If MySpace does end up buying music service iLike for anything near the $20 million reported by TechCrunch, it’ll be just the latest disappointing return for VCs — who have poured millions into the digital music startup industry with little to show for it.
Venrock’s David Pakman, who was previously CEO of eMusic, says on Twitter that iLike actually raised more than $35 million, not the $16 million reported elsewhere. “Ouch!” he adds. “Music startups aren’t great investments.”
True. iLike is the kind of investment where VCs are hoping to sell for hundreds of millions, not tens. This is a fire sale.
And it’s not the only recent disappointment.
The last few years have been littered with online music flops, from SpiralFrog, which lasted less than two years; to SeeqPod, which went bankrupt; to imeem, which has burned millions with no clear future. Now there’s big hope that a Swedish startup called Spotify can make it work. But the odds are stacked against it.
Why so hard? Several problems. But the most basic are that people generally don’t want to pay for music, the ad-supported model isn’t there yet, and the dying labels have had no interest in helping any of these companies succeed. And none of those show any signs of changing.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.