Imeem dodges bullet with new round of funding
Imeem, a social-networking site geared for music fans, has obtained new funding that in all likelihood saved the company from closing, according to music industry sources.
The money received so far by Imeem, which streams ad-supported music to users' PCs, is unlikely to last the company through the end of the year but the start-up's financing efforts continue, said the sources.
In March, TechCrunch reported that Imeem was in financial trouble after managers failed to sell the company or raise more money. At that time, the company denied that a shutdown was imminent. The company went back to some of its investors, which included some of the major music labels and asked for help, which it received. But last month Imeem went back to investors and told them even with the added assistance, Imeem needed new funding to survive, according to two industry sources.
An Imeem spokesman declined to comment.
Imeem made it clear that if it didn't raise money soon, the situation was "dire," one source said.
This first quarter of 2009 has been particularly bitter for ad-supported music sites. SpiralFrog, a site that offered ad-supported downloads closed its doors in March. In January, Ruckus, the music site tailored for college students, shuttered operations.
Some of Imeem's remaining competitors are facing their own struggles, including MySpace Music, the joint venture from News Corp. and the major labels. Music industry sources say the big recording companies are dissatisfied with the ability of the 8-month-old service to generate revenue. Read more about that here.
Greg Sandoval covers media and digital entertainment for CNET News. He is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at http://twitter.com/sandoCNET. 
it's one of my favorite sites after last.fm
Social Music is a great concept
I wonder why it hasn't caught on
- by michael DuKane May 7, 2009 6:41 PM PDT
- The challenge for any of these sites is monetizing the user base. At the present time, the music industry has operated with a heavy hand. In some cases, rightfully so as the proliferation of free downloads scares the pants of the labels causing a knee jerk reaction to squash any new idea. Streaming services that are exclusively ad supported will not prevail as the web is too fragmented to support the current costs for streaming when all is considered. The labels only offer licensing. They don't actually supply anything in exchange for the right to sell a digital file or to stream it. The web operator still has to source the music files, build and maintain the web servers and pay upfront fees to unions and labels before they can even begin to make a dime. The present models involve a serious investment to set up the source for the music to either stream or to sell. Imagine being a traditional record store or radio station where you had to produce the content that you wanted to sell or air. The most popular top 40 radio station of the 70s would have never survived had they had to press every album they wanted to play and pay the record labels to boot every time they played it. The only model with long term possibilities is a combination of ad support, subscription sales and download sales provided the web operator has a cost efficient source to obtain the music streams or files to sell. Under this scenario, download sales would pay for the cost of getting the music, subscription sales would pay for the cost of delivering it and ad sales would provide the profit. As it stands now, too many hands are in the pot that are providing too little in exchange. This includes not only the labels and the unions but also the consumer.
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(6 Comments)I personally like nextune.com for playlisting, streaming and digital downloads. They have a great search engine and terrific free software that creates playlists based on mood. I can work online or offline to create pretty amazing playlists.