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Bloom.fm fails to find buyer, administrator to sell assets
By Chris Cooke | Published on Wednesday 21 May 2014
Despite interest from various suitors, and one in particular, the people behind streaming service Bloom.fm last night announced that they had not been able to do a deal that would allow the company to continue as a going concern, and therefore the firm’s administrators would now sell off its assets.
As previously reported, Bloom.fm, the mobile-centric streaming service that grew out mFlow, and which was pursuing an alternative pricing structure to most of its competitors, arguably giving the set up more mass-market potential, shut down abruptly at the end of last month after the company’s backer pulled the plug.
However, after the service’s sudden demise various parties came forward expressing an interest in buying into the firm, with one offer in particular attractive to all parties. As a result Bloom’s closure was postponed a couple of weeks. But the company confirmed last night that that deal had not, in the end, come off, and as a result administrators Moorfields would now wind the business up.
Bloom.fm co-founder and CEO Oleg Fomenko told reporters: “After Bloom.fm was placed into administration we received incredible amount of support from our users and a lot of commercial interest from prospective buyers. One offer stood out in particular, as it would have allowed Bloom to continue in the spirit we originally intended. 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”.
He went on: “I would like to offer massive thanks to my team who have supported us through such a difficult time, our users who gave us a reason to get up in the morning and all our business partners for the rare opportunity to launch something truly innovative. We strongly believe in what Bloom.fm was trying to achieve and look forward to seeing someone else give UK music fans a fantastic streaming service at a reasonable price”.
Confirming things from his side, Administrator Simon Thomas added: “Bloom.fm has had an incredible response from their customers and we received a lot of offers. Sadly, we were unable to finalise a deal within the timelines”.
Given that most players in the streaming sector seem to need to achieve mass market reach in order for their low profit margin business models to succeed long term, Bloom.fm’s approach was interesting. Team Bloom argued that a cheaper subscription option was needed for streaming to go truly mainstream, even if such an option is more limited to the classic Spotify style subscription package.
The demise of Bloom doesn’t really mean that argument or that approach isn’t still valid; it’s more proof that getting a streaming service off the ground is an incredibly expensive business and requires substantial financing, ideally from multiple backers.
According to Music Ally, the Bloom company made a net loss of £6.6 million last year, with over £200,000 in royalty payments, over £950,000 in wages and £2.5 million to fund the company’s high profile above-the-line marketing campaign. And while the company signed up 1.1 million registered users since going live, according to Music Ally’s sources only 8500 were paying subscribers, the majority on the one-pound-a-month tier.
Nevertheless, it will be interesting to see if any other start-ups – or some of the more established players in streaming – now pursue a Bloom-style approach to pricing and marketing.
