Imeem Hits Grand Slam in Online Music Game

Media-focused social networking site Imeem is barely 18 months old, but the fledgling site just went four for four in partnering with major labels: Universal Music Group (UMG) is on board with Imeem's ad-supported music streaming model. Now Imeem users, averaging 19 million per month, can listen to full-length streamed songs and videos from top-selling artists such as Kanye West, Amy Winehouse and Gwen Stefani, among others.

Even more importantly, with Universal's addition, Imeem has agreements with all four major music companies to stream songs free.

"This is significant in that Universal Music Group is the largest of the four major music labels, and they've also been the most contentious in terms of the distribution companies that it will work with to distribute their music," Susan Kevorkian, an analyst and program manager of IDC's consumer audio markets research, told the E-Commerce Times.

The two best-known distributors, she noted, are Apple's (Nasdaq: AAPL) iTunes, which lost some exclusivity with Universal earlier this year, and Microsoft's (Nasdaq: MSFT) Zune-focused model, where Universal snags US$1 from Microsoft every time a Zune is sold.

"Universal has been aggressive about the deals they've been striking because they want digital music distribution to be lucrative for them, and they want to approach this in the right way," Kevorkian explained. "What it comes down to: The music labels are dealing with double-digit declines in what has been their core business -- CDs -- and they are taking very seriously development of new businesses, and many at once, which is a complicated prospect for them."

Revenue for Artists, Too

"Universal Music Group is committed to exploring new ways for consumers to discover and enjoy our artists' music online," noted Doug Morris, UMG chairman and CEO. "Imeem has developed an innovative way to make our artists' music a central part of the social networking experience. More importantly, they've done so the right way -- by working with UMG to provide an exciting musical experience for consumers while ensuring that our artists are fairly compensated for the use of their works."

Imeem's ad-supported social music and media model is geared to let artists, labels, studios and media companies make their music and video freely available for interactive streaming to the Imeem community. It shares advertising revenue with the content owners. While it's unlikely that Imeem and ad-supported music will generate enough revenue to cover the music industry's shortfall in CD sales any time soon, Imeem is certainly at the heart of a changing industry.

Activity Is Key

Users of Imeem can upload their favorite music, video and photos, search for and stream full-length audio and videos on demand, and find new content through social discovery features. Unsurprisingly, Imeem's typical demographic is media lovers aged 24 and younger. What may become a boon for Imeem is the amount of time it's able to keep its members on its site.

"The comScore data we've seen indicates that people are spending more time on Imeem than other social networks. We also expect that time will increase now that we are the only social networking service that offers free streaming of the entire digital catalog from all four major labels," Steve Jang, Imeem CMO and head of business development, told the E-Commerce Times.

"Imeem combines premium music and video content from all four major music companies and thousands of indies [independent labels] within a social networking experience, which provides a very entertaining and expressive user experience that keeps people on the site," he added.

If Imeem users make a habit out of staying logged on and listening to playlists, time spent online with advertising may also rise, implying that Imeem's entire premise and business model may have a solid set of legs.

Advertisers on Board

Some key companies, Imeem said, are currently working on advertising programs, including Apple, Nike, Microsoft, AT&T (NYSE: T) Wireless, Toyota Scion, T-Mobile and Puma.

As for the music industry, Apple could be creating ads for its iPhone and iPods, of course, or something else entirely. A big question for the future is how Apple's iTunes might fit in an online ad-supported music world -- if it will continue to be the dominant buy-and-download seller -- or morph into something new.