SAN MATEO, CA (Hypebot) – Late last year, rumors began circulating that imeem was in trouble. Ad revenue simply wasn't meeting the projections needed to pay labels the per stream rates agreed to. It was said that imeem was burning through the cash that Sequoia and Warner Music had given them at a rapid rate. Then the company began openly searching for a buyer. Along the way, the global economic meltdown hit, further slowing both the flow of online ad dollars and capital investments.
Now comes word from a variety of sources that imeem is in real trouble. Not the $30 million behind in payments to labels that one source told TechCrunch, but enough trouble that the future of the service that delivers in excess of 1 billion song plays each month is in serious doubt. In addition to dwindling cash reserves, a tough ad market and with few investors in sight, imeem faces both a major label community that appears unwilling to re-negotiate terms and the potential of competition from Spotify, Project Playlist and others.
The major labels and other rights holders are in a desperate search for new revenue sources and have focused in recent months on wringing bigger payments out of ad-supported music services from YouTube on down. In doing so, they run the risk of destroying the sources of music discovery that are most popular with consumers and run driving fan behavior further underground to platforms that may never be monetized.
For now, the labels seem content with constantly shifting their support from new service to new service in search of a better mousetrap – or perhaps a new advance payment. Spotify might even me that better mouse trap. But sooner or later the labels need to act like partners interested in win-win relationships rather than command and control. – Bruce Houghton