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Pandora pretty much invented Internet radio discovery. Then Spotify added its own radio feature to provide a more “lean back” experience to its search-driven service. The biggest challenge for these dominant market players – aside from the business model conundrum – is figuring out immersive discovery, according to Paul Resnikoff, editor of the blog Digital Music News. That is, letting users discover new music organically, and not having it shoved down their throat and forcing users to hit “skip” after bad recommendations.

Schematic Labs has a service called SoundTracking the company believes has nailed that sort of proactive discovery. The service, which has amassed an impressive three million users in a landscape brimming with music streaming options, masquerades as a music-centric social network, but has ulterior motives as a discovery mechanism. The company released a revamped version of its iOS app today.

As the name would suggest, the app allows users to share the soundtrack of their lives. For example, you’re riding the bus on your way to work and The Smashing Pumpkins pops up on your iPod. You share it on the network – caption, geo-tag and 30-second snippet of the song included. You can add a photo to Instagram, too. Or you’re in a bar and the greatest, cheesiest Zapp and Roger song comes on. Hold your phone up so the software can recognize it (like Shazaam but not – it’s actually technology powered by Gracenote), and share it. The point is to record what random music is scoring your life. Schematic Labs chief executive Steve Jang says the service counts Snoop Dogg and the Far East Movement among its fans.

But the intriguing part is what the service has potential to do in terms of discovery. Jang — already a digital music veteran as the former chief marketer at imeem (and co-producer of a J Dilla music video, which gives him all the music cred he needs in my book) – says he wants the service to be a tool of expression that will in turn lead to discovery.

The new version of the app gives users the ability to see what songs are trending near you, locally, whereas previously you could only see trends worldwide. It increases the chances of discovering the local band or DJ that other nearby users might be supporting. Along the same lines, when a user posts a song, the service automatically recommends other users who have posted that song, which lets you peek at what they’ve been posting.

This isn’t all that mind shattering in itself. Other music startups like Songza, TasteMakerX, and 8Tracks have tried to tackle engagement and expression in a digital music cyclone. It’s certainly a crowded market, but with 3 million users for a small music startup it’s clear that SoundtTracking has built something useful.

What works so well for SoundTracking is its authentic feel. The new app has a dedication feature, that lets users tag someone with a song. This seems elementary — the music equivalent to Facebook tagging and Twitter @ mentioning. But Soundtracking added this because they saw users already doing it. And in an odd way, it evokes the days of dedicating a song to a special someone on the radio, and waiting to hear it on the air. SoundTracking has that kind of feel. And for kids who didn’t grow up engaging with the radio in that way, this is their version of the lovelorn dedication.

Creating that type of environment makes it a little easier for users to open themselves up to discovery. While the big players are working to fix their discovery woes — Spotify claimed in December that its new version will address those issues — SoundTracking has created a nice little community of immersed, open-minded users in its own right. And when it comes to discovery, what more could you ask for?