Imeem, the free music streaming service, gets new round of funding.
Insert your favorite cliche or idiom here: Imeem
may have dodged a bullet. Or has risen from the ashes. They have nine lives. Or my favorite: they may have pulled a rabbit out of the deadpool.
The point is, they aren’t going to be closing down any time soon, say sources close to the company. And for a free music streaming company, that’s really saying something.
Weeks ago they were on the ropes, near the end of cash and with crushing venture debt obligations threatening to shut them down entirely. No one was interested in buying them or putting in more cash with big music label royalty commitments already past due.
Then we heard whispers that they may have a plan to build a profitable business. And apparently they’ve convinced at least their current investors to back that plan with more capital.
CNET’s Greg Sandoval reported earlier today that the company may have raised new funding (he used the “dodged a bullet” idiom, by the way). We’ve confirmed that the company has raised a new round of financing from existing investors. There’s no word if Sequoia has put new money in, and we’ve been told the amount raised is small, likely in the single digit millions. But it allows iMeem to make payroll and keep the servers running.
More importantly, the company has forged new deals with the music labels, we’ve heard, that help it break away from the crushing pay-per-stream model that’s impossible to cover with advertising.
Imeem has renegotiated its label deals to allow it to focus more on a revenue per user goal than a pay per stream. Revenues from downloads and ringtones will offset streaming rates, which moves the relationship much closer to a revenue share than a pure licensing deal. It may just give iMeem the room it needs to get to sustainability.
I am glad imeem survives for now. We need more innovation in the music industry and imeem is one of the innovative companies out there.