Muxtape originally shut its main music sharing service in August, alluding to issues with the RIAA and music licensing. The RIAA later confirmed that they considered the Muxtape model illegal.

In an extremely long post on Muxtape, founder Justin Ouellette walks through the story so far from his perspective, then eventually gets to the new direction Muxtape will be taking

“Muxtape is relaunching as a service exclusively for bands, offering an extremely powerful platform with unheard-of simplicity for artists to thrive on the internet. Musicians in 2008 without access to a full time web developer have few options when it comes to establishing themselves online, but their needs often revolve around a common set of problems. The new Muxtape will allow bands to upload their own music and offer an embeddable player that works anywhere on the web, in addition to the original muxtape format. Bands will be able to assemble an attractive profile with simple modules that enable optional functionality such as a calendar, photos, comments, downloads and sales, or anything else they need. The system has been built from the ground up to be extended infinitely and is wrapped in a template system that will be open to CSS designers. There will be more details soon. The beta is still private at the moment, but that will change in the coming weeks.”

Kudos for Ouellette for willing to try something new, however services for indie bands aren’t exactly thin on the ground, so although he may have some street cred with the Muxtape brand, it will be a hard ask to build a successful business in this space.

(in part via Centernetworks)

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Playing off the same concept, 8tracks lets you upload up to 30 minutes of music into a custom playlist, which can then be publicly shared with other users. You can search for music using artists, genres, or usernames.

So how is this legal while Muxtape ran into trouble? Muxtape was hosting the files without any type of license agreement or royalty plan, according to the Recording Industry Association of America. 8tracks, in contrast, says it has licenses with ASCAP, BMI and SESAC for the “public performance of musical works.” As such, it does pay a set per-play royalty rate — about one-seventh of a cent per track streamed, according to its owners.

8tracks is very transparent about the whole thing, providing a detailed explanation of the cost and how it can afford it:

“At current royalty rates, the hourly cost per user is just over $0.02 per listener per hour in 2008, increasing to nearly $0.03 per listener per hour in 2010. This means that 8tracks must earn a net CPM from advertising of at least $20 in 2008 (i.e., $20 per 1000 ad impressions = $0.02) and nearly $30 in 2010 (i.e., $30 per 1000 ad impressions = $0.03) to cover the cost of streaming sound recordings. In addition, 8tracks pays musical works royalties to ASCAP, BMI and SESAC, which generally comprises 3%-5% of revenues.

8tracks is taking 2 steps to reduce its royalty liability so can sustain itself as a business. First, it is opting into a Small Webcaster license offered by SoundExchange (at the request of Congress). This license provides for royalty payment on the greater of a percentage-of-revenue or percentage-of-expense basis, subject to a minimum fee, which will allow us to grow our user base – and our potential for advertising – before having to pay the more onerous compulsory rates owed on a per song, per listener basis.

Second, 8tracks is seeking direct licenses with independent record labels and artists who generally see greater promotional value in internet radio – given relatively few alternative channels for exposure – and are thus more willing to consider the percentage-of-revenue terms common to all other forms of radio (traditional, satellite, cable).”

8tracks has apparently been around since 2006 — who knew? David Porter, who used to head up online radio network Live365, formed it with six other people. It’s based in both New York City and San Francisco.

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1. Muxtape jammed?
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“For the past several months, we have communicated our legal concerns with the site and repeatedly tried to work with them to have illegal content taken down. Muxtape was hosting copies of copyrighted sound recordings without authorization from the copyright owners. Making these recordings available for streaming playback also requires authorization from the copyright owners. Muxtape has not obtained authorization from our member companies to host or stream copies of their sound recordings.”

Interestingly the RIAA didn’t say that Muxtape had failed to respond to RIAA (presumably DMCA) requests, but the double up on the copyright side makes Mixtape’s attempts for survival that much harder; not only are they being pinged for hosting (the obvious first call as we noted yesterday) the RIAA is targeting the unlicensed streaming aspect of the service as well.

Muxtape would seem to be completely screwed here. They have no clear revenue stream, and even if they did they probably couldn’t afford the fees the RIAA will be demanding to keep the service online. Muxtape is officially on dodo watch.

See also Cyndy Aleo-Carreira excellent piece on the music industry here.

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1. Muxtape jammed?
2. Muxtape officially dead, sort of.
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The ironic part is the the recording industry doesn’t need anyone’s help; it’s going to kill itself sooner or later if it continues on its current path. What entrepreneur in his or her right mind would want to launch a music app at this point? It’s a given that dealings with the RIAA and/or SoundExchange won’t be pretty, so why even bother to try?

If the RIAA has its way, every music app, with the exception of basic consumer sales sites like iTunes, will be gone. In its zeal to recreate the past with a sales model that had the labels rolling in money and the industry controlled by the complicated and often incestuous relationship between radio and the labels, the RIAA would completely eliminate the technology that could make even the long tail of recorded music profitable.

So what would be left? I know I’m not the only music fan who’s growing more frustrated that my tithe to the church of music is being overlooked, and that the sites where I’m finding all the great music that I buy are being shut down one by one. I remember Napster fondly as a site where I found tons of music I’d never have heard of without it. My iTunes library is legal, but many of those purchases were spurred by music I found on Napster, or last.fm, or Pandora. We know what happened to Napster, and it seems that at least Pandora may follow it.

What is the resort, then, for those of us who aren’t interested in the pablum being spoon-fed to us via Clear Channel here in the States? We’ll be forced to head underground to find new music, exactly the behavior that the RIAA claims it’s trying to stop. The U.S. and other countries will end up like China: a country whose music industry is so ravaged by piracy that recorded music is viewed as nothing more than an advertisement for live shows and merchandise.

At this point, the industry is faced with a choice: lay off the Draconian measures it’s using in dealing with online music services and find a model that benefits the artists and the Web services, or add more fuel to the bonfire of user revolt that could turn the U.S. industry into a wasteland of piracy.

Guest author Cyndy Aleo-Carreira is a contributing editor at The Industry Standard .

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Muxtape is a cool little service that allows user to upload songs and share those songs in a traditional mix-tape format. The problem though legally lies with the fact that Muxtape hosts the music and as far as I know doesn’t pay any royalties on songs played on the site. CNet’s Geek Gastalt noted in April that the defense Muxtape was hiding behind was the DMCA provision of “‘hosting on behalf of users’ safe harbor” in a similar fashion to YouTube. However, unlike other services that rely on the search provisions (such as Seeqpod and MyPlaylist.biz), the problem with Muxtape is the hosting, and unlike YouTube who can mount some sort of argument that it doesn’t rely on pirated content alone, Muxtape was open season for any music uploads, and that’s always going to gain the attention of the record labels or their proxies such as a RIAA. Owen Thomas notes that the service also made it easy to users to download songs hosted on the site, a double copyright red flag if there ever was one.

I like this service, and it fills a need that once again isn’t being met by the heads in the sand music industry, but unless they pack their bags and move to Sweden, you’d have to think that they’d have to be completely screwed here, presuming that the RIAA has come a knocking.

(via Webware)

Related posts:

1. RIAA on Muxtape: Illegal Play
2. Muxtape officially dead, sort of.
3. 8tracks: Muxtape, Without the Legal Muckiness