Is SonicSwap the Boxee of Music Videos?

SonicSwap launched the latest version of its iTunes/YouTube (s GOOG) mashup today, adding recommendations based on your musical taste to create personalized music video channels. Using music from YouTube is nothing new, but can you build a business when control over your content is twice removed?


Up until now, when you registered with SonicSwap, its application indexed and uploaded your iTunes information and found all the corresponding tracks on YouTube where you could watch them on its site. With today’s announcement, SonicSwap adds recommendations, so it will match your library tastes with those of others to create an online music video channel to your taste.

SonicSwap is just one of many applications like Songza and Muziic that are built on the back of YouTube. SonicSwap founder and CEO, Dan Skilken says YouTube is aware of what his company is doing and approves.

Skilken says the site currently has 40,000-45,000 active users who are spending 20-25 minutes per session. SonicSwap will make money through affiliate sales to iTunes and Amazon (s amzn) as well as advertising around the videos.

But the larger issue for SonicSwap is who controls the content. Skilken said SonicSwap has run into issues where its player will pull up a track that has the audio muted, one of YouTube’s efforts to placate copyright owners. SonicSwap was also on the verge of accessing content via MTV, but the music network apparently changed its API in a way that prevents access.

Then, of course, there are cases like YouTube’s fight with Warner Bros., which resulted in Warner content from bands like Metallica being removed from the site. SonicSwap has broadened its net to pull content from Dailymotion, but the fact that it’s reliant on another party’s relationship with the actual content owners puts SonicSwap in a precarious position. Boxee, another service that aggregates and makes your media consumption habits sharable, comes to mind. It got into a tug-of-war with Hulu, resulting in a dizzying back-and-forth for users.

Based in Palo Alto, Calif., SonicSwap has four employees, and has raised $2.5 million in angel funding.