Bloom.fm to liquidate assets, report indicates £6.6m net loss for 2013

Bloom.fm - the troubled UK-based music streaming service - has officially failed to find a buyer willing to take on the business and the company will be forced to liquidate its asset.

This is according to a statement released by the company’s CEO Oleg Fomenko who writes: “After Bloom.fm was placed in 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.”

Bloom was placed in administration because it principal investor - Russian media conglomerate TNT Investments - decided to cut funding to the company after realising that it would take a very long time for the service to become profitable - if ever.

Today Music Ally is reporting that sources that have examined the company’s numbers during the sale window found a particularly bleak situation, with the Bloom’s net loss for 2013 being as much as £6.6 million. The company did have 102,000 active users in March 2014 and it also did have 8,500 paying users, but as 70% of them were on the £1 per month that didn’t equate to meaningful revenues for the company. Certainly not meaningful enough to justify a £2.5 million budget on promotion and advertising.

One has to wonder whether the failure of Bloom.fm may put off other entrepreneurs from entering this space. The truth is that the market deserves to see an option that comes in between free and £10 per month, but whether that’s feasible is a whole other issue.

If a company was to keep its costs really low and majors were to keep their advance requests reasonable perhaps there is some money to be made here, but a lower investment would also mean that the product itself would suffer both from a development point of view and from a marketing one.

Unfortunately the £1 to £5 per month offerings are targeted squarely at people that we define as the “mainstream” music consumer, and reaching those consumers as well as making them understand why a service is worthwhile paying for is an expensive endeavour with an ROI that is hard to figure out.

On top of that, with services like YouTube providing free streaming and Spotify’s own free service improving all the time, some question whether a cheaper streaming service with limited functionality (for example - like Bloom - a limited number of tracks that can be cashed on users’ mobiles) has any legs at all in the eyes of consumers. Spotify itself is aware of the need to lower costs for some segments of the market that can’t afford $120 per year, in the US it recently launched a half price deal for college students.

This is a tricky space indeed, and hats off to Bloom.fm for trying their best to make it work. If you’d like to travel back in time to 12 months ago when the company was running full steam ahead, check out this interview below with the founder Oleg Fomenko recorded by Digital Music Trends.

(Andrea Leonelli)