RUMORS of ARO.SPACE’s demise have circulated almost since co-owners Jared Harler and Alex Calderwood converted the club formerly known as Moe into Capitol Hill’s most stylish dance spot in 1998. In recent months, a haphazard music schedule, revolving chefs at the adjoining cafeteria, and wavering audiences for its weekly dance nights signaled that ARO.space’s management might indeed be losing interest.

Still, the sleekly designed club is considered among the region’s best, and it continues to attract top international DJs, dance-music acts, and the occasional rock band. Rather than shut down the young landmark, Harler and Calderwood have sold ARO.space to Seattle’s K.S. Investments Inc. The two, also part-owners of Tasty Shows, will continue to book artists into the space, just as they do at recently opened downtown club I-Spy; ARO.space will also have an in-house booking agent.

“We’ll still do promotion at ARO.space,” says Harler. “We’re just not owning the club anymore.”

What does this mean for Seattle’s music community? On the surface, it’s a major blow. Harler, Calderwood, and their staff struck a stark, urban aesthetic that gracefully ushered this city into its postgrunge era. ARO.space came to anchor a Capitol Hill entertainment district with satellites such as the popular bars Linda’s, the Cha-Cha Lounge, and more recently, Manray, along with punk-rock hotspot the Breakroom.

New ARO.space owners Sunny and Kay Kim have no experience running a nightclub, which would seemingly make the situation more grim. But the husband-wife team say in a press release that they’ll maintain the status quo, the only immediate exception being a revamp of the restaurant.

This is where the Kims do have extensive background. They came to Seattle via San Francisco and their native Korea, and they’ve spent the past few years running restaurants and delis in the suburbs here. An ad in one of the dailies alerted them of a “business opportunity,” Kay Kim tells Seattle Weekly, and they soon found out that it involved ARO.space.

He’d always wanted to own a club, Kim says, and the presence of the attached cafeteria sealed the deal. They’ll update the menu to focus on Japanese and Chinese cuisine, but they’ll leave the music menu to promoters. Speaking on the phone from the club during a flurry of New Year’s preparations, Kim sums up his feelings about taking over responsibilities January 1: “I’m excited,” he says.

IT’S NO SECRET that Seattle’s at the epicenter of the Internet music revolution, but few locals realize the scope of what’s going on behind the scenes here. For one thing, Microsoft has spent the past six months positioning itself for a streaming media war with a company founded by an ex-Microsoft executive, RealNetworks, which pioneered the technology.

Now a company that’s remained quietly in the background is poised to become another big name in the Internet music business. Encoding.com, which last year transformed millions of analog songs into digital, downloadable files such as MP3, has changed its name and its focus. Now known as Loudeye Technologies, Inc., the company will extend into creating software applications while continuing to encode audio and video for multiple formats.

“When thinking about a bigger mission,” says founder Martin Tobias, “we realized we needed a name reflective of our vision.”

The company’s been in demand, helping clients like Atomfilms, BMG, Sony, and many others adapt content for the Web. In turn, the entertainment and technology elite, including Microsoft, Intel, NBC, CBS, and America Online, invested in Loudeye’s latest round of financing—an impressive $48 million. In recent weeks, the company has also acquired local multimedia software developer Alive.com and entered into a joint ven- ture with the Woodland, California-based record distribution company Valley Media; together, Loudeye and Valley will offer Internet clients access to a database of 30-second samples of up to two million songs.

Last week, Loudeye filed for an initial public offering. It’s a risky move. Music-related tech companies that went public in mid-’99, such as MP3.com and Emusic.com, first surged in trading, but ended the year on a steady downslide. (Tobias isn’t allowed to comment on the IPO, as mandated by the Securities and Exchange Commission.) Meanwhile, the makers of portable digital music players failed to roll out their products in time to take advantage of the Christmas season, leading to a muted impact after a big buildup.

“The timing,” muses Tobias, “we just missed it.”

Tobias remains confident, however, that the buzz will grow louder in 2000, and he should know: His company has grown to more than 220 employees in a year to keep pace with the demand to digitize music and video. While the major record companies have thus far maintained a wary distance, he says they’re moving closer to an all-out embrace of the Internet; Tobias’ company stands to benefit when it happens.

“I think next Christmas will be the year of music on the Net,” he says.