The hidden Audio application that launched on Facebook this past weekend has become extremely popular. Every minute there are around 100 songs being uploaded. I’m not sure who is footing the bill for this one but it has to be fairly pricey. Aside from the fact that there is huge bandwidth cost in maintaining the application, Facebook audio is technically illegal. The funny thing is that everyone that uploads a song can be tracked to their name. While there will be legal issues surrounding the privacy of people that are uploading music to the site, I can guarantee you that the RIAA is going to be documenting everyone that uploads music. Numair Faraz has this to say about the legality of the application:

Unlike previous developers working on audio file sharing software, I’m not some digital anarchist trying to “take down the system” or whatever. I’m a good friend of the music industry, and someone trying to help come up with ways for it to grow. I truly believe that the sort of socially-integrated audio experience that Facebook and Audio can offer will lead to the future of the music industry – both in terms of relevance and revenue.

As many people have noted, the digital music industry is only worth a couple of hundred million dollars. A lot of you guys who are reading this might think “well that’s a lot of money,” but it’s really not when you realize that CDs and such are a multi-billion-dollar business that is rapidly contracting. The music industry needs to find a new answer to its woes – and I think Audio can really help them in doing this.

The music industry that took down Napster is much different from the one we see today. They’re open to ideas, and I highly doubt they will feel threatened by the rise of Facebook Audio. I’m sure we’re all going to find a way to make each other happy.

I’ve always had a lot of friends in the music industry – partly as a kid who lives in Malibu, and partly because I’ve always been interested in really hard business questions – and there isn’t a question more difficult than “what’s the future of the record industry?” Audio will benefit from close relationships to the heads of all the major record labels provided by my longtime friend/mentor/collaborator Ralph Simon, who co-founded Zomba Records (you can very indirectly blame him for Britney Spears and the Backstreet Boys). As I collaborate / go to dinner with managements of acts like Beyonce and D-12, I’ll also get great input and collaborations on that side. So yeah, don’t worry – the record industry isn’t going to come bust down this great thing we’re building here.

While Numair highly doubts the RIAA will feel threatened by the rise of Facebook Audio, he has never tried uploading millions of pirated songs before. In contrast to Facebook in which artists are uploading their songs for promotional purposes, Facebook Audio allows users to upload their own songs and anyone can listen to them without paying royalties. If Pandora wasn’t worried about paying royalties they wouldn’t be up in arms over the new legislation being passed to raise the royalties on music streamed over the net.

While Facebook Audio is a cool application (I’ve added it to my profile), I don’t see it lasting for long. Even Facebook has removed the application from their apps directory. I’ll use it for now, but the controversy hasn’t even begun.