Spiralfrog missed a critical lily pad this week.
The distressed company is now dead, based on an inability to meet financial obligations and manage critical backend expenses. During the day on Thursday, spiralfrog.com showed a 404, with no sight of a recovery. “The company actually closed on Friday,” one source close to the organization told Digital Music News. After that, the site was kept alive for a few days, before being shuttered.
Multiple sources pointed to a debt load in the $35 million range, owed to lenders – not equity holders or VCs. “So much is owed to the creditors that the shareholders will receive nothing,” one source noted. “The total of the senior, secured debt is $34 million.”
Ahead of the shutdown, attempts to sell the company proved fruitless. Even Yahoo was on the list, according to another source, though investors are now attempting to figure out what to do with the remaining assets. That includes everything from physical servers to a database matching rights holders with specific pieces of content.
The Thursday shutdown follows an earlier wave of adulation from journalists at the New York Times, Reuters, and USA Today, among many others. The company dazzled the press with the prospects of ad-supported music sales, though the model ultimately suffered from tepid interest among advertisers and consumers. Instead, a more straight-ahead iTunes Store remains king, at least on the paid side.
Earlier this year, tips to Digital Music News pointed to a near-term shutdown. A subsequent interview with founder Joe Mohen revealed a highly-leveraged financial structure, one that included high-interest loans to keep the lights on.