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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

November 26, 2008 at 11:59 PM

Update on reports of iLike being for sale

I had a chance to chat briefly today with iLike Chief Executive Ali Partovi about reports that he’s shopping the Seattle-based social music service to potential buyers, including RealNetworks and Ticketmaster.

Partovi wouldn’t confirm any sale talks, but he didn’t assertively deny that something more than turkey’s cooking.

He did dispute one element in the initial report, on the MediaMemo blog Monday, that suggested iLike executives and investors are concerned about the company’s ability to stay afloat and independent.

The 2-year-old company isn’t profitable yet, and competitors such as MySpace Music (which shares the same parent company as MediaMemo …) are coming on strong, but Partovi’s not too concerned.

“I don’t have any worries about our ability to continue operating as a standalone entity, in contrast to something that was mentioned in the original rumor,” he said.

Partovi said iLike isn’t in the same boat as ad-supported music streaming services, which are more expensive to operate. Although iLike gives users free music, there are limitations and the offer is aimed at converting users to subscribers of RealNetworks’ Rhapsody service or buyers at iTunes and

“Our offering is more conservative … it’s a more sustainable model,” he explained

Most every startup is probably for sale nowadays, one way or the other. I wonder if iLike’s getting pressure from its investors to cash in and shore up their portfolios.

TicketMaster’s the biggest investor, with a 25 percent stake that valued iLike at $53 million in late 2006. It’s also purportedly a potential buyer of the whole company.

That makes sense because the company’s trying to build a new business providing management and other services to musicians, and iLike’s big emphasis lately is building a platform that musicians can use to connect with fans online.

But could Ticketmaster afford the deal, after spending $123 million in cash plus stock in October to buy artist management group Front Line?

Ticketmaster has been downsizing and bracing for worse times in 2009, after seeing its operating income fall about 20 percent this year. During the third quarter, it began slashing costs and laying off a third of its personnel.

I wonder if Microsoft would be interested (if iLike’s system could be converted to work with Zune’s music catalog, instead of iTunes and Rhapsody).

Both iLike and Microsoft are tight with Facebook, Partovi’s brother and iLike co-founder Hadi Partovi was formerly MSN general manager, and iLike could help Microsoft’s fledgling social-networking services and Zune music platform scale up. — iLike has something like 10 times more users than total Zune units sold to date.

RealNetworks would be easy for iLike to integrate with, but why should Real pony up when it’s already getting the benefits of iLike’s reach through a partnership they made last summer?



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