The technology behind "search inside the music"
One of the interesting things about giving a technology demo such as "search inside the music" is that you are exposing a whole lot of folks to technology that they haven't seen (or heard) before. Folks sometimes assume that what they are seeing is all new technology.
While there is lots of new and interesting technology in the 'search inside the music' demo, there are also some technologies that have been explored previously by a number of researchers in the Music Information Retrieval (MIR) community. Some of the most interesting and directly related work is the work by Logan, Ellis and Berenzweig summarized on Dan Ellis's Music Similarity page, and the work by George Tzanetakis on Manipulation, Analysis and Retrieval Systems for Audio Signals.
The International Symposium of Music Information Retrieval (ISMR) has a good collection of papers (although their site seems to be down as I write this) about music classification based upon similarity. Likewise, the music-ir.org site provided by Dr. Stephen Downie is an excellent starting point for those who are interested in learning more about music information retrieval.