Jaxtr Closes $10 Million Series A; Announces 1 Million Users

Jaxtr has raised a $10 million Series A round led by August Capital with Mayfield Fund, Draper Richards, Draper Fisher Jurvetson and Luxemburg-based Mangrove Capital participating. They’ve also doubled their registered user base over last month, totalling 1 million users. They plan on getting to a break even point on the investment and to total 20 million users by the end of next year.

Jaxtr, like GrandCentral, uses VOIP as a utility to add features to your existing phone. Many other other VOIP startups focus primarily on cost savings (We have a roundup of VOIP services here). It’s service lets you anonymously post your phone number on the web and get cheap long distance calling rates. It works by connecting calls to your existing phone service through a Jaxtr number on VOIP. Calls are anonymous because they are made to a new Jaxtr number instead of your existing number. This lets you push all calls to voicemail and choose who can and can’t call through directly. Calls are cheaper because long distance calls are made over VOIP lines instead of standard phone networks. Jangl is another player in the category, also enabling you to control access to who calls your phone.

Although you can access the service easily through an embeddable widget, Jaxtr has found a lot of its growth coming from direct call links placed in emails or on non-social networking websites. Jangl has been expanding through a series of business deals, most notably with Various, Inc, Justin.tv, Fubar, and Revision3, bringing their online profile presence to over 20 million.

As part of taking the company to a break even point, they will be releasing a paid service, incorporating advertising, and pursuing new services on social networks (TBA). The paid service is expected to be their lead revenue generator, with the first paid component simply allowing people to buy more Jax, the virtual currency that converts into local phone minutes. Currently users get 100 free Jax each month, which convert into 100 minutes in the US, with conversion rates depending on local telco costs (sometimes as low as 15 minutes in Europe). Longer term plans include tiered monthly minute plans, like cell phones.

Their second revenue stream will be through on-site advertising within user’s Jaxtr accounts. A look at their Alexa traffic shows traffic growing noticeably upward in fits and spurts, mostly due to users checking their Jaxtr voicemail. Although the company currently isn’t disclosing traffic numbers, Konstantine doesn’t dispute the Alexa numbers. He explains the dips as periods during which they had trouble keeping up with the growth.

Finding DRM-Free Music Online

Over the past half year we have seen arguably the most significant change in the online music industry since Apple launched their iTunes store in 2003. Following Steve Jobs’ open letter clarifying Apple’s position on digital rights management (DRM) in Februrary, major record companies have begun providing their music online free of piracy protection mechanisms.

The first major label to take the plunge was EMI Music, which teamed up with Apple in May to release its entire online catalog through a DRM-free area of the Apple music store called iTunes Plus. Also in May, Amazon announced that it would launch an MP3-only online music store with songs from major labels by the end of the year.

Just this week, Wal-Mart began selling unprotected MP3s of many Universal Music Group and EMI songs through its website. RealNetworks, MTV, and Verizon have also teamed up to launch Rhapsody America, a music service catered toward mobile phone users that will provide DRM-free downloads, in the near future. Even LimeWare, a P2P software maker, has recently announced that it plans to be part of the DRM-free movement (this time legitimately).

Some of the major music companies have been more tentative than others. EMI has thrown the most weight into the DRM-free movement by unlocking all of its online music. While Universal has agreed to release thousands of unprotected albums and tracks through several online retailers - RealNetworks, Google, Best Buy, Wal-Mart, Amazon, and gBox - it has done so on a trial basis that will extend only until January 2008, at which point the company will decide whether it thinks DRM-free music boosts or hurts sales. Sony BMG Music Entertainment and Warner Music Group are still standing on the sidelines of the DRM-free movement and appear to be waiting to see how EMI and Universal fare by opening up.

While the progression of things suggests that all online music will eventually be DRM-free, there’s no need to wait to get in on the DRM-free action. Check out the DRM-free online music retailers below to get better quality music that plays on virtually any handheld music device, on any computer, and with any music program. The retailers covered provide music from both major and minor labels.

iTunes Plus

Apple is the eight hundred pound gorilla, controlling something like 70 to 80% of the online music retail market. CEO Steve Jobs predicted in May that over half of the songs provided through the iTunes Store would be DRM-free by the end of this year.

While most of us are familiar with the iTunes Store, you may not have noticed the discreet link to the iTunes Plus sub-store under “Quick Links” on the store’s homepage. iTunes Plus provides 256kbps DRM-free AAC files for $1.29 per song or $9.99+ per album. That’s a 30 cent per-song premium over DRM-protected songs sold through the iTunes Store.

Already bought a ton of music from Apple? You can upgrade your DRM-protected collection to DRM-free for 30 cents per song, 30% of the current album price per album, and 60 cents per music video. Of course, you’ll only be able to upgrade those songs and videos in your collection that are offered through iTunes Plus.

Artists available on iTunes Plus include Coldplay, The Rolling Stones, Frank Sinatra, Gorillaz, and The Beastie Boys.

WalMart

Wal-Mart may not be as sexy as Apple but the retail giant does provide DRM-free music from both Universal and EMI. On Tuesday, Wal-Mart began offering 256kbps MP3 versions of much of its music for 94 cents per track or $9.22 per album. These DRM-free offerings are in addition to Wal-Mart’s previous 128kbps DRM-protected WMA files for 88 cents per song or $9.44 per album.

One big downside to Wal-Mart’s online store: you can only download music using a Windows machine. This limitation alone will make it very difficult for Wal-Mart to compete with Apple for mind share.

Artists include Amy Winehouse, Maroon 5, Pink Floyd, Nelly, and Bon Jovi.

gBox

Feeling generous? gBox, which we covered recently, lets you buy DRM-free music not just for yourself but for others as well. gBox users can create music wishlists that can be embedded in other websites and used by friends, family, and lovers to buy music for the list creator.

Universal is the one major label that has agreed to sell music DRM-free through gBox. Songs are 99 cents each and albums are $9.99 each.

Unfortunately, as with Wal-Mart, Mac users who would like to download from gBox are out of luck. This will put a damper on gBox’s otherwise highly viral business strategy of allowing wishlists to be embedded in social networks.

eMusic

You may not have heard of eMusic but the service, with over 2.5 million songs available, is second only to iTunes when it comes to online music sales. Founded in 1998, eMusic was the first company to sell MP3s, which it continues to do on a subscription, rather than per-unit, basis.

Subscriptions come in two flavors: $9.99 per month for up to 30 downloads per month, or $19.99 per month for up to 75 downloads per month. The coolest thing about their subscriptions: once they end, you still get to keep your music, unlike with other subscription services such as Napster. New users also get 25 songs for free.

While eMusic has a long tradition of selling DRM-free music, they still have yet to get in on any major label action. You won’t find any music from Universal, EMI, Sony BMG, or Warner here. But if you eschew popular music anyway, eMusic could be perfect for you.

Audio Lunchbox

If you like eMusic, you’ll probably like Audio Lunchbox as well. The company’s more than 2 million songs are DRM-free and completely indie.

Customers can choose to pay for their music on a subscription or per-unit basis.

Subscriptions range from $9.99 per month to $250 per year. On a per-unit basis, songs are 99 cents each and albums are $9.99 each.

All downloads are 192kbps VBR MP3 files.

AmieStreet

AmieStreet, which we have covered many times, like eMusic and Audio Lunchbox provides DRM-free songs from artists without major label contracts (although, AmieStreet has teamed up with Nettwerk Productions to provide music from big names like Barenaked Ladies and Sarah McLachlan).

The most interesting thing about AmieStreet is its pricing scheme. Tracks individually cost anywhere between 0 and 98 cents. Music offered on the website starts off free but goes up in price as more people download it. Therefore, the price reflects the actual popularity of the track in a similar spirit to an auction.

The tracks sold on AmieStreet are always in MP3 format, but the bit rate can vary as artists contribute songs directly to the website.

A Peek At Didja.com: VeryFunnyAds Clone

Although “advertising as entertainment” site Didja.com is not launching until next year, the NYT has a sneak peak at what it will look like (screen shot below). The NBC Universal project is part of the yet unnamed News Corp/NBC Universal cooperative strategy against Youtube. However, New Co.’s second “major assult” on YouTube looks like more of the same, a clone of TBS’s VeryFunnyAds. It’s very similar to the TBS re-branding effort, letting users watch heaps of ads by search, ratings, and sort by various companies and countries.

That’d all make sense if New Co. was copying a successful site, but VeryFunnyAds doesn’t appear to be a resounding winner despite the 63 million clip views the site article says they delivered over the past year. That number of views suggests an average of 5 million videos streamed each month, but the viewership of the site doesn’t stack up.

After an initial bump on launch, VeryFunnyAds’ traffic has since tapered out at about 100,000 uniques per month, according to Comscore. Sixty-three million streams is a lot of traffic for an audience that size, especially since they don’t allow off-site video embeds. Heavy.com, whose network generated about 6 million streams in April has about 5.2 million uniques per month. If the numbers are true, it appears TBS’s site is at most attracting a small cadre of ad fanatics.

Contrary to the “advertainment” meme going around, it doesn’t look like it has legs.