Hot social music service Turntable.fm has raised $7.5 million at a $37.5 valuation, according to a report at Business Insider. The initial investors and one new investor - none of which were named - are said to be involved in the funding round.
The funding is a strong signal on the site's legal standing: Investors would naturally be hesitant to put $7.5 million into a site that was inviting lawsuits. Many onlookers and users have wondered how Turntable.fm can operate without violating copyright law. The site may feel like an on-demand subscription service because it offers a social, engaging experience. But it turns out the creators have gone to great lengths to adhere to the requirements the Digital Millenium Copyright Act lays out for non-interactive services. For example, it limits users' ability to play specific songs or know in advance what songs will be played. If the site meets the requirements of the DMCA, it is able to operate with statutory licenses as long as it pays the appropriate royalties.
Given the site's popularity, the funding is not a surprise. In less than one month, Turntable.fm has attracted 300,000 users, according to various reports. This remarkable growth has occurred even though the site is officially in private beta. The perceived exclusivity of the private beta has probably served to make Turntable.fm even more attractive, however. Anybody who has a Facebok friend using the service can also use it. Considering Facebook's wide reach, and taking into account how many friends an average Facebook user has, it stands to reason just about anybody in the country is currently within a few degrees of separation of a registered user.
Turntable.fm has become so popular because it has basically created a new category of music service that's a mix of social networking, webcasting and gaming. It allows people to either actively select songs (each room can have up to five DJs) or listen passively to songs within different user-created rooms. Inside each room, DJs and listeners are represented by users' avatars. DJs stand on a riser facing the crowd. Listeners stand on the floor facing the DJs. People can accumulate points through DJing - one point for each time a listener votes the song as "awesome."