BEVERLY HILLS (Hypebot) –
MySpace has completed the purchase of imeem, which has been rumored since Monday, at a price that could make venture capitalists wary of investing in any startup that requires music licensing.
TechCrunch puts the purchase price at just $1 million. Imeem's debt is also being assumed and some assets are not included in the deal, say TechCrunch's sources, including millions of dollars in accounts receivable. But VentureBeat's sources says the purchase price is $7 to 9 million – $1 million in cash plus earn outs to retain key employees. About half of the current staff of 55 will be cut after the sale, according to reports.
Whether the final number is $1M or $9M, it is far lower than the $20+ million that imeem raised and burned through during its 6 year life. My sources blame the failure almost entirely on what many see as excessive licensing fees from the labels, as well as, lower ad revenue caused by the battered economy. Imeem was, after all, attracting almost 6 million visitors monthly. But that number had been falling; more than 12% in recent months.