Myspace Music Acquires iMeem in Firesale Deal

The San Francisco-based social networking music community iMeem has recently had some of its assets acquired by the webs bigger brother, Myspace Music. The deal was good for some, but certainly not for all.

While terms remain undisclosed, it is believed the News Corp-owned Myspace Music sang a tune of close to $1 million in exchange for the site which pulled in close to 16 million users worldwide.

iMeem is credited with creating the webs' first embeddable music and video playlist. The company's creative and engineering core came from Napster who pioneered the file-sharing service and went on to become the first site to secure licensing deals with the four U.S. major music labels who offered their music catalogues for free streaming and sharing on the web.

MySpace chief exec Owen Van Natta said, "This deal will allow us to leverage iMeem's industry leading technology and, over time, meaningfully integrate their products into the MySpace Music experience."

iMeem CEO Dalton Caldwell, chief technical officer Brian Berg, chief operating officer Ali Aydar and VP of sales David Wade will remain onboard at Myspace as consultants during the transition.

For all its creative innovation and juice, iMeem was financially struggling to stay afloat. Industry insiders say the company was hemorrhaging money due to a lawsuit brought on by independent music consortium, The Orchard. The company accused iMeem of playing TVT Records' without proper licensing and asked for a maximum penalty of $150,000 per infringed song. iMeem lacked the funds to fight the case. They couldn't even afford to pay the licensing fees they owed independent artists who sold their music through Snocap; the digital licensing and copyright management service for digital music which iMeem owned.

Through Snocap, independent artist were able to navigate Myspace easily and have their music accessed and sold without issue through embeddable widgets. But artist have not been paid for over a year even though contracts mandate so. The MySpace Music acquisition is of "certain assets" and does not include imeems' liability which includes over 110,000 independent artists with Snocap.

"MySpace Music bought a limited set of iMeem's assets including the domain name and certain technology and trademarks," a MySpace spokeswoman told Wired.com. "The asset sale to MySpace Music was part of a foreclosure process which resulted from the lien certain secured creditors had on all the assets of iMeem. MySpace Music did not acquire iMeem's outstanding debts, including the money imeem owed to artists under the Snocap relationship. Upon closing, users trying to access the Imeem website were redirected to MySpace Music. We did not acquire iMeem's contracts or relationships as we have our own in place. MySpace Music has its own distribution platform, which includes relationships with prominent aggregators and indie labels, that provides indie artists ways to monetize their music on our site."

Myspace Music refused to comment on Snocap leaving sources to believe the rushed deal reached with iMeem forced the company to "leave behind anything that either had explicit liability or potential liability."