US streaming service Cur Media misses first payment, owes labels money

US Streaming service CUR Media is off to a rocky start as the company failed to make its first payment to labels and publishers after launching on January 31 2016.

The streaming service, which promised to be the next generation of music streaming, is in desperate need of more time to get its feet off the ground.

CUR Media promised to beat all other streaming services with their low monthly price tag of $1.99/per month for an unlimited music library, personalisation and customisation, giving the service a social media edge. The fact that all three labels could be so on board with such a service was questionable until it was revealed Cur Media agreed to make US$8 million of upfront payments to all content providers; payments that have already been missed.

It hasn’t all come crashing down yet though. Labels and publishers have a “cure period” of 10-30 days according to the deals, where if it has not made the required payment, its licensing partners can terminate agreements. Furthermore, Cur Media has said each content provider has kindly agreed to extend the “cure period” extensions ranging from 90 to 120 days.

“To date, the company has not received any written notices of default,” it said.

However, Sony Music had a separate agreement with Cur Media where no “cure period” was involved. The separate filing states that the first payment was to be made on March 25, 2016. Should Cur Media fail to make these payments then Sony will have the option to terminate the agreement immediately. Whether they made these payments or not is unknown.

Cur Media is described by its Board as a “mix of internet radio, expertly curated stations, and your own playlists all-in-one” promising a catalogue of over 10m tracks.

The service targets a younger demographic of 18-25 year olds, reeling them in with their low price subscription packages of either the ‘Octo’ plan for $2.99 a month and the ‘Inked’ for $6.99 a month – Inked users receive the offline listening mode. Each price beats competing services Apple Music, Spotify and Tidal, all at $9.99 per month.

The company has been transparent in the fact that it will need more funding to operate. CEO Tom Brophy commented it “still needs to raise more money to launch the service” when the company was profiled the Wall Street Journal.

The piece also stated that not only did Cur Media agree to an US$8 million advance to all three majors labels, each label will receive a 5% stake in the company. One report stated an executive’s company “had only agreed to license his music to Cur primarily because it didn’t want to turn down the advance money.”

Joining Tom Brophy on the Board Of Directors is former Universal Music Group Senior Vice President Bill Campbell. Campbell, who was also the SVP of Global Digital and is the founder of Barefoot Media, is no stranger to the digital world When confirming his appointment. he said he spent “the majority of my career in the music industry helping the record labels adapt to constantly changing technologies while embracing new business models.”

Whether Cur Media is a worthy investment is questionable beyond reason. The company’s financial report last year revealed it had suffered a net loss of US$5.6 million in the first nine months on 2015.

In February, we saw Cur Media withholding from the Nasdaq stock exchange, telling investors that they were “actively seeking sources of equity or debt financing” and that it “currently does not have sufficient cash to meet its operating needs.”

Cur Media are currently seeking out investors, the question is whether or not investors will find Cur Media a desirable candidate when all funds go straight into advances for content providers. This kind of business model is something that VC companies are notably wary of when considering any ties to the music industry.