Online music is hard: iLike shuts down

Myspace officially pulled the plug on the social music service today, putting an end to what once was hailed as the most popular social music service (hat tip to hypebot). iLike was one of the first startups to offer a combination of free music streaming and social networking, which helped it to gather some 55 million registered users by the time it was bought by Myspace in 2009. However, its revenue never added up, and now it is joining Napster, Lala, Imeem and others in digital media heaven, proving once again that making money with music online is really, really hard.
iLike launched as a standalone service in 2006, initially focusing on a combination of a web service and an iTunes sidebar. In early 2007, it debuted as one of the first music apps on Facebook, and soon attracted millions of new users per month. What made iLike so successful? The service not only offered free streaming, but also tracked users’ listening habits and served up social recommendations. The service also attracted bands and labels, who used it to create buzz for new releases.
At one point, it had 10 million monthly active users on Facebook alone, generating some 1.5 billion page views. The company got $17 million in funding, including a $13 million investment by Ticketmaster, and briefly seemed like the next big thing in online music.
However, iLike struggled not only with licenses for its music, but also with its reliance on Facebook as a platform as well as its overall business model: Turns out, serving up free, ad-supported music is really, really hard, and concert ticket referral fees never really made a big difference either. iLike eventually sold to Myspace for a reported $20 million in 2009, and has since been living alongside the more popular Myspace Music service, slowly withering to obscurity.
Of course, iLike isn’t alone with this fate: Imeem, which offered a very similar service, was also absorbed and eventually shuttered by Myspace. Napster’s assets were sold to Rhapsody last fall, and the service eventually shut down in December. And Apple shuttered Lala’s streaming service after it bought the company in late 2009 to power its cloud platform.
All of this should be a warning to music services like Rdio and MOG, which currently are trying to grow their user base with free music. Insiders have long predicted that even Spotify, arguably the biggest of this new crop of streaming services, can’t be profitable with the licenses offered by the labels. And if there’s any lesson to be learned from iLike, it’s that a large user base alone isn’t enough to succeed.
Image courtesy of Flickr user Hitchster.