Last night, IUMA announced that it would stop accepting new artists and eliminate most services. For aspiring musicians, it's just one more stage that goes silent. For aspiring investors, it's just one more lesson on the toll of the digital music revolution.
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Independent artist sanctuary Riffage and the popular peer-to-peer file-swapping site Scour both closed up shop late last year. Last night, IUMA announced that due to a lack of funding from its parent EMusic.com (Nasdaq: EMUS), the site was closing its doors to new artists and would be suspending most of its human-rendered services to existing performers on the site.
IUMA made waves last year when it offered a $5,000 bounty to the first couple that would name its child Iuma. A sign of the times, the company found more than one taker. Poor little Iumas, just starting to cut their teeth and they're reputation is already tarnished with the dot-bomb association.
The company had ambitious plans to become the landing strip for starving artists, each packing built-in traffic through their fan base. In a bold move, the company began splitting the site's ad revenues with its growing artist community. EMusic liked what it was hearing so it bought in back in 1999.
However, recent restructuring plans at EMusic now finds IUMA orphaned at the digital doorstep. Absent necessary financing since last month, IUMA was forced to cut loose its own staff.
IUMA is not dead. While defections are expected to still-beating sites such as Ampcast, BeSonic, and MP3.com (Nasdaq: MPPP), IUMA has a shot. It just has to learn to play by sandlot rules with the meager resources it is down to. Since the different sites take on the unsigned bands in non-exclusive agreements, a little creativity may take IUMA a long way in convincing its roster of artists to stay.
But what about the long term? Right now it seems as if Napster and MP3.com are the only two with the financial means and established popularity to see it through this fiscal cacophony. Both sites are beginning to evolve from free music service providers.
According to former-adversary-gone-investor BMG, Napster will begin charging for its peer-to-peer service by the summer. MP3.com, which caters to the independent community that willingly uploads its music for public scrutiny, has started charging for premium programming channels and upgraded usage of its My.Mp3.com music locker service.
In recent weeks MP3.com has also turned to its artist community for funding. Through paid membership in music licensing and the new Premium Artist Services programs, the company is cashing in on its ability to create new exposure opportunities for its roster of more than 125,000 artists. Yesterday MP3.com teamed up with Qualcomm (Nasdaq: QCOM) to create applications for wireless music delivery. (For more on that story, check out today's Fool Plate Special.)
Napster is blessed with minimal overhead and infrastructure, for now. MP3.com is on a path to profitability with narrowing losses and new revenue streams to offset the weak ad market. So the beat goes on. Sure, some of the musicmakers are being lost along the way, but the song remains the same.
Rick Aristotle Munarriz loves music. He loves to play and compose music too. As a matter of fact, his band was once signed to Sony's Columbia Records label. He owns shares in MP3.com. His band -- Paris By Air -- is also one of the 125,000 bands on the site. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy. Can't vouch for his music though.
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