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Big 4 Back imeem

behind imeemIt’s four in a row for imeem.  After settling a lawsuit signing a deal with Warner Music Group in July, the social music site has won over the rest of the Big 4 music labels. Sony BMG signed up in late September.  EMI inked paper at the end of October.  Now Universal Music Group has crossed over too.

Imeem is a free social networking service built around streaming digital music.  Unlike most music sites which build a library of content to then offer to their users, imeem works partly in the reverse.  Subscribers can upload music which is, in  turn, added to the catalog.  As a member of the site, you can create playlists, upload music, or listen to streams of music already in the catalog.  Members can also use embeddable code to add the stream of a chosen song to a blog posting or a personal webpage (including profiles on some social networks).

The hook for imeem is the songs are not available for download.  To hear the music, or watch equivalent video content, you must access it as a digital stream, either on the imeem site, or through embedded code elsewhere.  Songs are also not available for purchase.  If you want to buy a song for your MP3 collection or to put on your iPod, you’ll need to do so elsewhere.  Imeem provides a “download” link that gives you the option of going to Amazon’s MP3 store or iTunes for this service.

As an affiliate partner, they make money from iTunes or Amazon for these kinds of sales referrals; likely a few cents for each successful sale. (Apple reportedly keeps 31cents per song and gives 68cents to the labels and artists, split equally. Imeem’s share would but taken out of Apple’s cut. An extremely unlikely equal partnership would yield 15c per song. More likely is an amount capped at the range of 20 to 30 percent, or 6 to 9cents per referral for the highest level fee).

As of October 31st, in fact, their CEO said they were the number one affiliate partner for iTunes.

Like most free web services, imeem makes much of their money from advertising which litters the pages of their site.  This revenue is shared with the music labels.  Money earned from affiliate referrals to iTunes, is presumably not shared with the labels. There, as noted, the labels earn approximately 1/3 of the sale as their royalty cut from the store selling the music. An additional 1/3 goes to the artists.

Some sources have speculated imeem is also paying the labels a per song fee for each time a licensed song is played through the site.  Matt Graves, imeem’s VP of Marketing and Communications, has publicly said that is not the case. 

In many ways, imeem operates like a web based radio station.   The distinction is, listeners, and the community, act as their own DJs, choosing music down to each song.  Like other more pure-play online radio stations, Last.FM for example, the imeem service can act as a discovery agent for finding new music.   It can refer songs explicitly, or allow a listener to see what other people are currently into.

The labels so far seem to like what imeem’s doing. Universal’s CEO Doug Morris called it “an innovative way to make our artists’ music a central part of the social networking experience.”     

Other executives from the rest of the Big 4 have said similar.  In many ways, imeem seems to be the among the first alternate business models they’ve embraced.

Unlike other sites, MySpace notably, the record labels seem to like the revenue sharing agreement and copyright protections imeem affords them.  (Universal had previously sued MySpace for not effectively policing copyright of their music.  And last week, Universal limited streams of their music on MySpace sites to 90 second clips.  There is some speculation the recent move in anticipation of the now announced imeem deal; an effort to drive traffic to this revenue producing partnership)

imeem’s site is not without some problems.  One criticism sometimes levied targets the user upload process for inaccuracy in the catalog.   As a case in point, selecting a list of the all-time most played songs in the Blues category on the site pulls up a listed headed by J Holiday’s Suffocate. The same list also includes Sex and Candy by Marcy Playground and Foolish Games by Jewel.  None of these songs, by even a liberal definition, fit the category.   Similarly, songs may occasionally be mislabeled with credit going to the wrong singer.

Despite these modest flaws, the site remains incredibly popular.  Imeem continues to grow.  Current data suggests they are at about 19m unique subscribers, up from 16m in July.

Imeem hopes to capitalize on the music labels’ support and this growth with increased ad revenue.   By monitoring site usage, and listening trends, there is also some likelihood they will attempt to offer more precise ad targeting, for a premium price, in the near future.


Related Articles
imeem Settles and Partners with Warner Music
imeem Signs with EMI
Universal Music Restricts Streaming on MySpace (via Billboard)
DRM: Can EMI Save the Record Labels from Themselves
Amazon’s MP3 Store Goes Live
DRM and the Shrinking List of Music Retailers

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