German Last.FM clone Simfy gets financing to become a Spotify, er, clone

German Last.FM clone Simfy has won a new round of financing – to re-launch itself as a clone of Spotify. Music Networx, a German online distributor of live music and a portfolio company of VC firm Earlybird, has invested an undisclosed sum to finance Simfy’s upcoming relaunch as well as the introduction of a flatrate music pricing and a mobile version. Here’s how it’s played out so far:

The music streaming and sharing website gives the Last.FM model an interesting twist: Other than the original, or the recently deceased German Roccatune, you can’t just go to Simfy’s website and listen to as much music as you want.

New listeners have to sign up and make friends before the real fun starts. To hear tracks in full length, Simfy users must upload music files from their private collections and share them with other users. If a song isn’t in your own or the friends’ collection you can only hear a 30 seconds version, similar to the previews on Amazon’s website. By doing this and by only streaming the music, Simfy could avoid complaints of copyright infringement until now. The website’s FAQ section declares that private copies among small circles of friends are legal under German law. If a user deletes a song, all his friends are barred from hearing it again.

I have signed up this morning and could hear several songs, but only short versions because I hadn’t uploaded or made friends. For the new user it’s quite complicated to start with Simfy, but the company doesn’t have to pay royalties by operating in this way. Supposedly it’s only private music swapping among friends, although you never met them before. The idea is smart but maybe it hasn’t gained enough traction.

But Simfy will now use its VC money to turn into another business.

Everything changes with the forthming flatrate model which converts Simfy into a streaming service similar to Spotify or Napster, but it is planning to be cheaper. The press release states that every day 3.000 new users sign up to Simfy. With 1.5m available songs and 1.4m users the company from Berlin declares itself the market leader in Germany.

Simfy was originally started by two students, Christoph Lange and Steffen Wicker, as price comparison for music downloads in 2006. A next rebirth, without uploads and friending necessary, is now imminent. Its new strategic investor, Music Networx, is a venture financed startup itself. The company sells audio and video recordings of live concerts as downloads or as instantly made USB sticks right after the show. The transaction is financed by Music Networx’ backers, among them Earlybird, DuMont Venture and business angel Klaus Wecken.