The global marketplace for cloud music services is becoming more crowded with countless users accessing their favorite songs online, dumping the conventional use of compact discs and harddrive storage. This trend has paved the way for services like Google Music, iTunes, Pandora and Spotify, all flourishing in the consumer cloud market. Many investors are convinced that this business will only get better in 2012. In fact, Kleiner Perkins has just placed a $50 million bet on SoundCloud in a funding round announced earlier today. This brings the value of the audio-hosting service to $200 million. Mary Meeker will join the board to represent the financial institution.

In the official announcement, Founder & CEO, Alexander Ljung shares his excitement for this financial augmentation:

“SoundCloud has seen exponential growth this year in terms of users and greatly evolved our product offerings. With Kleiner Perkins’ impeccable track record for recognizing and investing in companies with a long-term view, and their understanding and support for the potential of sound, we couldn’t be more excited about working together.”

Spotify stays fresh with service integration

One of the most famous residents of the cloud music industry is Spotify. Following a stellar debut in the United States, the company has led the market with innovative updates. These include the integration of TuneWiki, a notable lyric syncing technology that carries a database of over 6 million lyrics, to the Spotify platform.  A few days before 2011 closed, the official Spotify for Blackberry app was also released. The relaunching of its radio feature almost sidelined another popular player, Pandora. Another personalized radio service provider, Pandora also had a good run last year and is continuously expanding, as evident by its recent partnership with Vana Workforse to handle their human capital needs.

Old rivals and new competitors

Spotify has set benchmarks that competitors try to outmarch.  Some missed the hoop, but others have seemingly done well. An old thespian in the digital music industry, Rhapsody is giving Spotify some tough competition, having recently reached 1 million paying subscribers in the United States.

With almost a decade of tenure in the business, Rhapsody president Jon Irwin feels that 2011 was their renaissance, saying,

“We’ve accomplished quite a bit over the past decade, so it’s no small statement to say that 2011 was probably our biggest year yet. I told our team that when we topped one million paid subscribers, I’d shave my head… it was probably the best free haircut I’ve ever had.”

Another newcomer that’s been aggressively competing in the cloud music space is Rara.com. What sets this streaming service from the crowded pool of rivals is their thick visual content that makes interfaces of Rhapsody, Spotify and Pandora look pretty bland.

The music industry is expected to develop alongside the growth of cloud and mobile industries. The year 2011 witnessed the birth of digital music streaming as a widely accepted consumer service, but 2012 looks more promising for neophytes and veterans alike.