One month ago, streaming music startup Bloom.fm was proudly boasting of having surpassed 1m app downloads. Two weeks ago, it was cheekily thumbing its nose at Apple over a mobile advertising ban. Today it shut down.
To say the news is a surprise is an understatement. “We’ll keep this short because we’re pretty shell-shocked. It’s game over for Bloom.fm,” explained the company in a blog post this evening.
“Our investor, who’s been along for the ride since day one, has unexpectedly pulled our funding. It’s come so out of the blue that we don’t have time to find new investment. So, with enormous regret, we have to shut up shop.”
Who is that investor? Someone asked that very question on Q&A site Quora last year, and got this reply from Bloom.fm co-founder Thong Nguyen: “Bloom.fm – The music app is backed by TNT Media Investments Limited – a Russian TV network. The company is based in West London,” he wrote.
Update: Music Ally contacted Bloom.fm CEO Oleg Fomenko, and he said this about the abrupt shutdown:
“Underlying this decision is economics – there is no business case at the moment in licensed digital music – margins are too low and up-front and growth costs are too high. The solution is a massive scale that then will allow for re-distribution of margins in the value chain,” said Fomenko.
This is unlikely to be game over, even if Bloom.fm doesn’t live on as a brand. The company has a slick app, data on more than 1m users in the UK, and licensing deals with a number of labels. If nothing else, the farewell blog post may smoke potential acquirers out – even if the result is a fire sale.
“This is a poetically crappy turn of events as our young business was showing real promise. Our apps and web player are looking super-nice and we had 1,158,914 registered users in a little over a year,” said the blog post.
So why the abrupt shutdown? Bloom.fm did have some financial challenges looming. For example, despite being live for more than a year, the company had yet to ink a licensing deal with UK collecting society PRS for Music. The pair had been in talks for some time, with any deal likely to have included backdated royalties.
Bloom.fm had also focused on registered users as its main public metric, rather than active users (not to mention how many had converted into paying active subscribers, stumping up £1, £5 or £10 a month for its subscription tiers).
It was thus unclear to outsiders how much money Bloom.fm was making and what its real momentum was in terms of active users – metrics that may have influenced the investor’s decision to pull out.