Online music-focused social network Imeem is on the block, according to our sources, and has hired investment banker Montgomery and Co. to lead the sale. Coincidentally, we have also learned that the company is announcing some layoffs internally today — as much as 25 percent of its around 80-strong workforce. These layoffs are mainly on the technical back end and services side.
The company has done its on-demand streaming music deals with all four majors, and has also been working with a slew of indies. As it has built out its platform (it recently relaunched its site/service), and done most of the biz dev deals, the focus now is on growing audience and monetizing the platform…it won’t be needing as much technical expertise going ahead, the sources say, and hence the layoffs. Of course, Imeem is a Sequoia-portfolio company, which means it is all but obligated to heed to the VC firm’s recent call of cost and employee cuts.
Lots more after the jump…
Why sell? On the sale, the company’s thinking is that despite the economic troubles and music industry’s continued troubles, the time is right with lots of activity in the sector — the hype around MySpace Music’s launch, the imminent launch of Facebook’s own music service (and for now, iLike’s dominance there), and music becoming part of a bigger social media play — and the company would do well as part of a bigger one. It has been in the process of raising more money from strategic investors, some of whom have expressed an interest an acquisition. The company has previously said it has about 30 million registered users, and 100 million users across its network of widgets/apps and through usage on other social sites. On the actual making money side, its efforts are more recent, and it has been focusing on branded experiences with advertisers, something similar to what Pandora also does.
Imeem has raised above $50 million in funding over the last two years, including a $15 million round from Warner Music Group (NYSE: WMG) earlier this year. Other previously disclosed investors include Sequoia Capital and Morgenthaler Ventures…we have also learned that DAG Ventures was the last one to invest in the company this summer, with the valuation north of $200 million. They would probably like more than that, but with the current market, anything in nine figures would be, well, reality-rational.
The Palo Alto-based company earlier this year acquired Snocap, the digital music start-up founded by Shawn Fanning. Last year, it resolved a copyright infringement lawsuit brought by WMG by striking a rev share deal.
While we’re at it, who is going to put Pandora out of its streaming-royalty misery?