Imeem Is One Tough Startup. But Maybe Not Tough Enough.

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Imeem is a tough startup. They languished in obscurity in 2005 and much of 2006 by pushing an instant-messaging centric model that required a download to access a full feature set. Late in 2006 they de-emphasized their client download and started focusing on a widget strategy, letting users upload any music and stream it to others via a widget.

They adapted to the marketplace, and users responded enthusiastically. Suddenly, Imeem had real traction and growth and looked like it was on a path to success.

Then a hammer came down. In February MySpace started blocking Imeem widgets, supposedly because of fears of copyright infringement. Unlike the Photobucket ban, which lasted just a week, the Imeem ban looks to be permanent.

Today the company received even worse news. Warner Music sued Imeem, alleging massive copyright infringement by allowing users to stream music to others. Lawsuits like these can’t simply be ignored (See Napster and MP3.com), unless you happen to be based outside of the U.S. This may be the end of a good run for the company, unless they can find a way to claim protection under the DMCA and get themselves out of this.

Imeem is backed by Morgenthaler Ventures and Sequoia Capital and is based in Palo Alto, California.

I hope that someday soon the labels and RIAA begin to understand that services like Imeem and Pandora are providing free marketing for their products, not stealing their intellectual property.

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