Warner Music Boosts Stake In Imeem In Return For New Licensing Terms
This story was written by Joseph Tartakoff.
A month after writing off its entire investment in music social-networking site Imeem, Warner Music Group (NYSE: WMG) is increasing its stake in the company. AllThingsD reports that Warner is getting a bigger piece of the company in exchange for a new licensing deal in which Imeem will pay Warner less each month for the use of its music. CNET confirmed the story. The arrangement is also reportedly related to a new funding round Imeem is expected to close soon. The company raised $2.4 million of the $6.5 million round earlier this month, according to an SEC filing.
It's unlikely, though, that the deal signals that WMG's view of Imeem's prospects have changed. CEO Edgar Bronfman Jr. said last month that the impact on Warner's earnings of Imeem and another music startup it owns a stake in, Lala, was "negligible at this stage." He added at the time that the company did not "intend to make more digital venture capital investments." And, as AllThingsD's Peter Kafka says, it's a "no risk deal" for Warner: "Instead of throwing good money after bad, Warner only has to give it access to its digital music catalog, which doesn't cost the company a cent, and won't show up on its books."
It remains to be seen how much the better licensing terms will help Imeem, which has been struggling under the terms of its licensing deals as well as the weak economy. The company put itself up for sale last Octoberbut hasn't been able to find a buyer. It raised some additional funds in early May that reportedly saved it from an imminent shut down.
By Joseph Tartakoff