VCs tune to music startups

Three years after Apple Computer launched its iTunes Music Store (which has since sold more than 1 billion downloaded songs), startups are looking for their own iPod effect. Venture firms backed four audio startups last week, each targeted at slightly different segments of the music market.

SAS Investors seeded Lightspeed Audio Labs with $1.25 million to pursue development of a collaboration platform for music makers. The company, based in Scotch Plains, N.J., is looking to raise between $6 million and $10 million over the next 12 months as it starts to come out of stealth mode.

Pump Audio wants to dethrone the music labels by making it easier for independent musicians to connect with advertisers, TV producers and radio stations for lucrative licensing and usage contracts. The company, founded in 2001 and based in Tivoli, N.Y., received an undisclosed first round of venture investment from Greycroft Partners and High Peaks Venture Partners. This is the first deal made by Greycroft founder Alan Patricof, who was an early investor in America Online and Apple.

Then there’s The startup, based in London, hosts a service that lets people stream their music collections. It also offers a platform for music discussions and social networking. The startup raised an undisclosed first round of venture investment from Skype-backer Index Ventures and angels Joi Ito, Stefan Glaenzer and Reid Hoffman, CEO of LinkedIn.

Although focuses on music, it’s social-networking platform approach for delivering highly targeted advertising looks a lot like gaming tournament company XFire, which sold to Viacom (NYSE: VIA) last month for over $100 million. appears to be after the same targeted advertising dollars. The startup collected $1.6 million in seed investment in March from the Angels’ Forum and the Halo Fund, along with others. MOG, based in Emeryville, Calif., was founded by former Gracenote CEO David Hyman.