In a sign that the music industry is embracing the digital age, IMVU is announcing today that it will let users discover, share and buy music inside the virtual chat rooms of its 3-D social network.

IMVU lets members create their own 3-D animated virtual characters, or avatars, and decorate rooms that serve as 3-D chat rooms. Now the members can use IMVU Credits Music to buy songs, create playlists, and listen them alongside other IMVU avatars. In essence, it recreates a kind of “listening bar” social experience that allows users to talk about the music — or even dance to it — with a group of friends as they hear it, said Cary Rosenzweig, chief executive of Palo Alto, Calif.-based IMVU. More than a million songs are available.

“Instead of being passive recipients of music, people can now be the DJs,” Rosenzweig said. “They can share the music they want, like going over to a friend’s house to share CDs.”

This is just the kind of extension of the music business into the social realm that MySpace co-founder Chris DeWolfe and Warner Music Group chief Edgar Bronfman Jr. were talking about last week at the Web 2.0 Summit as the key to saving the music industry from piracy. The entire music industry will watch this closely since it is banking that the discovery of new music in a social setting will directly lead to an increase in music consumption and purchases.

This is also a good way for IMVU Credits to distinguish itself from other sites that offer virtual chat rooms — Vivaty, Whirled, Lively by Google, Gaia Online, Habbo — and the larger virtual worlds such as Second Life.

Rosenzweig said that the company responded to requests from members who wanted to have their 3-D virtual rooms come to life, like real world apartments or homes with mood music. Users can listen to music in private rooms or public spaces. Users can listen to streams of music or purchase downloads that are free of digital rights management from a big catalog of music from all four major music labels.

Notably, users must pay for the music. If you’re visiting a room owned by someone else, you don’t have to pay. The virtual room itself is free for the owner to create. But to stream a song inside the room, the owner of the room has to pay for the song one time.