MORE Indie Invaders / POSTED BY: KINGSOFAR

hype-machine.jpg

The Silicon Bubble: Music site Hype Machine has a $10 million dollar offer according to ValleyWag. The Hype Machine is an MP3 blog aggregator.

Another music site called MOG received $2.8 Million in new financing from Universal and Sony according to VentureBeat. The site offer reviews, videos, music videos.

So far this year, venture capitalists have invested 58 million dollars into music tech companies. Check out the stats and the summary here.

Investors are throwing money around to these music related social networking sites with no guarantee. Even major music labels are getting in the ring and betting on these sites. Investors of these sites claim social networkers are the next generation of broadcasters and are successors to traditional radio.

Critics don’t understand how these sites can be successful on their own even though they talk multiple revenue streams led by advertising. What is the true sticker price for these sites?

Kelli Richards, president of the digital media consultancy All Access Group warns that investors may be disappointed by just how much revenue these sites can generate and compares the rich multiples to the kind of irrational exuberance that valued Facebook at $15 billion. “It’s too early in the game to say definitely what kind of cash flow, what kind of potential these companies are going to have,” concludes Perlson.

At the end of the day, we are going to have happy investors or just another bubble that is about to burst.

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