Social Music Is The Next Wave, But Will Music Labels Play Along?

What do Ashkon Davaran (the San Francisco Giants viral video guy) and venture capitalist Larry Marcus have in common? Both were part of the divergent crowd at SF MusicTech Summit, the annual gathering of technologists and musicians, held yesterday at the Hotel Kabuki in San Francisco.

At the conference, Marcus, managing director at Walden Venture Capital, says that he is a huge believer in mobile music, and that he’s excited to see an explosion take place in social media because “music is such a social activity.”

“Music is a social and we’re going to see an explosion of more mobile music startups, especially those with social components,” Marcus said.

Music has already proven a popular business model for Marcus, who said to me at the cocktail party after the conference that he is probably the one VC with the most music-related deals in his portfolio, although he prefers to think of his deals as more mobile or social oriented. Marcus’s firm is an investor in Pandora, a provider of Internet radio services , and SoundHound, which develops a mobile app for music search. Marcus is also an angel investor and a director in RootMusic, which helps bands setup Facebook fan pages.

“Social networking is so darn important [for the music industry],” agreed Jeff Price, founder and CEO of TuneCore, a distributor of digital music and which is backed by Opus Capital. “With social networking, bands have the ability to reach millions of users.”

Both Price and Marcus participated on a panel called What Works at SF MusicTech conference. (The conference  had about 800 registrants this year.) Though the two panelists are in agreement over the rise in social media and its importance in the music industry, the question is whether giant music companies are ready to embrace the technology.

“The music labels should do what they are doing in reverse. instead of saying, ‘Raise your venture capital and give me the advances,’ the music labels should turn around and give advances to the startups,” Marcus said.