Business News Digital Top Stories shuts down after losing investor

By | Published on Thursday 1 May 2014

In what was definitely a surprise move, London-based streaming start-up went offline and shut up shop last night after the firm’s investor unexpectedly pulled its funding.

The Tumblr post announcing the sudden closure of the much hyped service last night came right out of the blue, declaring that: “We’ll keep this short because we’re pretty shell-shocked. It’s game over for 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”.

The message went on: “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. Yep. A massive thanks to everyone that helped us get this far. We’re absolutely gutted. But it’s been a real pleasure”. grew out of the Twitter-meets-iTunes service mFlow, and offered a subtly different approach to streaming music, and a significantly different pricing structure. The people behind Bloom said that they reckoned their model had more mass-market potential than those digital operations running a Spotify-style service, and they splashed out on a more conventional advertising campaign than employed by most tech start-ups these days to reach that more mainstream consumer.

But launching a streaming service of any kind is an expensive business, requiring deep pockets to fund tech development, marketing and, most significantly, the licensing fees paid to the record labels and music publishers. Bloom (and mflow before it) seemingly relied on one principal backer, Russian media firm TNT Media Investments, which has abruptly halted its support.

Speaking to Music Ally last night, CEO Oleg Fomenko was candid about the challenges of launching a streaming music business. He said: “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”.

“[But] most consumers are not willing to pay existing prices”, he went on. “You can see this in dominance of YouTube and by popularity of totally free ways of listening to music on the mobile. [But] we do hope that someone will re-start to offer truly mass-market streaming options soon. I am very saddened that it will not be”.

Of course, Bloom’s assets – its technology, userbase and the licences it had in place – may well be of interest to another player (though licensing deals are not always transferable), so elements of the business might live on elsewhere. Though the sudden shutdown of a very promising new service demonstrates that – for all the hype, and for all the royalties being paid into the record industry by the better funded players – streaming music is still a risky business, where only a very few are likely to prosper.