KEY POINTS:
DENVER - A month ago, iLike was just another online music community struggling for relevancy in an increasingly crowded market.
Today, it's the fastest-growing digital music service on the Internet, registering a million new users per week and fielding information requests from record labels every half-hour.
The difference
is Facebook.
Facebook was once a niche social networking site limited to college students. Then two things happened. First, in September, Facebook opened the service to anyone. Membership doubled to 25 million, about 60 percent of whom are not college students.
Then, in May, it opened its technology platform to outside developers, letting them build their own custom applications using all the tools and features of the Facebook service.
iLike was one such company taking advantage of this opportunity. The music-sharing site enables users to share music preferences, receive personalised concert and music recommendations and includes a "sidebar" for Apple's iTunes that creates automatic playlists based on one's iTunes library.
The old way
Before teaming with Facebook, iLike required users to visit the iLike site, set up a profile and then try to match friends in their e-mail contact list to existing iLike members.
New users had to sort through a massive database of artists to tell the iLike service which artists and music they prefer. Then they needed to e-mail their friends and convince them to join as well in order to share music recommendations.
iLike first went live in October; through May it attracted about 3 million users. Then the company made a version of the service for Facebook.
Within three weeks, that incarnation signed up 3.7 million users, and continues to add about 1 million per week, far overshadowing the original Web site.
"iLike is actually better on Facebook than as a stand-alone application," iLike CEO Ali Partovi said. "It's a little sad to have to admit that your own Web site isn't as good as the thing you build for Facebook, (but) there's a community already there. That's impossible to re-create on your own."
The catalyst for this growth was not so much Facebook's 25 million members - although that's part of it. Rather, it's the way Facebook provides access to that mass.
For instance, the Facebook iLike application pulls information directly from each user's Facebook profile (favourite artists, friends list, demographic info).
On the other hand, iLike's widget (a graphic element that serves as an interface to another application) on the News Corp-owned MySpace is little more than a glorified link back to the iLike Web site, where users have to re-enter all the information that already exists on their MySpace profile.
As a result, only a few hundred thousand MySpace users have downloaded the widget during the last five months.
No comparison
"Comparing the Facebook platform to (MySpace) widgets is like comparing the emergence of mammals to dinosaurs," Partovi said. "iLike (on Facebook) already knows what your music tastes are, who your friends are and what their music tastes are. Facebook has completely redefined what's possible for a third party co-existing in a social networking environment."
And the music industry has taken notice. Some labels are launching their own custom Facebook applications, like the one by Warner Bros. promoting the White Stripes' new album, "Icky Thump."
Many other record companies are instead developing Facebook iLike profiles to better-communicate with fans. About 100 artists, including Faith Hill, 50 Cent and Kelly Clarkson, are participating in an "invite only" trial where iLike develops custom profiles that provide streaming music and tour dates.
iLike also is working with Bon Jovi to test a tour promotion service.
The company is sending targeted e-mail to iLike users living near New Jersey's Prudential Center who also list the band as a preferred artist, inviting them to participate in a presale ticket offer.
There's also the potential for actual download sales. iLike links to iTunes for digital downloads, but that may soon change as the company turns its attention to new business models.
But iLike still has some work to do. First, it needs to grow even more. With 3.7 million users, it's the second most-popular application on Facebook today, but that's still only 15 percent of Facebook's total membership - which itself is on track to reach 50 million by the end of the year. Second, it needs to start making money. All the services offered to users and artists are free.
iLike's only revenue stream is a cut of concert ticket and album sales.
The smart money says someone will acquire iLike, and soon. The company's social media discovery capabilities are a natural extension to any digital music service, particularly iTunes - given the tight integration it already has with the service.
What's more, iLike's tour alert and recommendation feature, not to mention ticketing service, would bring a much-needed new revenue stream to many of today's struggling digital music efforts. Ticketmaster owns 25 percent of the company.
For Partovi and crew, it's still all a bit breathtaking.
"It's something we never would have contemplated just a month ago," he said. "We've had our whole world turned upside down."
- REUTERS
