Turntable.fm raising round at $40 million valuation

Investors eager to fund site that drew 300,000 users in less than a month

Turntable.fm, the addicting music site where users can DJ for each other, could be close to raising a new round of between $5 and $10 million, according to Betabeat sources, valuing the startup at around $40 million.

I’ve reached out to both of the guys behind Turntable.fm, Billy Chasen and Seth Goldstein, but have not yet heard reply.

The Betabeat article linked to above zeroes in on the almighty “pivot,” of which Turntable.fm is perhaps one of the most recent successful examples. Chasen and Goldstein originally raised nearly $2 million for Stickybits, a New York City-based startup that launched in March 2010. Stickybits offers a free app for iPhone and Android that lets users scan barcodes and win related items. (“Scan a snowboard – win free lift passes.”)

If you haven’t heard of Stickybits, it’s not your fault. Despite being well-funded, the service never really caught on. Turntable.fm, on the other hand, is an instant hit.

Before Google+ got released to a lucky few a week ago, the Web service occupying the minds of every tech nerd around the world was Turntable.fm. Finally, everyone must have thought, it’s a music site that’s not just radio like Pandora or a subscription site like MOG--it’s actually something completely fresh.

You enter a room where up to five users are DJing for everybody else. The DJs select music from a database or, if the song they seek isn’t there, they can simply upload tracks from their own computer. Listeners thumbs up tracks they like and thumbs down tracks they don’t, with the former garnering points for the best DJs. It’s social, it’s music and it’s gaming: what investor today could resist?

And even though the service is still kind of closed, Turntable.fm already boasts over 300,000 users. Not bad for only being around a month or so. ("Kind of closed," because anybody with a Facebook friend on the site can get in.)

The startup’s new round isn’t closed yet, so we don’t know which investors are participating just yet, but it wouldn’t be too farfetched to see Stickybits’ investors returning for this promising new round. That includes VC firms First Round Capital, Lowercase Capital and Polaris Venture Partners, along with angel investor Mitch Kapor (co-founder of EFF).