Imeem announces deal with Universal

Once a hotbed of piracy, music social network now has digital catalogs from all major labels available on its site. Imeem's challenge now: can it make money?

If the digital music business were a game of poker, Imeem can now claim to have a royal flush--sort of.

Imeem

The music-centered social network, which focuses on ad-supported streaming music and video that its members can arrange into "playlists" on their profiles, has announced a deal with Universal Music Group that gives Imeem access to full-length recordings of the recording giant's entire digital music and video catalog. This means that Imeem now has deals with all four major labels as well as a large number of independent labels.

The sprawling catalog of Universal Music Group, a division of Vivendi, encompasses artists like Kanye West, Amy Winehouse, Fall Out Boy, Black Eyed Peas, Gwen Stefani, The Killers, Snow Patrol, and Maroon 5.

"If (the Universal deal) isn't a vindication for what we're doing, I don't know what is," Imeem co-founder and CEO Dalton Caldwell said in an interview with CNET News.com. He highlighted the fact that Universal has recently cracked down on the use of its content on most social-networking sites, requiring its streaming music clips on MySpace.com to be limited to 90 seconds rather than full songs. Imeem, Caldwell said proudly, has access to the entire files.

It's a sharp change in fortune for Imeem. Just over six months ago, the company--which then allowed users to upload and stream music despite not having deals with the labels in place--was sued by Warner Music Group for copyright infringement. Social-networking leader MySpace, too, had blocked Imeem widgets out of piracy concerns. Imeem then settled with Warner and got to work on licensing ad-supported content. It was a smart move; otherwise, the Palo Alto, Calif.-based start-up could've gone under entirely.

But Imeem is used to changing course. The company was originally founded in 2005 as a generic social network in the form of a downloadable client that allowed members to communicate, share files with each other, and create interest groups. Since then, it's shifted its focus almost entirely to streaming music and music videos, and user accounts now tally about 19 million.

So what's next? "The thing we really need to do is monetize this thing and prove that we can make money," Caldwell said. And some critics have hinted that the user experience could use some attention , too. But if the free, ad-supported streaming model (there are no downloads or subscriptions involved) proves successful, Imeem executives hinted that they may try applying it to other forms of media like TV or film.

"In the beginning of 2008 you'll see a flurry of things happening on the video side," chief marketing officer Steve Jang said in an interview.

For now, executives have ruled out selling the company and cashing in. "This is the good part. We've been working so hard on these deals that we don't want to entertain (acquisition offers)," Caldwell said. "We just want to soak in the goodness of accomplishing our goals for a little while."

He clarified that even though virtually the entire music industry is on board, Imeem is still an unproven product. "I feel like we just ran a marathon, and we finished it, and I'm so proud of us," he explained, "but let's see if this works. We really are excited to prove the model out and all of the good vibes that went into getting here, we want to see them bear fruit."

 

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