I’d argue that both of these very smart guys are obsessed with the wrong problem and, on this topic at least, they are as stuck in the past as major labels are.

They both make the mistake of focusing primarily on start-up business models that revolve almost exclusively on getting publishing or performance rights to stream or download music. And by getting tangled up in that mess, they miss the forest for the trees.  They’ve forgotten that the music industry isn’t — and has never been — just about recorded music.  Sure that part is hard and it’s been shrinking for the last decade, but that aspect is only a part of the bigger picture.

Don’t believe me?  Here are some forward-thinking companies who are wisely focusing on other parts of the music world and not just whining about the high cost of licensing music. So what are they doing right?

They focus on live music

Live music revenues have eclipsed recorded music revenues and while a lot of that money is flowing through LiveNation or AEG, both of those companies are ripe for disruption. Live experiences are hard to pirate and commoditize. As the money drained out of recorded music sales, money spend on music has moved products and services that are harder to mass produce and offer intimate access to their favorite musicians.  And fans are willing to pay for these experiences, in stark contrast to the smaller segment who are willing to paying for downloads or subscription music services.

This is what start-ups like SongKick and BandsInTown understand as they build communities and tools for live music.

They are making promotion and discovery better for artists

The truth is that 90 percent of musicians don’t have a piracy problem, they have an obscurity problem. The people who should love their music just don’t know it exists. The old channels of videos and radio are still there, but the internet exploded everything and diffused attention. In many ways it’s harder than ever for artists and fans to connect. While Peter scoffs at the value of a start-up based on bands without music contracts, it’s where the future Radioheads and Beyonces are going to come from. And plenty of new and old artists who DO have label deals also need these services and will pay for them.

This is what Soundcloud (CEO Alex Ljung pictured) is doing by proving easy-to-use tools for artists who want their music to be heard by more people in more places. Or WebDoc, which creates a platform for artists and their fans to collaborate and share creative projects.  Or The Hype Machine, which has harnessed the power of music blogs to amplify discovery of new music. This is also the area that my old company, Last.fm, SHOULD be pivoting toward…but don’t get me started on that.

The opportunity to partner with brands here is also amazing. It’s also a place where you can get the labels to work with you instead of sending their shark-like lawyers to negotiate with you.

They are making the whole ecosystem better

The value of music for fans isn’t just listening to it.  It’s about the connections you make with other fans and to the artists themselves. Or by disrupting the number of middlemen who take a part of each dollar an artist gets from fans. Fans want to pay artists, particularly when they understand that the artist gets a larger piece of the pie than they did with the old-school record labels.

This is what Ian Rogers has been preaching forever as TopSpin pioneered the direct-to-fan platform. Or what Benji Rogers is doing with his alternative funding platform for artists, PledgeMusic. Or what Bandcamp does when they create a better deal for artists by letting them sell direct to fans.

They created simpler and more intimate services

While the first generation of services that Pakman and his generation ran were based on the size of the catalogs they offered and on trying to be all things to all users, a music services doesn’t have to be massive and complicated to be valuable.   This is what Hannah Donovan and Matt Ogle, formerly at Last.fm, are doing with This Is My Jam, which you an think of as Instagram for music. Watch them closely.

They move their focus to mobile

Mobile phones are already the most personal technology we own these and so they have already become central to many people’s music listing experiences. The opportunities to expand that to other music-centric features like with ticketing, new music discovery, fan/artist interactions are all fantastic. Location and hyper-local services around music are also untapped. Improving and enhancing music playback of music we already own is also under-developed as an opportunity.  Apps have become a new medium for artists like Bjork and Brian Eno and there is more room for innovation here, even as it gets even more crowded.

This is what Mobile Roadie recognizes as they build a mobile-first platform for artists who want to want to reach their fans directly.

They build B2B services around the music

Every label and artist manager, large and small, is struggling to understand audiences and to collect data around how music is being used. And it’s not just labels who want this data. Brands and advertisers want it too. This is where Next Big Sound and MusicMetric live, providing important analytics and tools to create “actionable intelligence” in the fragmented music world.  The Echonest, meanwhile, is also building data-driven services and commercial APIs to help small and big companies to make their music products with data, play listing, and recommendations.

And that’s not all

Here are other areas that haven’t really been touched yet:

Sync rights

 - the licensing of music to TV, games, advertising and film  is one of the most lucrative parts of the recorded music business.  Creating a better marketplace for sync rights could make it even more valuable, particularly if you can make it faster and simpler for companies to do it.

Merchandising

 The company that really fixes the “merch-table” for bands and creates the Threadless or the

Etsy

 for music fans could clean-up.  TopSpin and BandCamp are doing this now too.

Royalties and payments to artists

  The accounting system that underlies the publishing and performance rights is one of the most rotten and complicated things about the industry. It’s only getting worse as are more digital products and services are created. A few companies like

Kobalt Music

are trying to start again from scratch.  A music start-up built on transparency, great analytics and paying artists faster and more fairly would be the most disruptive music business ever.

Start-ups create the most value when they carve out new business models and transform the way we used to do things.  They are less valuable (and thus less viable) when they just wringing the last drop of money out of old models.  The truly great ones transform industries and build new opportunities, growing the market for everyone.

Kafka and Pakman are right about one thing:  trying to licensing music is hard and the corpses of many start-ups litter are littering the battlefield.  So be smart and don’t play on that field.  Move to a new one or make your own field.

Matthew Hawn is product development and strategy consultant based in London, and previously VP of product at Last.fm

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Once the preserve of web nerds, this weird, headache-inducing pop art form has had new life breathed into it by the rise of Tumblr and mobile photography — particularly with a surge in apps that let you make loopy GIFs directly on your handset. But now one of the leaders of the pack, Berlin-based startup Loopc.am, is taking a step away from mobile with a new desktop client that it hopes can turn it into a force to be reckoned with.

Until now, most of Loopcam’s activity took place on handsets, as people turned their videos into short loops. But as of Tuesday, Loopcam viewers can use a web widget to embed “Polaroid-like” animations made on the service into their site with just a click. The idea is clearly to increase virality, something that founder Tor Rauden Källstigen admitted to me.

“GIF sharing has historically been complicated to understand for a lot of people. Our new GIF/loop widget is probably the first one ever, and it’s definitely one of a kind.”

Mobile creation, desktop consumption

This is an interesting — and growing — problem for all mobile apps: the handset might be where the act of creation takes place, but in many cases the virality and consumption is heavily reliant on the desktop. Everyone is desperate to be an Instagram, where the mobile becomes the core platform for viewing as well as contributing, but it can’t always be that way.

It’s an issue that many app companies are switching on to, perhaps belatedly.

“It’s mainly about how shared loops are consumed,” says Rauden Källstigen. “Most of them are seen on desktop devices, and we want to ensure that the Loopcam experiences reaches all the way there.”

What Loopcam has added, then, are a set of tools that allow you to embed GIFs that people have created on other services — all with a handy link back to the app itself. They’re not perfect. There are no creation tools, and sharing is not as simple and easy as it could be… but they’re better than before.

Getting on the web is about getting traction, and that’s important if Loopcam is to beat the host of other GIF services out there — and it’s a surprisingly crowded space, with players like Flixel, Cinemagram, Gifboom and Kinoptic among the players.

Tumblr-tastic

The crucial platform for all of them is probably Tumblr — where every other blog seems dedicated to sharing must-see animated GIFs of Ryan Gosling looking hot, or kittens doing hilarious things. Get Tumblr users embedding your images and you can go stratospheric: hence Loopcam’s attempt to making web sharing easier.

But despite this pitch for a wider audience, Loopcam and its rivals still look very much like a business without, well, much of a business. The service is free, the consumption is free, and the product is — surely — going to be difficult to monetize unless it achieves gargantuan scale. And while the team is just four strong, so financial pressures may not be immense, when they talk about “future monetizing based on user behaviors, primarily by adding more value to the loop experience”, I can’t help but think it’s a bit hand-wavy.

That lack of a business model doesn’t seem to have deterred investors, however, and alongside the new web platform, Loopcam is also announcing a small seed funding round from London-based Passion Capital and a group of largely Berlin-based angels including local big hitter Christophe Maire and Soundcloud’s Alex Ljung and Eric Walhforss.

But how does any of this make animated GIFs anything more than just a fun feature?

Is it really something you can build a business around?

While a handful of savvy webslingers have turned LOLcats into media properties, I’m not so sure that the same applies to these brief animations. More likely it seems as if there is an acquisition play behind all these services — build the best animated GIF engine, with the biggest userbase, and you become attractive for somebody like Tumblr to bring in-house.

Either that, or you have to have a longer game in mind. But what might that be?

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Valentin, unsurprisingly, disagreed. And now he’s trying his best to turn my assumptions on their head by building Tripbirds into a beautiful, smart and highly competitive entrant into this difficult space.

As far as features go, the site — which is going into open beta on Tuesday — doesn’t particularly stand out from rivals like Wanderfly, Trippy or Gogobot. It takes your social network data (that includes Facebook, Foursquare and Instagram so far) and builds a gazetteer, a tip directory, and a Q&A site all into one place.

That means if you enter an upcoming trip — or even the idea for a trip — you can ask people for advice through a simple, easy to use process. I plugged in a quick visit to Cannes that I’m making later this month to judge the MIPCube Lab video startup competition, and the site immediately gave me some feedback on places to go, and offered me the chance to connect with existing friends, or people already on Tripbirds who had visited the area.

But rather than add a vast number of bells and whistles, the Stockholm-based team of seven seems to have concentrated on making a service that feels restrained, careful and considerate. Where other sites feel noisy and flashy, Tripbirds is focused: something that I think could be a massive selling point. It’s still in development, so things are limited — and features like being able to push questions into Facebook, or integration with Tripit would be really nice — but there are many things in the pipeline.

Still, the quiet design means that all in all, it’s a little reminiscent of my favourite social travel startup, Dopplr, which ended up being purchased by Nokia in 2009 so the Finnish handset maker could bring CEO Marko Ahtisaari on board to head up design. Ahtisaari is making his mark at the company, but Dopplr quickly became a ghost town.

The opportunity and approach has been enough to convince a strong team of investors to put their faith in the company. London-based Passion Capital, Nordic VC Creandum and European A-lister Index have all joined Tripbirds’ seed round, as well as a list of angels that includes Soundcloud’s Alex Ljung and Eric Wahlforss, former Spotify CTO Andreas Ehn, Gidsy backer Peter Read and Path’s Dave Morin.

Don’t read too much into that list, however: travel sites have a habit of picking up seed money from globe-trotting investors who visit new places regularly and obsess about the places they go.

Valentin, who has spent the last few years creating local listings sites — micro-Yelps focused on things like Swedish sushi restaurants, for example — outlines precisely what is so appealing about making travel social, but also what makes many businesses weak.

“The center of gravity is shifting from search to social, from Google to Facebook: if you’re doing travel research on Google now, it’s very bad.”

“There have been lots of social travel services, but they have failed to get critical mass. We are hoping to solve that problem by bringing in data from Facebook, Foursquare, Instagram — services where people are already getting content. We can add a travel layer on top.”

Perhaps not the most revolutionary approach, but there is one simple reason there is so much activity around travel: there are many established routes to making money. The most common is the affiliate deal — find a hotel on our service and we get a small cut of the money you pay. And that’s precisely what Tripbirds is doing in the first instance. Over time it may expand into other streams, but Valentin says there’s no need to reinvent the wheel.

“The nice thing about that is it’s a proven business model, and to the user it’s useful,” he says. “It’s not interfering with the experience.”

Whatever the case, this proliferation of services surely can’t happen forever. Companies with a different take on what “social travel” means, like Airbnb or TripAdvisor, seem to be doing well… but those tapping the social graph for a layer of tips and recommendations seem to find it hard.

So is the reason nobody has won social travel because — essentially — there isn’t anything to win? Valentin hopes not.

“The thing about Tripbirds right now is that it’s still in beta; it’s a product for early adopters… We’re making it even easier to use,” he says.

“The vision is for people to start thinking socially when they think about travel. As it is, people are already doing this stuff, but they’re doing it on Facebook, or by email. We want to organize that.”

Photograph of Ted Valentin used under Creative Commons license courtesy of Erik Starck

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SoundCloud, a Berlin-based web audio startup, has raised $50 million in new funding from investors led by Kleiner Perkins Caufield & Byers, Mike Butcher reports. GGV Capital also participated. The company confirmed in a press release it raised the funds, but it isn’t releasing information about how much money it got from the investors. Previous investors in the company include Union Square Ventures, Index Ventures and Doughty Hanson Technology Ventures.

Mary Meeker, a partner at Kleiner Perkins Caufield & Byers, will take a board observer seat at the company. Butcher reports the company is said to have pre-money valuation of $200 million. It’s yet another case of KPCB trying to invest in fast-growing web companies at valuations that can politely be termed “generous.” It seems to be part of a transition away from its big cleantech bets.

The company that was started by Alex Ljung and Eric Wahlforss in 2007 has signed up more than 9 million folks. SoundCloud started as a collaboration platform for musicians and deejays. In more recent times, the company has refocused on becoming a “web audio” platform and launched multiple mobile apps. Ljung in an earlier interview said the launch of mobile apps had added about a million new people to SoundCloud platform. It was also one of the  GigaOM Euro 20 startups to watch.

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The company is growing at a rapid clip and has added more than a million users since the introduction of its new mobile apps. SoundCloud is part of the GigaOM 20: the European startups to watch. And when I visited Berlin earlier this month to better understand the German capital city’s blossoming startup scene, I decided to call on Ljung and talk to him about the city.

We took a walk down Berlin’s Mitte district (home to many startups). Here are two short videos clips: The first is of Ljung explaining to me what’s happening in Berlin, and the second one is about SoundCloud itself. (And once you are done, check out some of the photos I took in Berlin on my personal blog.)

Alex Ljung on Berlin’s startup scene:

Alex Ljung on SoundCloud’s plans:

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