MC Hammer strides into a San Francisco restaurant wearing sunglasses, a black velvet blazer and a large peace medallion around his neck. He checks messages on his iPhone as he settles next to his business partner, Web 2.0 entrepreneur Geoffrey Arone.

The 45-year-old Oakland native and chart-topping artist of the late '80s and mid-'90s is "turning this mutha out."

Specifically, that's DanceJam, the dance-focused video site the pair co-founded that premieres today at dancejam.com.

"My focus here is as a businessman," Hammer said. "While many complain about the current condition of the music business, I think of it as early on in the Wild, Wild West. There's an opportunity to build a whole new business model, to build a whole new landscape. There is an old business dying and a new music business emerging. It's a great opportunity."

DanceJam is getting its start by tapping into the dance phenomenon, underscored by such pop culture crazes as the television show "Dancing with the Stars" and the hip-hop footwork of Soulja Boy and the Billboard-topping song "Crank That."

On the DanceJam site, users can record their moves and upload them, as well as watch and rate others' skills. "The next star might be a kid sitting on his couch," Hammer said.

DanceJam trains a spotlight on the growing popularity - and increasing competitiveness - of online video. By next year, more than half of the U.S. population, or about 155.2 million people, will watch video on the Internet, according to an eMarketer report, viewership that will draw an estimated $1.35 billion in advertising.

Companies from DanceJam to Rupert Murdoch's News Corp. are trying to pump it up. NBC and News Corp. unveiled Hulu in late October, a site that offers full-length episodes of "Heroes," "House," "Prison Break" and other television shows. In October 2006, Google shelled out $1.65 billion to acquire San Bruno's YouTube.

They're all battling for the largest audience. YouTube, the top video-sharing site, drew more than 54.5 million viewers in September, according to Nielsen Online, but its rivals, from San Francisco's Revver to Sony's Crackle, attracted just a fraction of that audience.

"This space is incredibly fragmented," said Michael Greene, an associate with JupiterResearch. "There is a lot of clutter. You need a solid plan to drive people to the site. It's the same problem that any site that depends on user-generated content has. You have to rely on a certain number of people to create content to draw (more) people to your site."

For DanceJam, the challenge is in luring people to a dance-focused site when fans already can get their dancing fix from YouTube.

Co-founders Hammer and Arone said DanceJam's appeal will be in its growing collection of dancers and dance styles, from Fred Astaire and Ginger Rogers to Michael Jackson and his moonwalk. "YouTube is great, but it's general-purpose," Arone said.

Users can browse a directory of dance styles on the site. Two teenage girls, for instance, giggle and demonstrate the steps to the Macarena in their bedroom. Ever wonder about the origins of buckin'? Also known as gangsta walking, jookin' or choppin', it started in Memphis, according to a page featuring examples, history and related dances.

Naturally, the site also includes a tribute to the Hammerdance, Hammer's trademark move, described as "jumping side-to-side, reversing toes-in and toes-out, shuffling quickly one way, then the other."

Arone said DanceJam plans to team up with artists such as 50 Cent, Lil Mama and the Backstreet Boys, who can use the site to promote their music and videos. It expects to make money through sponsorships, other advertising, and selling music and merchandise. It received about $1 million in angel funding from TechCrunch blogger and venture capitalist Michael Arrington and other investors.

The unlikely pair met earlier this year. Arone had left Web 2.0 start-up Flock for a position with Bessemer Venture Partners, a Menlo Park venture capital firm that has invested in LinkedIn and Yelp. When Arone suggested creating a dance-oriented social media site, Bessemer suggested he meet with one of the company's contacts, Hammer. The pair met for coffee, which turned into a four-hour conversation.

Hammer's interest in technology started more than a decade ago, in the mid-1990s. "I wanted to know why I couldn't see my videos over the Internet," he said.

That question led the artist to meet with Sunnyvale's Silicon Graphics and the developers of Apple Inc.'s QuickTime video player. More recently, Hammer toured YouTube, a trip captured by the site's employees and posted online.

DanceJam is the first technology business he's co-founded, although he has invested in other technology companies over the years.

"Hopefully the entrepreneurial spirit never leaves anyone," he said. "If you're working for somebody, hopefully at some point you'll want to own your own label ... and you want to be at the top of the food chain. Here in the Bay Area, startups happen daily, so being in that type of environment, the idea was always in the back of my mind to do something tech-driven."

Hammer said his role includes developing the company's advertising and content strategies. He also recorded the piece "Meet Me" for the new site, though he declined to discuss his future music and dance plans and how they might be incorporated in DanceJam.

"It's not about Hammer," he said. "It's about the entire world being able to post their entertaining videos."

But, he promised, "Within the next few months, you'll hear from the Hammer. You will hear from Hammer about the dance side and music side."


-- Check out a video with DanceJam co-founders MC Hammer and Geoffrey Arone at sfgate.com.

Check out a video with DanceJam co-founders MC Hammer and Geoffrey Arone at sfgate.com.

E-mail Ellen Lee at elee@sfchronicle.com.

SF Gate: News and Information for the San Francisco Bay Area 11-12-07