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Business News Digital
Imeem deny multi-million royalty debts and pending closure
By CMU Editorial | Published on Friday 27 March 2009
Much speculation doing the rounds about music-based social network Imeem following a report earlier this week on Techcrunch which claimed the service was in danger of shutting down after failing to raise new funds or find a buyer to help pay millions in unpaid licensing bills from the record companies.
Imeem, of course, initially faced lawsuits from the record companies for its role in helping kids share music, but they eventually entered into licensing deals with the majors, and Warner Music even became an investor. But Techcrunch says bosses at the service have struggled to make their social networking service add up commercially, despite the support of the record companies and an ever-growing user base, and that they now face royalty bills of $30 million with little money in the bank to pay them with. Techcrunch cited some sources as saying shut-down of the service was now “imminent”.
But the company’s VP of marketing, Matt Graves, has denied the gloomy report, telling reporters: “TechCrunch’s $30m number is not only wrong, it’s preposterous. We don’t now owe, nor have we ever owed, that amount of money to the labels”. But, according to Music Ally, Graves did admit the company are hoping to renegotiate their deals with the record companies and publishers, observing: “The economy and the world have changed, and just as we’ve renegotiated our bandwidth bills, ad-serving deals, etc, to take into account the new economic realities, it makes sense to do the same with our content deals”.
