Wednesday, December 19, 2007

Imeem - Doomed by Success?

Michael Robertson (CEO/Founder of MP3tunes formerly of the original has very interesting analysis of the deals Imeem had to cut with the labels, and how they have essentially solidified their own death....

Michael Robertson . com: "Far from a breakthrough, it is a death sentence for Imeem. Under a dark cloud of looming lawsuits, Imeem entered into a crushing financial agreement that allows them to survive as long as venture capital money continues to flow into the company, but spells almost certain financial calamity once outside funding halts. Reporters classified the deal as a 'license' with 'advertising revenue sharing', implying it is a new structure from the labels. A more accurate description would be an ownership position with substantial upfront payments, plus required ongoing payments regardless of revenue generated by Imeem. To put it another way, it is the same onerous deal labels have foisted on digital music companies for the last decade."

If you buy into the picture that Michael paints, it sounds like the Imeem folks had their back up against the wall. Either get sued out of existence, or sign up for financial commitments that are impossible to meet. The only happy ending? Sell, sell, sell! But to who? The labels already basically own them, and who else would want to buy such a money losing venture?

Michael's is obviously just one opinion based on information that he has been able to scrape together from his industry contacts, but I find it fascinating nonetheless.

No comments: