By Doug Caverly

Defends against onslaught of “croak” jokes

SpiralFrog hasn’t been doing so well, but $2 million can heal a lot of wounds, and the ad-supported, Web-based music service has raised this amount in funding.

SpiralFrog is the company that intended to serve both consumers’ desire to get free songs and the music industry’s interest in making money.  “Listen to a tune, then watch a commercial” is the basic idea.  As Marshall Kirkpatrick recently noted, this approach lost the company $3.4 million in the third quarter.

So, on to the fresh infusion.  SpiralFrog received $2 million “through the private placement of Senior Secured Exchangeable Notes,” according to a formal release.  “The Notes bear interest at 12 percent per annum, with interest payable quarterly, commencing January 1, 2008.  The entire principal amount is due on April 19, 2008.  The Notes are exchangeable into 2,325,582 common shares at the Exchange Price of $0.86, subject to certain adjustments.”

Fascinating stuff, right?  Or not.  Either way, this isn’t the same thing as a well-known venture capital firm stepping up to support SpiralFrog.  The company plans to expand its operations and acquire “additional content for the site,” however, so we’ll see how things pan out in the first quarter of 2008.

Inside a cramped conference room at Toronto’s Mars Discovery Centre, angel investors listened closely as Nussar Ahmad pitched the future of the Internet.

Equipped with just a cellphone and a laptop connected to the web, Ahmad, director of Addictive Mobility, demonstrated how his company’s latest software application has the ability to cash in on the world of social networking - the web’s latest gold mine.

Using code supplied by Facebook, Ahmad’s software can take pictures snapped on a camera phone and instantly send them to a Facebook profile page.

During this past year, a number of oddities emerged in the world of tech. First, Microsoft was forced to live through an unbridled flop, Apple was enjoying its meteoric rise as the most successful company of the year and social networks gained even more steam. On the back of that, the world’s favorite social network, MySpace, quickly gave ground to Facebook and companies like the ill-fated Netscape tried to take on Digg.

And it’s that site — Digg.com — that emerged this year, not necessarily as the most popular social site (it’s tough to call it a full-fledged social networking company in the vein of a Facebook or MySpace), but as the best destination for people surfing the Web.

Don’t believe me? Let’s take a look at some other social networking sites to see why they couldn’t make the cut.

Kansas based Blogfuse is a Facebook application creator for bloggers that allows content from blogs to be turned into a native Facebook application.The service is as simple to use as signing up and adding a RSS feed. Blogfuse hosts the application and it links in to Facebook functions such as share this, allowing blog posts to be easily shared within Facebook. Applications are coded in Facebook’s FBML code and not flash, delivering a visually seamless application.

Blogfuse also doesn’t believe that users should be locked into their service; should a user decide later that they want to host their Facebook application themselves, switching is simply a matter of changing the app’s Callback Url, meaning you never lose a user or have to start again.

Blogfuse offers full hosting for the app irrelevant of the traffic each app has. Packages start at $5/ month for one blog up to $30/ month for 10 blogs.

Thanks to Blogfuse we have twenty lifetime “Pro Blogger” packages (ten blogs each) to give away to TechCrunch readers. Tell us in the comments why you want your own Facebook Application (include a real email when making the comment in the email box, it won’t be published but we’ll need it to send you the code) and we’ll select twenty of the best comments for a free account.

And don’t forget, if you’re looking for invites to other services, visit InviteShare.

Duncan Riely

Amazon.com has added songs from Warner Music Group to the range it sells as MP3 files without DRM (digital rights management), the companies said Friday.

The online retailer launched its music download service in September and now offers 2.9 million songs without copy prevention technology, including tracks from Warner, EMI, Universal, and 33,000 independent record labels — although it has still not won over Sony BMG, the only one of the music majors still insisting on the use of DRM.

Warner said it also planned to offer album bundles including exclusive tracks through the Amazon service.

The move is a blow to Apple’s iTunes Store, which has only persuaded EMI and a handful of independent labels to let it offer their tracks in the DRM-free iTunes Plus format it launched in May. The rest of the songs available through iTunes come with digital limitations on where they can be played, or how many times they can be burned to a CD.

Three formats dominate the market for online music sales: MP3 and AAC, which are both open formats, and WMA, a proprietary format owned by Microsoft.

MP3 files do not include provision for DRM: music recorded in that format will play on most digital music players, many mobile phones, and in software readily available for all the major operating systems, including Windows, Mac OS X, and Linux, opening up a huge potential market to Amazon and to other online music stores such as eMusic dealing in unprotected MP3 files.

AAC is the format Apple chose for its iTunes Store. Most of the 6 million tracks in its catalog come wrapped in a proprietary DRM layer called FairPlay, although EMI and independents such as Sub Pop, Nettwerk, IODA and The Orchard also allow it to offer higher quality AAC recordings without DRM. The DRM-encumbered tracks will play on authorized iPods, iPhones, PCs, and Macs — but won’t play on digital music players from other vendors. Unprotected AAC files will also play on many mobile phones, PCs running Linux with the appropriate software, and even Microsoft’s Zune digital music player.

WMA files without DRM will play on PC or Macs using Windows Media Player, and some phones and digital music players — although typically not on the same ones that play AAC files. Microsoft has also introduced a range of DRM systems enabling online stores to sell locked WMA files — and later abandoned some of them, leaving a certain amount of confusion and doubt about whether devices and songs branded “PlaysForSure” really will play for sure.

Industry executives expect initiatives such as iTunes Plus and Amazon MP3, which remove the DRM locks placed on music downloads by an earlier generation of music services, will encourage consumers to buy more music.

Warner believes that giving consumers the assurance that the music they purchase can be played on any device they own will only encourage more sales of music, it said Friday.

It may also persuade music-buyers to look at other brands of digital music player such as the Zune range from Microsoft, ending Apple’s dominance of that market segment.

With the locks off the music, Apple also faces the prospect of a price war with Amazon, which offers 1 million of its MP3 tracks for just $0.89, compared to the $0.99 Apple charges for all its tracks. Before the launch of Amazon MP3, Apple also charged a $0.30 premium for tracks in the iTunes Plus format, which is recorded at a higher quality than the DRM-encumbered versions. Other Amazon tracks sell for $0.99.

By Peter Sayer, IDG News Service