Does embattled music streaming site imeem think it can take on iTunes? For the most part, nearly every streaming song on the site has a download button which links to both iTunes and the Amazon MP3 store. But it is quietly testing its own music download store which bypasses iTunes and Amazon and sells MP3s directly. For instance, this is the case with some Sub Pop artists, such as Iron and Wine and The Shins. When you hit the download button on songs for those artists, a window pops up showing the album where that song came from with with the option to download the entire album or any individual song for $0.99 (see screenshot above). You can then pay imeem directly by credit card or Paypal and download the song to your computer.
This imeem music store is obviously an experiment. The vast majority of songs still direct users to iTunes or Amazon for downloads, and you’d expect imeem to provide its own lightweight desktop client to manage and store the downloads, or at least place them directly into iTunes instead of a download folder on your computer. But it is also likely a sign of things to come. After nearly running out of cash because it was paying out too much money to the music labels for streaming rights, imeem went through a sever recapitalization. Warner Music ended up taking a $20 million hit to write down its investment and bad debt from imeem. Instead of walking away, however, Warner renegotiated its deal with imeem to get new shares without putting in any new money.
Imeem is doing everything it can right now to cut costs and find new sources of revenue. Last week, it announced it will soon stop storing user’s photos and videos, an expensive remnant from its earlier strategy to compete with Facebook and MySpace as a larger social network. Now, imeem is focusing on being a music site. It was one of the first sites to strike streaming deals with all the major labels and for the most part has renegotiated those on more favorable terms. Its iPhone and Android apps, which also offer streaming music, are taking off and driving even more downloads.
And that’s where the imeem music store comes in. Currently, imeem gets a dinky 5 percent affiliate fee for every song its users buy from iTunes or Amazon. As part of its renegotiations with the music labels, it is getting download rights along with its streaming rights I’ve been able to confirm. Instead of getting a few pennies for each song from iTunes and Amazon, imeem can capture the roughly $0.30 per song that doesn’t go to the labels. What is more likely, however, is that it is giving the labels more than the 70 percent cut they get from Apple. Even if it splits its share with the labels and takes only $0.15 per song, imeem still stands to triple its download revenue. Add in ringtone sales and its existing advertising revenues (imeem attracted 25 million unique visitors worldwide in May, according to comScore), and imeem might just have a chance to survive. But if it does survive, it probably won’t be because of its advertising model alone. It will be because the free music is driving enough sales of actual music downloads.
Update: Imeem has confirmed that it is planning to roll out this store more broadly, but says that when it does it will continue to offer iTunes and Amazon downloads as an option.
Below are screenshots of the new post-payment window for songs imeem sells itself and the regular affiliate link window which still pops up for most downlods:
Great idea. I was wondering why they never had this from the beginning.
“The dirty little secret of all this is there’s no way to make money on these stores,” [Steve Jobs] says. For every 99¢ Apple gets from your credit card, 65¢ goes straight to the music label. Another quarter or so gets eaten up by distribution costs. At most, Jobs is left with a dime per track, so even $500 million in annual sales would add up to a paltry $50 million profit. Why even bother? “Because we’re selling iPods,” Jobs says, grinning. — Time Magazine, “The 99-cent Solution” by Chris Taylor, 2003 http://www.time...s/invmusic.html
Steve Jobs knew six years ago that the money was in the hardware. It enabled Apple to sell music at cost and spend heavily on advertising, while Apple’s music-only competitors (like buymusic.com) could only try to match the 99-cent price point. Apple used music as low-margin bait to sell high-margin iPods and computers.
Now imeem is going back to 2002? What’s that quote about those who don’t know history being doomed to repeat it?
since when is a net profit of 10% been paltry? do ur research
Yeah, you tell that Time magazine how to do research, Steve!
Ten percent is paltry compared to the 30% (or higher) markups on hardware.
Ten percent is paltry when you consider the amount of investment required to build such a platform and get all the record labels to cooperate.
Ten percent is paltry when you are a high-end brand like Apple.
freddy, i think you need to re-read the post. they’re selling downloads as an *add-on* to their ad sales model, not as a standalone business
I’m well aware of their ad sales model, which is why it’s not worth mentioning. Advertising is not working as a sustainable revenue model for most Web 2.0 companies, and according to this earlier article in TechCrunch, it wasn’t floating imeem’s boat, either:
http://www.tech...t-cant-collect/
@Freddy J. Nager – You are dead on – this is more stupidity if anything – at the end of it all – their only chance to to get bought out by WMG (longshot) – at a price of “Imeen’s cash on hand – minus closing costs – or in one word – $0 (zero)
Say a prayer for the stupid – and move on to the next socialnet music platform funeral.
Hi, I am the CEO of imeem.
Few things:
-As Erick mentioned, we are going to continue to offer iTunes links even when this is fully rolled out. Letting the user make a choice about their preferred music store is important to us. We will also continue to sell downloads from iTunes on our iPhone app on a permanent basis.
-It has been well established that the margins on downloads are not that great. However, Alan is correct in that it is an add-on to our ad business. It is also worth mentioning that this is something our small and large label partners have repeatedly and consistently ASKED us to do. There is more going on here than meets the eye.
-Our overall philosophy on monetizing online music is that there is no “silver bullet” and the right approach is to be pragmatic and monetize all of the touchpoints. That includes advertising, ringtones, downloads, tickets, merchandise, subscriptions, etc. In my opinion the media industry, for instance the newspaper business, have spent too much time searching for the One True Answer to “The Internet Problem” rather than being pragmatic and realizing that it’s going to take a lot of technical innovation through trial-and-error to grind out a business.
-Dalton
“There is more going on here than meets the eye…”
Ooh, that sounds just like a scene from the Godfather 2.0, with the record labels as a multi-headed Don Corleone….
“Listen, imeem, we got an offer you can’t refuse… don’t take it personal, it’s just business. From now on, you’re our tool. We’d rename you ‘tool,’ but there’s already a band by that name. Since you can’t pay us back for all the music you gave away, you’re gonna be our endaround iTunes… Hey, did we say you could speak?! Shut the $%^& up and listen! You will sell our music direct and return most of the profits to us. Not only that, you will go across this Web thing of yours and find out everything that makes money — ringtones, downloads, tickets, dating sites for hermaphrodites — we don’t care. Just make money. Are we understanding each other here?”
Dalton,
We are currently in private beta at jamWee. Will your music catalog be available for 3rd party sites to sell music too? And if so, will you increase the margin?
Brandon
CEO
jamWee.com
This is a great idea to sell the music songs. I’m interesting to see if this idea have success
If only it was 2006 when they could have flipped the site already and avoided asking questions like, “How will this actually make money?”
I think this lesson has been beaten into the ground. Sites with hordes of bandwidth can’t make money from advertising alone. How long will it take Facebook to understand this?
To all the haters on this thread, I dedicate this song to you: http://www.imee...-album-version/
The labels are more than willing to give away another $0.15 or so per download to imeem in an attempt to ween buyers away from itunes. Especialy the non-apple indoctrinated “urban” audience that dominates imeem. In time imeem I am sure will start to see exclusives/remixes.
Mad props to a compnay that keeps hustlin. To the imeem staf I dedicate this:
http://www.imee...k-ross-hustlin/
What will the rights management be on the songs purchased though imeem?
I run marketing and PR for imeem. All songs sold on imeem, whether it’s directly through our site or through our partners, iTunes and Amazon MP3, are DRM-free MP3s. —i.e. there’s no rights management on the songs.
There is no way Imeem will be able to compete with iTunes or Amazon. Their recent decisions to begin deleting service for videos and photos even to paying customers has set the company back another step. With all the cutbacks, layoffs, and shrinking market share over the past 12 months, it doesn’t seem Imeem can succeed even with Warner coming back into the fold for essentially nothing after writing off $ millions earlier this year. It was a great site while it lasted, but the reason it was great is because it wasn’t Amazon or iTunes.
Imeem and the major-labels continue to fail to realize their business problem. When you focus on promoting music that lacks depth, it fails to retain your listeners in ways where listeners and artists will invest money.
What makes iTunes and Last.fm more viable in the long run is that neither is overrun by one genre or audience. Imeem is obviously urban/pop. As a user, it felt like there was nothing to discover, since it was the same stuff I’m already being spoon fed through other mediums.
This campaign to sell directly seems like a last-ditch effort by a failing platform. iTunes nailed the interface and continues to engage their user base, while Amazon is doing a reasonable job of leveraging their overall online dominance to join the music market.
To Imeem, I’d say your best shot is to promote artists more equally, and surprise your users. Make yourselves relevant. You have a unique opportunity to have people say “oh yeah, I discovered that artist on Imeem.” I don’t anyone saying that. Finally, your user flow for artists to link their music profile to the music that has been uploaded by fans is abysmal.
Imeem has lots its way. I was a paying VIP member and they just decided one day to remove my photos and videos (a long with those of all members). They can reimburse my VIP fee (I hope), but not my TIME invested or FAITH in Imeem to support members. Pure hatred for the liars at Imeem who said one thing and then did another. Hope they go bankrupt like all the others for their lies.