Trouble Ahead For

In an honest blog post, music recommendation and streaming service (which we likened to a Twitter for music when it launched almost exactly one year ago), CEO Jeff Yasuda has indicated that the startup is going through a rough phase right now that has forced it to make some fairly painful changes to their service.

The blog post, titled ‘Navigating the storm’, speaks volumes about Yasuda’s sentiments on the music industry in general, even if they are not all that outspoken. A short excerpt:

The challenges involved in running a start-up in the music space are immense. To be honest it’s completely nuts, but we are trying to navigate our way through the perfect storm: a struggling music industry, a global economic meltdown, and a fundamental shift in the way people relate to one another and share their appreciation for music.

The biggest change mentioned in the post is the following: the music will be streaming from now on will primarily be coming from Imeem, which means there will be some limitations to what can be streamed henceforth. This decision affects users not located in the U.S. in a big way, which basically means about 80% of its current user base is now using a trimmed down version of the service.

The other changes are:

* Adding urls to public mp3s will be limited to legitimate bands and labels approved in our systems
* The embeddable widget will still show blip messages, but won’t play the music in most cases.
* Where applicable, old blips will be replaced with content from the imeem catalog, but anything that doesn’t match will temporarily cease to function. We plan to add tools to allow you to correct any false matches and find replacements for unavailable tracks.
* We plan to add a preference to skip 30 second clips.
* Additional media content will be available as it is sourced via new partnerships.

Yasuda says he can’t go into detail about why the changes were made exactly, so we can only speculate about it at this point. The big elephant in the room here is that most of’ music catalog was being sourced from SeeqPod, and by now we know what kind of trouble that company is in (although they might still be saved by Microsoft). He does mention that the startup has engaged in talks with ‘lawyers, artists, people from the labels and aggregators’ besides software developers, publishing companies etc. to ensure the service stays alive and can keep adding features.

I’ve contacted the team for more information and will update this post if and when they get back to me.

Looking at their Compete stats (which usually underestimate actual traffic for websites), actually appears to have been growing nicely the past few months. Compete pegged monthly unique visitors going to the service at about half a million in April.

We should also note Fuzz, the initial company behind the service for which they raised an undisclosed amount of angel funding back in February 2008, recently sent its music destination site / social network to the deadpool to focus completely on, making the whole situation extra painful for the 4-headed team.

Too soon to put on deadpool watch, but beyond a doubt its future is now less bright than it was before.