MySpace to acquire imeem

Allows site to consolidate music streaming biz to one service

DENVER -- MySpace reportedly is in the late stages of negotiating an acquisition of rival music streaming service imeem. Billboard has independently verified initial reports from tech blog TechCrunch and the Wall Street Journal's AllThingsD, that the negotiations are ongoing. Timing however is less clear. The deal could be completed as early as the end of this week or well into next month. No details yet on pricing.

Should the deal come to fruition, MySpace would gain not only imeem's personnel and users, but also the Snocap technology imeem acquired last year. It's not yet clear whether imeem would continue to operate as a separate service, such as MySpace's other recent acquisition- iLike - does.

Imeem's sale, on one hand, would certainly raise additional doubts over the viability of the ad-supported music streaming model. To date, no service has been able to reconcile the cost of music licenses with the value of the advertising it sells against them. Imeem's sale, particularly if it's the bargain many expect, would only serve to cast further doubt on the business model.

However there is a potential upside. By acquiring imeem, Myspace would consolidate the free, on-demand, ad-supported music streaming business in the U.S. into one service. The only other on-demand music streaming service remaining would be Lala, which is not ad supported, and only allows one free stream before users need to make a purchasing decision. And Spotify has yet to launch in this country.

That could be good for the still-struggling business model. With only one service offering free on-demand streaming music, particularly one with the scale of MySpace, advertisers interested in buying ad inventory around music will have only one place to go.

The resulting scarcity could result in better ad rates and potentially give a much-needed boost to the ad-supported model. One of the problems that's plagued the ad-supported music business was the fact that too many services were selling ads around the same kind of content. Universal Music Group and Sony Music Entertainment are trying to solve that problem in the online music video space through the creation of Vevo, which will serve as the sole point of access to advertisers interested in branding around music videos from the two labels. MySpace, through acquiring rivals such as imeem and iLike, would emerge in much the same position, albeit through a different path.

However it's unclear if MySpace can continue to offer free on-demand streaming even under these circumstances. Before the imeem merger rumors broke, MySpace was also rumored to be considering a plan to add a paid subscription tier. Incoming music streaming services like MOG and Rdio are planning to go live with a monthly subscription as well.

MySpace of course is one of the two music services providing free music streaming to Google's search results, the other being Lala.