On Friday Fred from “A VC” blog had a great post entitled Something Important Is On The Horizon In The Music Business.

Here are a few juicy snippets below. I share most sentiments and continue to believe the music and streaming space will continue to accelerate towards numerous niche services.

Having ceded the file based music opportunity (mp3s and drm’d file formats) to Apple, the recorded labels are now getting hip to the much bigger opportunity, streaming music.

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But over the next five years, the number of places and devices where you can’t get a speedy wireless connection is going to dwindle to maybe the car. And you’ve always got radio in the car which is going to get better and better because it has to in order to survive. (Ari’s note: beyond 5 years from now, probably not even a problem for streaming in the car).

Like everything that has happened in digital music, the rights holders have been once again been forced into dealing with an emerging technology. Companies like last.fm and imeem and others have, over the past year, have done deals with the leading rights holders to give them permission to stream pretty much any song they want to listeners over the Internet. They can do this “on-demand”, meaning you want to listen to the new Jack Johnson song, you tell your favorite web music service that and it plays.

They can also stream music in various forms of smart playlists, either the tracks you have marked as your favorites, or the tracks your friends have suggested to you, or the tracks that people who like the same music as you like. Each and every service has a different take on these playlists. I happen to like last.fm and hypemachine. You may like Pandora. Someone else might like Jango. Your kid’s myspace page might have an imeem playlist on it.

And because of all this innovation in streaming music over the past year, the number of people actively listening to music streamed over the Internet is rising quickly. It’s becoming a mainstream activity, particularly among the younger set.

I think of these web services as the new radio stations. Everyone of my generation has had their favorite radio stations. Everyone of my kid’s generation will have their favorite web music services. There will be hundreds of them. All supported by advertising, just like traditional radio stations, and all of them licensed by rights holders (eventually), and all of them paying the rights holders a little coin every time their song is played.

And because these services will be free to anyone who wants to listen, they will be very popular. Never before have you been able to decide you want to listen to something you don’t currently own and then just play it. No searching on Limewire or bittorrent, no waiting for the download, you type in the name of the song you want to play and you hit play.

These services are coming to mobile phones, probably in the next year we’ll all be listening to pandora or last.fm in the gym on our phone instead of our limited library on our iPod. That’s when this new form of listening is going to explode. And that’s when Apple is going to wish it had thought more about streaming and less about file based music. But you can’t feel too badly about Apple because a good number of people will be listening to pandora or last.fm on their iPhones.

I may go a step beyond even and say this. In the space that is social sites such as MySpace, Facebook, Bebo and the like, we are starting to see other contenders come to life. Contenders such as Ning which offer anyone “their own social network.”

When there’s a way, it is only inevitable that popular things spiral out into niche services. It makes more sense for many to have a feeling of belonging to their local town, than to their state. The same is true for social network sites, and the same is true for music services.

If you run a service today, what plans are you making for 5 years from now when you will be one of thousands of services?