With the rise of MP3s and other forms of downloadable music, the venerable mixtape, which Wikipedia says gained mass popularity in the 1980s, may be going the way of the dodo. It is, afterall, rather hard to give someone an iTunes playlist, not to mention a whole lot less romantic (if that's what you're after). But New York-based Mixaloo isn't about to let the mixtape die.

Mixaloo revives the art form of mixtape creation by packaging mixtapes as flash widgets that you can spread via social networks or blogs. These "digital mixtapes" are powered by Clearspring, and while they don't play full songs (just samples), they do something arguably better: they can make you money.

The Mixaloo widget doesn't just show off you smooth musical taste, but also acts as a mini-store front from which your peers can purchase your creations. We created a Bob Marley-heavy mix (embedded below) that has 14 tracks -- Mixaloo puts that at a $15.22 price point. Mixaloo offers a 50-50 profit share (or about 20-40 cents per song) with mixtape makers. Mixaloo also offers a points system. Users earn points for doing things like selling tracks, and recommending related artists that the app suggests during mixtape creation. Points can be redeemed for things like Mixaloo merchandise and audio equipment.

Mixaloo entered public beta just a couple of weeks ago, and though mixtape creation is easy and I was very impressed by the sheer amount of albums and songs it has listed -- more than 3 million of them (including many obscure live tracks that other music services tend to overlook), there were some hiccups.

For example, when trying to get the embed code for my widget, I often got an error saying the widget could not be found -- especially after trying to change the widget's colors or theme. Further, though I got Mixaloo to accept my uploaded cover artwork, it is nowhere to be found on the widget itself. And speaking of the widget, every time I have tried to purchase my mix, it asks me to create an account -- I already have an account, but there appears to be no way to log in with it from the widget!

The downside of having so many songs in the library, is that Mixaloo has to offer songs protected by Windows Playsforsure DRM. Yuck. It would be great if Mixaloo could offer DRM free tracks from record labels that are open to the idea (like EMI). With the public's growing distaste for DRM could potentially hamper the growth of the service, but it is a necessary evil if you want to work with most of the major labels.

It's probably premature to say that Apple is losing any sleep over Mixaloo (and the services aren't really comparable, as iTunes sells to people looking for specific tracks, while Mixaloo hopes to sell people based on the recommendations of their friends). But speaking of making money on the long tail, Mixaloo is a perfect example of a business whose approach to utilizing the long tail is smart. They're using the distributed nature of social networks and blogs to promote music sales virally to a massive audience on a personal level.

"We created Mixaloo to merge that experience with the viral nature of blogs and social networking communities, giving users the added incentive of earning cash for popular mixes. This 'social record store' creates a vast network of personal recommendations to increase sales and visibility for artists of all sizes," said Mixaloo CEO Mark Stutzman. Work out the bugs and Mixaloo could make be a winner.