Bloom.fm: 20 buyers show interest in London music startup
Oleg Fomenko reveals why the streaming service is at risk of being shut down
Bloom.fm surprised many when it shut down earlier this week, saying its sole funder had pulled support.
But the London-based streaming music site could yet be resurrected, if it can find a buyer or new funding in the next week.
Bloom.fm isn't quite like Spotify: users can listen to a radio-style stream for free, or pay as little as £1 a month to "borrow" a limited number of tracks to play as they like, including offline.
We spoke to founder and CEO Oleg Fomenko for an inside look at what happened, as well as discussing the state of the streaming music industry and the emergence of London's Tech City.
Q. How did you end up losing funding? What happened?
A. We looked for our original funding in the year 2008 - you might remember that it was probably the worst time ever to be looking for any money - and we found it from TNT, a Russian TV channel. They've been incredibly supportive.
Then recently there were some organisational changes on their side... they considered this to be a little too "venture capital" for their liking. They decided to pull the plug, unfortunately, and rather abruptly. That gave us very little opportunity to find a buyer or investor.
Without being positive and romantic, you'd never be an entrepreneur
Q. Have you had any interest from potential new investors?
A. We're kind of doing this in a really wrong-about way, being in administration. But more than 20 companies have gotten in touch with me in the last 24 hours expressing an interest in acquiring Bloom.fm in its entirety or in parts. I'm actually shocked, in terms of who's coming out of the woodwork and all the interest. I think we might emerge in a couple of weeks' time with a different investor and a very interesting growth strategy.
That's me being very positive and romantic. But then without being positive and romantic, you'd never be an entrepreneur.
Q. How long until you turn a profit and can stand on your own?
A. Your question suggests you haven't spent an awful lot of time in digital music services... A long time.
Q. If licensing digital music in this way is so expensive and difficult, can a model like yours - or any streaming music service - ever make money?
A. This model will be making money... this is how consumers will be consuming music in the future, whether we want it or not. That's how music consumption is going to be done.
In existing scenarios, small players like us, or emerging parts of our chain, are not getting enough margin because other parts of the value chain are very powerful. This is going to change when streaming gains momentum and really pulls considerable revenues for the industry.
We need scale, and the ability to get higher margins. This will happen, because consumers will vote with their fingers and their ears.
Q. Can you compete against the big established players, such as Google and Apple?
A. They haven't, in terms of streaming, introduced anything groundbreaking or astonishing, and we believe... it is about beautiful product at an amazing price.
Everyone who enters the market enters it at the extremely predictable level of £10 a month. Very few people want to pay £10 - in the UK, it's only 16% of the population max. This is making the proposition niche. If you want to be mass-market, we need to start bringing in more attractively priced propositions, and £1 is the crunch price where people are keen to pay.
All we need is marketing muscle, and to get into scale through partnerships. We were on the verge of doing that; hopefully we'll be able to restart those conversations very shortly.
Q. You're UK-only, and only on iOS and Android. Any plans to extend that?
A. We know the web would be a good kick for our growth... [Our web app] is nearly done, it's used by hundreds, if not thousands of our subscribers now. We just hadn't pressed the button to release it into the wild yet. We were planning on doing it this month.
Q. What do you think of the London tech scene - are you part of Tech City, even if you're based in West London?
A. My head is so much in Bloom that Tech City sounds like a place you go for a drink. I would say that in comparison to where London was five or six years ago, there is a feeling that there is a tech scene. It's becoming a lot more acceptable to be in a tech startup.
I remember five or six years ago, if I said I had a startup, people would look almost with pity at me, like some big company wouldn't give me a job.
So right now it is changing - especially if you go into the East of London, you see it more. It certainly isn't as vibrant or cohesive as the west coast of the United States, like San Francisco and Silicon Valley, but I think it's getting there.
It's getting a lot cooler and a lot more interesting, and that's good for us. Five or six years ago, it was hard for us to attract good people from investment banks, where they would be writing scripts that would make their hearts bleed. But right now, a lot of people would actually be willing and interested to forgo some of their daily rates for interesting and exciting work, and being part of a team that's trying to change the world rather than trying to extract a little more value out of a current account holder.
Bloom.fm is actively looking for funding and investors - you can reach Oleg Fomenko on email@example.com