mSpot Opens Up Freemium Cloud Music Service in a Bid to Pre-empt Apple and Google; In-Depth Q&A with CEO Daren Tsui

MSpot might be the biggest mobile music service you’ve never heard of. The Palo Alto company has been profitable since shortly after its launch in 2004, and its streaming music service has six million users across 10 different wireless carriers in North America. But it white-labels that service, meaning it shows up under names like “AT&T Radio.” But pretty soon you may be hearing a lot more about mSpot—and through it.

In May, at the Google I/O conference in San Francisco, the company launched an invitation-only beta test of the first major mSpot-branded service, a system that uploads the music users have bought for their PCs to the cloud and then streams the songs to any Android phone or any Web-connected Windows or Macintosh computer. And today mSpot is opening that service up to everyone, in a bid to “amass millions of users,” in the words of CEO Daren Tsui, before UK-based Spotify can bring its own freemium streaming music service to the U.S., and before Google and Apple can launch their own widely-rumored cloud music systems.

The service doesn’t yet work on non-Android phones such as iPhones or BlackBerry devices, but Tsui hints that mSpot apps for those platforms are coming. For now, the service will allow Android users to access the music on their PC wherever they go—and, if they wish, to progressively sync that music to their phones. The company says its proprietary streaming technology can detect, and compensate for, holes in data network coverage, so music streams flawlessly.

What distinguishes mSpot from other streaming music services like Napster or Rhapsody or San Diego-based Slacker is that it’s free, at least for the first 2 gigabytes of stored music. (Users can reserve 10 gigabytes for a monthly fee of $2.99, and up to 100 gigabytes for $13.99.) And what distinguishes it from Lala—which Apple purchased in December and recently shut down, perhaps in preparation for a relaunch as part of iTunes—is that it plays copies of your own music files from a cloud-based storage locker. Lala first checked user’s PCs to see what music they owned, then played master copies from the cloud—a process that required it to pay license fees to music labels.

Daren Tsui, CEO of mSpotOf course, this is all untested territory. Tsui says mSpot firmly believes that its approach to cloud-based storage and streaming constitutes fair use, and that it will owe no additional royalties to labels. But in a long interview, he acknowledged that this belief hasn’t been tested yet, and that the labels might come after the company at any moment. “I hope that doesn’t happen…but if they are going to come after us, I can’t stop them,” Tsui says.

And mSpot will need to run fast if it hopes to collect those millions of users—whom it Tsui envisions as a natural market for other selling opportunities—before competing players in the turbulent digital-music market make their own big moves. My talk with Tsui, transcribed below, covered “the G question” (Google) and “the A question (Apple), as well as mSpot’s origins as a service provider to the wireless carriers, the inner workings of its streaming and synchronization services, and Tsui’s hopes for smooth legal sailing with the music labels.

Xconomy: Can you give me a 30-second history of mSpot?

Daren Tsui: We started out in 2004 and have always focused on rich, multimedia entertainment on mobile devices. In early 2005 we launched our first live service, mSpot Radio, which stramed radio stations as well as branded content like NPR and Marketwatch. The concept was a little like … Next Page »

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Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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