The Social

Social network Facebook has disabled widgets from music-sharing site Project Playlist at the behest of the music industry, several days after rival site MySpace did the same. The reason? The user-uploaded music on Project Playlist that doesn't have industry sanction.

"The Recording Industry Association of America (RIAA) initially contacted Facebook last summer requesting the removal of the Project Playlist application for copyright violation, and recently reopened those communications," a statement from Facebook read. "We have forwarded the RIAA's letters to Project Playlist so it can work directly with that organization and music labels on a resolution. In the meantime, the application must be removed to comply with the Facebook Platform Terms of Service. Our hope and expectation is that the parties can resolve their disagreements in a manner that satisfies the developer and copyright holder, that continues to offer a great experience to music fans, and that doesn't discourage other developers from using (Facebook's) Platform to share their creativity and test new ideas."

Project Playlist has struck a deal with Sony BMG but has outstanding lawsuits with most other big players in the music industry, including the RIAA. The fast-growing start-up--it has 40 million monthly users, per ComScore--has gained most of its traction by encouraging users to embed its widgets on social networks like Facebook and MySpace, so bans from the big social network could be a critical blow.

But ironically for Facebook, Project Playlist recently brought on its former chief operating officer, Owen Van Natta, as CEO. Part of his job, the blogosphere assumes, is to ink those crucial deals with the music industry.

Project Playlist has struck a deal with Sony BMG to bring the label's catalog to its streaming-music service. It's the first major-label deal for Project Playlist, which recently brought former Facebook exec Owen Van Natta on as CEO but has been dealing with legal problems that have seen its widgets banned from social network MySpace.

Currently, Project Playlist has been sued by Warner Music, EMI, and Universal Music Group, as well as the Recording Industry Association of America (RIAA), because of the amount of unauthorized content that members have uploaded to the service. Industry rumors have persisted that Project Playlist was interested in a merger with Imeem, a similar service that has deals with all the major labels.

Reports had surfaced in April that unlike the other labels, Sony BMG was negotiating with Project Playlist rather than seeking legal action against it. Now, months later, that deal has come to fruition.

"Collaborating with Sony BMG is a significant milestone in our effort to improve the access and quality of content on Project Playlist, and enhance the overall user experience," founder Jeremy Riney said in a release. "We hope that we soon will be able to provide our users with ready access to even more of the music they want in the way that they want it."

There are a ton of social music sites out there, but Project Playlist is growing fast: Traffic firm ComScore pegs its user base at 40 million.

MySpace has officially blocked access to embedded widgets from Project Playlist, one of the myriad start-ups that lets members create music playlists and share them with friends.

This could come across negatively because MySpace runs MySpace Music, a service that competes with Project Playlist. And that's probably why the News Corp.-owned MySpace is making it very clear that it has blocked Project Playlist because of complaints from major music labels.

"MySpace is an open platform that welcomes all developers to build rich and legitimate applications for its global community," according to a statement from the company. "We take copyright issues very seriously and our goal is to help developers build a substantial business by creating an environment that respects rights holders and protects their content."

The statement continued: "MySpace has received notices of infringement about Project Playlist at different times from several of the major music companies currently suing Project Playlist. Per our policy of taking very seriously the requests of rights holders to block access to third party sites that are believed to be infringing, we have evaluated the requests of the major music companies and determined that it is in our best interest not to allow Project Playlist widgets on MySpace, and effective immediately, we will no longer be allowing these widgets within the MySpace platform."

Indeed, Warner Music, EMI, and Universal Music Group have ongoing lawsuits against Project Playlist, which recently hired former Facebook Chief Operating Officer Owen Van Natta as its CEO. The Recording Industry Association of America (RIAA)--itself going through a major transition as it ends legal action against individual file-sharers and is rumored to be on the verge of budget cuts--also sued Project Playlist this past spring.

The fourth major label, Sony BMG, has been negotiating with the start-up.

The labels' complaint against Project Playlist was industrywide, not restricted to MySpace. However, Facebook, hasn't blocked Project Playlist widgets. Whether that's due to Van Natta's Facebook connection (he's also an investor in Project Playlist), or to anything else, is unclear. Because litigation is involved, neither party is commenting.

In the digital music industry, 2008 really was the year of the playlist. Streaming music companies took off, and improved social-network sharing features made it easy to swap your favorite music lineups with your friends.

Despite its rampant and well-documented problems, the music industry's muscle has been what's steering the direction of the movement. For example, the two highest-profile "mixtape" start-ups, Mixwit and Muxtape, both shut down amid the threat of legal action that their young founders didn't want to handle. Meanwhile, bigger companies like Imeem and iLike, both of which have negotiated with the record labels and struck deals, have fared better--despite a number of rumors that Project Playlist wants to merge with Imeem.

As for MySpace, the labels have all invested in MySpace Music, so it's understandable that the social network would be quick to respond to its concerns.

There's finally an end to the speculation over what former Facebook exec Owen Van Natta would do next: he's taken the job as CEO of a site called Project Playlist, according to Kara Swisher of AllThingsD.

He had already been an investor in the music discovery company, and there have been blog-circulated rumor about his new gig for several weeks now.

The move comes shortly after Van Natta withdrew his offer to take the CEO position at MySpace's new music venture. All signs now point to MTV exec Courtney Holt to take that job, but no formal announcement has been made.

AllThingsD confirms what many had figured: Van Natta, in his quest for a CEO position, wasn't interested in taking a job at a venture run by the News Corp.-owned MySpace. It's not quite a start-up, no matter how trendy its office space might be.

Start-up Project Playlist has snagged a hefty round of financing led by former AOL exec Bob Pittman's invested firm, Pilot Group--probably somewhere between $18 million and $20 million, Swisher wrote.

The New York-based Pilot Group stays low-key, but it already has a stake in a growing social-media site, Buzznet, which focuses on music and other pop-culture content and has an additional investment from Universal Music Group. Pilot Group was the majority owner of DailyCandy when the women's events newsletter site sold to Comcast for about $125 million earlier this year.

As for Project Playlist, it's a lot like Imeem or the ill-fated Muxtape: members can build playlists and embed them across the Web. The site was sued by the RIAA back in April. Like Muxtape, it's fairly stripped-down, but a ticker at the top of the page says that over 38 million playlists have been created.

Van Natta stepped down from his role at Facebook amid, naturally, plenty of rumors. He left the company in February as chief revenue officer, after having previously been chief operating officer, which some bloggers speculated was a demotion. When he left, he made it clear that he wanted a CEO post somewhere--which set off even more speculation that Van Natta had wanted Facebook CEO Mark Zuckerberg's job, and left when it looked like there was no chance the young founder would step aside. That's unconfirmed, of course.

The issue with a company like Project Playlist? Aside from its RIAA woes, which are pretty much protocol in the music business, the "music discovery" niche is clogged beyond belief. There's Imeem, Pandora, iLike and its popular Facebook app, and Last.fm (owned by CBS Interactive, which publishes CNET News). Even Apple's iTunes now has its "Genius" discovery sidebar, and MySpace Music is a high-profile new entry in the field. Even Van Natta's old company, Facebook, is rumored to be interested in doing more when it comes to music.

"Discovery around music is exploding on the Internet," Van Natta told AllThingsD when he spoke to Swisher about his new gig. "And the company that does the best job of taking advantage of that is really going to be huge."

Well, let's hope he picked the right one.