UK-based streaming music startup Bloom.fm has spent the last three weeks trying to find a buyer, after announcing in late April that it was shutting down due to its main investor pulling out.
On 1 May, the company delayed its closure for a planned 7-10 days in an effort to keep the service running, but yesterday admitted defeat after a possible deal fell through.
“One offer stood out in particular, as it would have allowed Bloom to continue in the spirit we originally intended,” said CEO Oleg Fomenko yesterday. “We have worked furiously on finalising it, but unfortunately, due to very tight timelines and complexities associated with the administration process, the deal fell through at the last minute.”
The company’s app really will shut down now, in the next few days, while its assets will be sold off by administration firm Moorfields Corporate Recovery.
On one level, it’s sad news: Bloom.fm developed an impressive app and worked hard on a business model that was definably different from most streaming music services, with its combination of free personal radio and tiered subscriptions to ‘borrow’ tracks to store on users’ devices.
On another level, though, it’s not a huge surprise that it couldn’t continue. While the company signed up 1.1m registered users in its year of operation, potential buyers saw Bloom.fm’s warts-and-all figures: 102k active users in March 2014, with 8.5k paying subscribers of whom 6.5k were on the cheapest £1-a-month tier.
Anyone buying Bloom.fm would have been taking on a business whose revenues in 2013 were £42k, set against £205k in royalty payments to rightsholders, £2.5m on promotions and marketing – those high-profile tube ads don’t come cheap – and £952k on wages, resulting in a net loss of £6.6m for the year according to figures shared with Music Ally by sources familiar with the company’s rescue efforts.
Bloom.fm told potential buyers that it was hoping to reach 1.1m active users by the end of 2014, including more than 100k paying subscribers, with the aim of breaking even in 2017 fuelled by partnerships with telcos, retailers and smartphone manufacturers.
Heavy losses are hardly uncommon in the streaming music world, but in this case, seemingly nobody could be persuaded to take on the risks in the hope of bigger rewards ahead.