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What in The World is Thumbplay?

What in The World is Thumbplay?

by Ed Ryan

Up until yesterday I thought I was a pretty savvy Internet person. I don't write code or anything super smart like that, however, I can build a pretty decent Jimmy Buffet sounding radio station on Pandora. And, I understand why Slacker is catching on (I may have had a little help with the interview I did of Jim Cady). I guess I should be ashamed to admit until yesterday I never even heard the word Thumbplay.

It must be something special if the likes of Bob Pittman and the Mays family believe it needs to be part of the world of Clear Channel. Having missed the Thumbplay memo, I thought I'd do a little research to see what I can find out, other than the press clippings. According to Peter Kafka of "All Things Digital" Thumbplay started out selling ring tones and was bringing in about $100 million a year in revenue. He says the company used the revenue (subscribers paid $10.00 per month for the ring tones) and got into the music business.

Kafka says "I’m told that Clear Channel will be buying a business that only managed to sign up 20,000 subscribers, who pay $10 a month for unlimited music, since March 2010". All the online news blogs we  researched reported that Clear Channel picked up Thumbplay on  the cheap. No numbers were released when the announcement came out yesterday. Yahoo played it this way: "Cloud-based music service Thumbplay completed its first year with only 20,000 subscribers, and has thus decided to throw in the towel and sell to Clear Channel. Thumbplay was launched in March of 2010 with unlimited music for $10 a month. The terms of the Clear Channel deal haven't been made public, though it is likely to be less than 10 percent of the company's current valuation."

Kafka tells Radio Ink "It's impossible for me to evaluate (this deal) from a distance. But given that Clear Channel is buying a distressed asset, seems like biggest risk is that the integration of tech, personnel doesn't work out - the amount they're spending on the  transaction shouldn't be significant for a company Clear Channel's size".

Thumbplay was founded in 2004 by Are Traasdhal and Evan Schwartz selling ringtones and wallpapers. It launched its cloud-based music service, Thumbplay Music, in 2010. It has the backing of all four major record labels with about 10 million songs in its catalogue. The service sells on a  $9.99 monthly subscription, via a smartphone app (iPhone, BlackBerry and Android) or as a desktop app. Financial backers include Bain Capital Ventures, SoftBank Capital, i-Hatch Ventures, Redwood Partners, New Enterprise Associates, Meritech, Brookside Capital Partners and Cross Creek Capital.

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