It’s game over for Bloom.fm
Bloom.fm has recently lost their main investor TNT Media Investments Limited, a Russian TV network based in West London. The CEO Oleg Fomenko mentions that:
“Underlying this decision is economics – there is no business case at the moment in licensed digital music – margins are too low and up-front and growth costs are too high. The solution is a massive scale that then will allow for re-distribution of margins in the value chain.”
It was also stated that difficulties in paying royalties to music rights holders was a major contributor in the dropping of investment. A factor I believe could be the downfall of many music streaming companies in the future due to the vast amount of money required to purchase enormous catalogues of music for the services compared to the relatively small amount made from users paying for their higher tiered services.
‘Bloom.fm chief executive Oleg Fomenko said that the main reason for TNT pulling out now is "organisation change on the side of our investors", but also cited the difficulties of balancing the books with Bloom.fm's royalty payouts to music rightsholders.’
The streaming service was very similar to Spotify as it allowed both mobile and desktop use and multiple payment levels. It had 4 different tiers to choose from including bloom zero, their free service that included radio and a discovery services that provided recommendations for users. Bloom 20, which was £1.49 a month and removed the advertisements from the service and added a playlist feature with the option to ‘borrow’ up to 20 songs. Bloom 200, similar to bloom 20 but with the option to download 200 tracks and finally full bloom, which gave users access to an unlimited catalogue of music for £13.99 a month, a fair amount higher than Spotify charging £9.99 for their premium service.
This was a very unfortunate surprise for the company. Since their launch in 2013, they reached over a million users in a very short amount of time.
In my opinion, I believe that bloom.fm should’ve kept their pricing tiers a lot simpler for their users. Spotify, currently the most successful paid streaming platform in the UK, now only offer a free service and a premium service to their user base. I believe the reason behind the success of Spotify in comparison to bloom.fm is primarily that they had a stronger foundation in terms of their consumers. This gave the company a user-base that was loyal in using their services by continually evolving their user base, initially with free invitations to the service and changing the pricing tiers over time to suit the needs of their consumers. Spotify also eventually integrated Facebook into their service, which grew their user base significantly, something which bloom.fm didn’t have.
Finally, with the growing amount of music streaming companies out there at the moment, there is great competition amongst the services and a struggle to strive as the best. Bloom.fm are still a relatively young company and are now looking for new investors, CEO Oleg Fomenko states:
"Hopefully someone will come up with a compelling enough offer to keep the team and all our assets moving forward. It's the end as we know it, but it doesn't mean we won't emerge out of it."
