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Report: MySpace may get Imeem in firesale

GigaOm reports that Imeem owes money and has been drained by legal fights.

Courtney Holt, MySpace Music's chief, is on a buying spree.
MySpace Music

Om Malik over at GigaOm advanced the story about MySpace's efforts to acquire Imeem on Wednesday.

The news that Rupert Murdoch's MySpace was in talks to buy Imeem, a long struggling social-networking site focused on music, generated a lot of headlines on Tuesday.

Judging from the glut of media coverage but relatively few reader comments at some of the sites covering the story, this is one of those events that journalists care more about than the public (don't know what it's like at other sites, but MySpace stories don't generate big readership numbers).

Be that as it may, Malik reported that the transaction is "essentially a firesale." He summed up the situation this way: "I guess when the company had a choice between locking the doors or teaming up with MySpace, it wasn't a hard decision to make."

Malik reported that Imeem owed money to independent record label, The Orchard following a legal dispute. I reported on Tuesday that Imeem CEO Dalton Caldwell was in New York recently looking for new investment, and that Imeem has burned through the funding raised last spring, according to sources with knowledge of the company's latest fund-raising efforts.

The ad-supported music sector is crumbling and Pandora, Lala, MySpace Music and Spotify appear to be the last of the noteworthy players still standing.

Spotify has received remarkable reviews. MySpace Music has largely disappointed, according to sources close to the company, but parent company News Corp., is putting resources behind the project that could change its fortunes. Lala just launched a partnership with Google and Pandora is growing its audience thanks to the music-discovery service's iPhone application.

Not one of the companies has reported profits yet and faces its own set of challenges. How do you handicap the race?