM network’s complete SXSW coverage, check out this round-up.

Six months later, however, iTunes LP doesn’t prompt much consumer recognition, and none of the industry sources with whom I spoke said they viewed it as being anywhere close to game-changing from a format perspective. Rather, it’s considered more of a curiosity. Like an enhanced CD or a DVD packaged with a physical album, iTunes LP’s bonus materials may interest super-fans, but they aren’t generating much buzz among mainstream consumers, and don’t appear to be stimulating LP sales at all. “It’s something most people will look at once,” is how one person put it.

It’s somewhat ironic that the very company that atomized the album in order to sell individual tracks -– one of many causes for the music industry’s decade-long tailspin –- has encouraged the rebundling of songs with iTunes LP. But I’m told by an industry source who preferred to remain anonymous that iTunes LP wasn’t Apple’s idea in the first place. Rather, it’s the result of the same renegotiations between Apple and the major record labels that yielded DRM-free songs and flexible pricing early last year, a concession by Cupertino to make a gesture in favor of album sales as consumers increasingly show a preference for digital singles.

One person who worked on an iTunes LP project said Apple subsidized the initial group of LP editions, which were created by the company’s handpicked third-party developer at costs of up to $60,000. All are issued in “deluxe edition” releases that feature extra tracks, typically priced a few dollars higher than iTunes’ customary $9.99. Neither Apple nor anyone else I spoke with was able to break out sales figures, but sources in various parts of the music industry agreed that the financial impact of iTunes LP on record sales has been tiny, if it’s had any effect at all.

Only 29 LPs are currently for sale in the iTunes store, about a dozen of which were available when the format was launched. Several are catalog albums, meaning that only a couple of new releases each month appear as iTunes LPs. The same person who participated in an iTunes LP project said, “If it costs $50,000 or $60,000, we’re not going to do it again,” although at the same time, acknowledged that Apple’s extra promotion of the release in conjunction with iTunes LP helped it become a moneymaker after all.

Not every project will cost so much. Apple opened a developer kit for iTunes LP in the fall, enabling artists to craft album packages independently. Direct-to-fan marketing tools developer Topspin Media handled a December release for Pixies spinoff band The Everybody, touting it as the first iTunes LP release sold outside the iTunes store. But a Topspin spokesman told me interest in iTunes LP was generally quite meager among artists with which Topspin had worked.

Although the format was initially seen as tailor-made for tablet computing, Apple hasn’t yet done much to promote the iPad as a music device. When Jobs stepped onstage again in January to introduce the iPad, iTunes LP was barely present. The music segment of the presentation was less than 60 seconds long, and although an iTunes LP was visible as Jobs spoke, he never mentioned the format. No one I spoke to said the imminent availability of the iPad had generated interest in new iTunes LP projects.

As it turns out, most artists and labels are pursuing a different avenue for their digital goodies: iTunes’ wildly popular App Store. Numerous artists have released lyrics, videos and other content in both free and paid apps, which also serve as channels for artist news and can be updated with new content anytime.

It’s still possible that once a few million iPads are in consumers’ hands, and with a few more ambitious iTunes LP releases — like the 760-megabyte package for the new album from Gorillaz — the format will prove to be an essential component of a digital album. It’s also possible that iTunes LP will continue to have a miniscule financial impact on record sales, merely providing a small bonus for a dwindling audience of album-oriented fans. At least with its effort and investment in the format, Apple can say it made a redoubled effort to undo the damage it did to last century’s record industry by selling songs one at a time.

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As it enters public beta, Thumbplay’s music subscription service becomes the first to launch simultaneously on desktops and smartphones. The company’s deep mobile experience is one key differentiator that sets it apart from incumbents such as Rhapsody and Napster as well as upstarts MOG and Spotify, the latter of which hasn’t launched in the U.S. yet.

CEO Evan Schwartz told me half of Thumbplay’s installed base is now using smartphones, and the company already counts hundreds of thousands of customers for its existing mobile entertainment subscription service, which offers ringtones, wallpapers and other goodies. Online radio provider Pandora, for one, has shown how mobile phones can drive user adoption of a music service, and Thumbplay may have some advantages as a result of its presence on smartphones.

As an iPhone user, I wasn’t able to test the  mobile app, but I did get to survey the desktop version (screenshot below), an Adobe AIR-based client that was up and running quickly after a brief installation. Thumbplay’s library, said to comprise 8 million songs from all four major labels and numerous indies, showed some gaps (no Arcade Fire?), but I found that the songs loaded quickly and played without interruption. If it can replicate that experience on mobile devices — and early reports suggest that the BlackBerry app may still be buggy — Thumbplay will have a real contender, given that Rhapsody ($14.99) and Spotify (€9.99 in Europe, or $13.56) are charging more for the anywhere-anytime experience. Thumbplay also offers smart playlisting built on the Echo Nest’s music brain, delivers instant syncing between desktop and phone, provides offline caching on mobile devices — good for airplanes and train tunnels — and allows users to import iTunes playlists.

Schwartz said Thumbplay reached profitability around the middle of last year, and has reportedly raised $61 million from venture investors. The company’s expansion to include a full-track music service is in line with forecasts suggesting that the market for ringtones has already peaked, and that consumers will soon expect a more complete music experience from their mobile phones. Spotify’s imminent U.S. launch will probably still make the biggest splash, but given its large installed base and understanding of mobile behavior, don’t count Thumbplay out.

The choice of Balderton as a new investor gives MOG a beachhead in the UK, where it plans to launch its service this spring. The company is also planning to introduce a series of mobile applications in the coming weeks, and is exploring integrations with networked consumer electronic devices, including set-top boxes.

MOG raised $5 million last summer, prior to the introduction of its all-you-can-eat streaming music service in early December. David Hyman, CEO of MOG, said the company will use some of the funds for an aggressive consumer marketing strategy intended to win over new users. MOG plans to extend its free trial period from one hour to three days in order to encourage new signups; the company says it’s currently converting 17 percent of trial users to paying customers.

MOG, whose service allows on-demand streaming of nearly 7 million songs from all four major labels and numerous independents, is preparing to launch iPhone and Android applications by April. MOG’s desktop service currently costs $5 a month, but Hyman has said the mobile version will cost more.

With the UK launch, MOG will enter a market in which Spotify’s free service has won considerable consumer attention but relatively few of its fans have become paying customers. Rumors have suggested that Spotify may launch in the U.S. as soon as next month’s SXSW conference, although the stateside version may lack the free tier in favor of a monthly subscription fee similar to MOG’s. Warner Music Group chief Edgar Bronfman Jr. said earlier this month that the label is no longer interested in working with free streaming services, but remains in full support of subscription models. Warner holds a small equity stake in MOG, but has never invested cash in the company.

Aha wants consumers to construct their own stations at home, not in the driver’s seat — in fact, there are some tasks the app won’t perform when it senses that you’re cruising down the highway. The Aha Radio app’s channels include real-time, location-based traffic information that can be customized for a specific commute, tweets and Facebook status updates, restaurant data culled from Yelp, and news from NPR and Fox -– all read aloud, often by a robotic “cyber-human.” Users can also contribute to the service by notifying fellow drivers about car wrecks or other developments via brief voice memos; there’s also a somewhat silly “caraoke” channel of people singing along to their radios. The company’s first app is available free of charge for the iPhone, and CEO Robert Acker says an Android app is likely later this year.

Aha pays for very little of its content, save for a contract with Inrix that delivers traffic data; the rest comes from existing APIs. Acker said Aha is still pre-revenue, although it expects to add 10-second advertisements “after 2010.” What’s more, he said he envisions Aha as a platform company that expects to work with carmakers as they develop in-dash or steering wheel controls that will allow drivers to operate or manipulate apps remotely, without handling their smartphones –- and eventually enabling them to do away with phone and apps completely while driving. That’s the model Pandora’s Tom Conrad described to me last fall, in advance of that company’s fruitful CES trade show in Las Vegas last month.

Acker said Aha won’t be offering a music channel, although it may seek to syndicate its customizable content streams into existing mobile music services, so that a user can switch to a non-music channel for traffic reports or other data (just as a driver might tune in an all-news terrestrial AM station for a few minutes after listening to FM music for awhile). The company could also add driving directions or other services, as well as premium information for which it could charge money.

Venrock led Aha’s $3 million Series A round last year, and Acker said the company is aiming to complete a second round in the coming months.

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Rhapsody launched its iPhone application in September and saw quick uptake, with hundreds of thousands of consumers test-driving the app in its first few weeks of availability. But that didn’t translate into sales right away, as its paying customer base dipped to 700,000 during the third quarter of 2009 from more than 750,000. (RealNetworks typically reports the size of Rhapsody’s subscriber base as “greater than” some number.) Now that it’s had a full quarter to prove itself, the results are no better: Rhapsody now counts somewhere between 675,000 and 700,000 subscribers.

Music subscription services have generally hoped that the “any song, anytime, anywhere” promise of mobile applications would rekindle interest in a model that has flagged somewhat over the years. Rhapsody and longtime rival Napster now face competition from upstarts such as MOG and Spotify, which offer updated models that have attracted venture investment and attention.

RealNetworks announced this week that Rhapsody would be spun out as an independent company. The restructuring will make RealNetworks and current minority stakeholder Viacom into equal partners holding less than 50 percent of Rhapsody. RealNetworks pledged $18 million in cash to Rhapsody, while Viacom-owned MTV Networks “will contribute a $33 million advertising commitment.” The independent entity may seek outside investors as well.

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