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  ‘IMVU’ Now $9M Richer  
Posted 2006-03-05 by Tony Walsh
Avatar-based chat service IMVU has raised $9 million in Series B funding, a deal reportedly co-lead by Allegis Capital and Menlo Ventures. While IMVU bears some resemblance to virtual worlds such as and Second Life, it is a much more focused affair, therefore the infusion of $9M will doubtless go further than investments in its closest competitors. In October of 2004, Second Life received $8M in financing. As best as I can tell, ate up over $30M since opening up shop, got another $13M in VC funding in Q2 2004, and $8.77M in expansion stage funding in 2005.
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Comment posted by csven
March 5, 2006 @ 5:06 pm
I predict one of these three will be bought by one of the big players (AOL, Google, Yahoo, etc) by the end of this year.
Comment posted by Tony Walsh
March 5, 2006 @ 5:14 pm
I agree it's a possibility. In one of the Secondcast shows, there was some discussion about whether or not LL is positioning SL for sale.
Comment posted by Rikoto
May 11, 2006 @ 12:27 pm
I agree with you. It's a strong possibly that Google will be the buyer of one of the three, since it seems to be aiming to become a web portal of its own (I can picture the opening the homepage on my web browser right now :D )
Comment posted by NBForrest
July 7, 2007 @ 4:44 pm
After 3+ years IMVU is still in the beta stage and has alienated many of its adult customers,a recent review of chat websites by has labeled IMVU "seductive and potentially dangerous" for kids.The concluded the review by saying "IMVU is a fascinating model, but it's not for kids." i predict that within 2 years IMVU will be out of business due to the fact they will not have a customer base to support their product.
Comment posted by Tony Walsh
July 8, 2007 @ 11:01 am
Thanks for the comment -- how has IMVU alienated its adult customers?
Comment posted by SneakyWho_am_i
July 21, 2007 @ 4:13 pm
lol... For a moment there it sounded like you were into that sort of thing, Tony. IMVU in my humble opinion didn't entirely alienate many of its adult customers... It merely allowed them to alienate themselves. I'm tired enough to be able to oversimplify things, but IMVU serves anyone over the age of thirteen, inclusive. On registration you can look at whatever you want but it has to have a very family friendly rating. There's a restricted content category which is accessible to avatars with an "Acess Pass" or AP. IMVU failed to define exactly what the AP did and didn't allow. I thought it was pretty clear, but it was cloudy enough to give a great number of 3rd part content developers and customers an excuse to bend or break the rules. The AP was created so that Adults (Well, anyone over the age of eighteen - I know some forty year olds who are still children) could view content suitable for 16 year olds - for a small huge one time fee. It adds some extra depth to what's available. What the AP does not do is allow you to view content which on television would be restricted to eighteen plus. No mature content. Third party developers (devs) would step over the line and submit sexually explicit items to the catalog, or male genitalia. These things are bad. Furthermore, for some time a bug has gone undetected which allowed disabled products to persist (apparently) .... So for a long period of time, more and more suggestive content was accumulating in the IMVU catalog until eventually it reached breaking point, they fixed the bug and wiped all the mature content. Well, not all... All they really did was restore things to the status quo, but many AP holders were very resentful and bitter about having their contraband products removed. In short, they believed that IMVU had changed the rules and stolen what had been allowed before. The userbase's first line of defense was to say "What's the point of an access pass that doesn't grant access?" along with "The terms of service are not well defined and make not clear distinction" (which is true to an extent that IMVU has actually agreed on this point) and that "restricting the sale of the ap to adults should make it a valid way to purchase mature content" - these defenses are pretty shaky as you can't submit an item to the catalog without assigning a rating yourself. There are three possible ratings in the combo box and it shocks me that everyone could miss the third, and the paragraph-long warning below it which says basically "Mature content is naughty due to our terms of service, click here for more info"... ... .... The long and the short of it is, each party learnt a valuable lesson. In any event, IMVU recently began to categorically state that they are now targeting children (SecondLife is Adults Only anyway) and claimed to be growing more quickly than MySpace. (Maybe.) With the targeting of their market, the multiple income streams and the aforementioned cash injection, there is no way on Earth that IMVU will fade out and die - on the contrary, they will continue to become more strong and powerful and it won't matter what they do or how they are portrayed by the media. The fact is, children will continue to flock to the site and empty their parents' bank accounts without consent (stupid parents for allowing that to happen though..). It's being marketed now as more of a game and more of a dating service, yet also strangely for kids. Children genuinely see it as a way to have sex online now. And children will lie on sign up to get in if they're under thirteen. IMVU will grow as a community, organicly. IMVU made its internet debut in August 2004 and became available to the public during September of that year. Yes, it is still in Beta. It will feature more and more on the news as it becomes a magnet for sex offenders. The negative press will only serve to expose it to children and attract them. It'll snowball out of control, it's a monster.
Comment posted by SneakyWho_am_i
July 21, 2007 @ 4:15 pm
Whoops, now Google will think this page is about intercourse. I tried to avoid saying it too much.
Comment posted by Cassandra
May 22, 2008 @ 3:32 pm
I am an active on imvu and i have to say its funny how imvu makes $$ off of music products that contain STOLEN copywritten music yet they have done everything they can to say they are NOT responcible for it yet still the profit from it. They just released a new thing called "peer review" where developers review new items coming into the catalog to make sure its fit for the proper category in the catalog.
Sad thing is the catalog is clogged with music items that contain stolen music. so doing peer review is a strain on developers and the catalog.
IMvus getting out of beta very soon.
they are shooting for june hense they been cleaning up and cramming new things in while having poor services for the community that it gains it profits from.
Comment posted by Tony Walsh
May 27, 2008 @ 8:54 am
Thanks for the insider info, Cassandra. It certainly sounds like a sticky issue from a legal standpoint. Second Life seems to be constantly embroiled in similar issues--developers of original content often must compete with those who are simply uploading bootlegs and knockoffs.

I believe Linden Lab gets around legal responsibility by providing a DMCA takedown system--basically anyone who feels their work has been stolen files a complaint. Somehow this gets Linden Lab off the hook, if I understand correctly. Maybe it's a similar case with IMVU.
Comment posted by Denovich
May 27, 2008 @ 11:02 pm
Good God Cassandra, you are all over the place and seem to be the only one on IMVU bitching about the music items, when I have been told from reliable sources that you have bought music yourself?

What you fail to mention is that when a music item is submitted it is indicated (mostly) that the customer is not paying for the music but for the time it took the developer to make the item. I also believe that without music items IMVU would lose a large portion of it's sales because of clubs, and the items that sell for clubs, let alone other public chat rooms. I have seen disclaimers on usic items that indicated the music was not for sale, merely put there for entertainment purposes. Besides, virtual money isn't real money, I cant pay my rent with it, so there is no profit being made from the sale of music items.

You keep going off on this 'illegal music' crap but you're all alone. There are literally COUNTLESS websites on the Internet where you can get FREE music, popular music to, and they are not illegal sites nor is it illegal music.

Personally, you are going to run yourself ragged trying to prove a point that doesn't exist.
Comment posted by SneakyWho_am_i
June 6, 2008 @ 9:28 am
Even if Cassandra has purchased something illegal from the catalog, perhaps she feels remorseful now?

In my opinion imvu has promoted the sale of illegal items. I concede that it was probably wholly unintentional, but still pretty bad to use (for example) music products as a promotional ploy to entice new customers.

Yes, the client is capable of playing music, and that's totally legal. So perhaps there was always a problem and imvu has just been far too slow to react. It's hard to not judge ;) when there has been SO MUCH illegal music in there. I am almost certain that if I've seen ten thousand music items, none have been legal. Then again, I haven't actually asked if the user has obtained permission from the copyright holder....

As for "entertainment purposes only" and "not real money".... One of those is in my opinion rubbish, frankly. The other is debatable.

I hope I don't wind anybody up in saying this. If my opinion is so far from normal, just shake your head and walk away but...

- The copyright holder usually has distributed the work with a very prohibitive license that expressly forbids broadcasting, reproducing, copying et cetera. Generally it doesn't matter whether or not it's for entertainment purposes. After all, the people willing to pay for the music will be doing it for entertainment purposes too - the fact remains that it is forbidden. Commercial or noncommercial.

- It is real money; imvu has expressly created a system (imvu developer/reseller gateway) for resale of credits and products. The products are reproduced for credits, which are readily transformed into real money through a system implemented (for that purpose) by imvu. Real money is a part of the workflow by design, hence credits are an economic good. At the very least, it's barter.


I mean, if I took two thousand dollars off you (I promise to not), you might be displeased. Now what if I take from you something which you were about to convert to two thousand dollars? The idea that it's not [yet] real money and therefore worthless doesn't sit well in my mind.

imvu IS making money out of illegal music, definitely. It's important and everyone should be aware of it. I'm not saying that it's imvu's fault. It's user ignorance (not rereading my last comment - if I contradict myself maybe I'm more mature or something). Users like you and I and Joe Bloggs are too dumb to know when we break the law, or what things are bad for our health, or who is the face of Belgian politics.

Now that we're FINALLY allowed to "flag" (report) music rings which we think are illegal, it feels like imvu has acknowledged the problem.

There HAS been quite a big DMCA-related problem in my humble opinion (as basically an outsider, admittedly). I get the impression from the forum at imvu that plenty of people care about it (could be a minority, but we're talking about choosing high moral standards over a quick buck, so it wouldn't be surprising).

IF the basis of imvu's economy is music, and users are submitting a lot of illegal music (infringing the license) then the basis of imvu's economy might be "coveting". What would this suggest about imvu? You could take a lot of things from it. I think that the "grown up" thing to do would be to admit that there is a problem (because on some scale you know fully well that there is) and instead of pointing the finger and flaming people who can see it for what it is, we should try to clean it up.

There's something about Peer Review that I don't like. Maybe because it keeps track of how much you vote down. Like a game to see who can vote down the most things in one day. Try to get the highest score. I guess it is a start though.

There's genuine concern about this music problem, and it should be taken seriously. Today I am thinking that it would be best for everybody if we stopped trying to explain it away or blame others for it, and instead we just tried to work together to solve it.
Comment posted by Denovich
June 9, 2008 @ 8:09 pm
>There's genuine concern about this music problem

Like I said, the only one 'concerned' seems to be Cassandra.
Comment posted by TruthWillOut
June 21, 2008 @ 5:33 am
I wish to correct some statements Cliff (Denovich) has made. First though I want to make clear I have been a customer, and now a content creator, on IMVU for over 2 years. Second, what Cassandra is saying is absolutely true. She is NOT the only one on IMVU talking about the illegal music. There is a very large contingent of customers, some are even ASCAP producers, who time and time again try to bring up the issue in the IMVU forums.
What has happened is IMVU has banned customers who keep bringing up the issue, and has now even CENSORED any discussions of legalities of any kind! IMVU runs behind its DMCA which is a really do nothing tissue of cyber paper.
I know for a fact that one licensed ASCAP producer who was also an IMVU customer and Content Creator, had his entire catalog and his account DISABLED and the reason IMVU disabled him? The music! Last year he was selling well over 50,000 credits (figure 1000 credits equal roughly 1 american dollar give or take whatever the going rate it and who you buy them from)a day, mostly from the music he submitted. IMVU told him he could not sell copyrighted music. When a content creator gets their account disabled, all their credits(which they paid real money for), all their "inventory"(items they purchased using credits they bought with REAL money for use in the chat program)and their product catalog(everything they made to sell in the IMVU catalog) is confiscated.
IMVU continues to allow those products of disabled content creators to be bought in the IMVU catalog thus filling their coffers even more off the "sweat" of their customers.
Sorry, I think I got off track..there is really so much that is going on there that I could go fill pages..
Back to the music: The ASCAP producer sent proof of his license. IMVU eventually, months later, gave him back his account, but NOT his catalog, NOT the credits he had paid for nor the ones he had earned before being disabled, and then they had the audacity to tell him "Do not sell any more music". Yet at the same time, dozens of content creators were doing exactly that. This is just one case!
Let me tell you how IMVU makes money off all the illegal music being sold, even though Cliff D. claims they do not make money! Not real money, I believe he said.
When a CC makes a product they must PAY IMVU a submission fee...generally 500 credits...okay credits, one can say, are not real money...but then why do we have to pay IMVU or a reseller our real money to get credits? I put forth then that a credit is currency backed by REAL money. Just as the American paper dollar use to be backed by gold.
So, off a ring or now what is called triggerless music, IMVU makes 500 credits or roughly 50 cents just so that CC can put it in the catalog. Now then comes the price for a customer to pay...IMVU declares a "breakeven" price the CC can sell his illegal music for...(come on, I know Prince or Nickleback, or EMI are not CCs on IMVU!)If the CC wants to make any kind of profit, he must then add to that breakeven "fee". So far we see IMVU getting a submission fee and they get up to the breakeven price of said illegal music product. THEN, once the product gets into the catalog, IMVU adds a 10% charge to the overall price. Now how can Cliff say IMVU makes no money off illegal music products?
You all think about it..right now Peer Review is clogged with music products. If one goes into the New Products Catalog each day, they will count that 7 out of 10 items are illegal music products DAILY in a New Products Catalog going more than 70 pages sometimes with 10 or more items per page.
Do not belittle Cassandra. She knows what she is talking about.
Just go into the IMVU forums long enough and read. OH, OOPS silly me...IMVU removed all old threads and posts recently...OH OOPS, IMVU declared talking about legal issues as a reason to be BANNED from the forums thusly shutting up people from trying to get other customers to know what is really going on there.
You want the real dirt on IMVU>>>just go to the Content Creators and ask how they are being treated by IMVU.
Comment posted by TruthWillOut
June 21, 2008 @ 6:11 am
Oh boy, I had to make more comments off Denovich's misleading remarks.
1: "the only one on IMVU bitching about the music items" I have already said in my previous post that there is a very large group that has consistantly brought this issue up with IMVU Staff. I have at one time even sent Cliff a PM about this situation. As have others I know.
2: "when a music item is submitted it is indicated (mostly) that the customer is not paying for the music but for the time it took the developer to make the item." Yes, most of them are saying this..but how does that make what they are doing any less illegal? The .OOG file that is used is also of questionable legality..but THAT is a whole 'nuther can of worms. As for saying the customer is paying for the time and effort of the CC to make the item...customers are not buying something called "triggerless" or an ugly ring, they ARE buying the music ON IT. You cannot get around that no matter how much SPIN Mr. D you put to it.
3: " I also believe that without music items IMVU would lose a large portion of it's sales "
Oh so IMVU would lose sales and doesn't sales equate to money?
4: "indicated the music was not for sale, merely put there for entertainment purposes. " Again, someone had to pay for that song that gets played in the club that all the other people can hear. And oh my, yes, entertainment purposes...professional DJs have to pay royalties for all the music they play at clubs, bars, weddings....why should IMVU think they should not?
or the Content Creator should not? And if IMVU believes the CC should pay royalties, then IMVU better also from the profits they get off the fees I mentioned in the other post.
5: "virtual money isn't real money, I cant pay my rent with it, so there is no profit being made from the sale of music items." I already showed how virtual money DOES equate to real money in my first post. And Mr. D where does IMVU get the money to pay your salary? Oh, didn't you mention in your post that you are an IMVU paid employee? OOPs sorry if you didn't want that known.
6: Ahh I love this one Mr. D...."there are literally COUNTLESS websites on the Internet where you can get FREE music, popular music to, and they are not illegal sites nor is it illegal music." Yes there are many of these types of sites and oh yes, the music industry IS cracking down on them..Does Napster ring any bells? Other of the so called Free sites most likely pay some kind of fees to someone...or have gotten permission to put it up..if not,then sooner or later you will find those sites shut down also.
Comment posted by Sikk
June 23, 2008 @ 12:46 am
The only one concerned is most certainly not Cassandra, as TruthWillOut said.

Also, Denovich isn't Cliff unless he misspelt his own name.

Two years after this story, IMVU is still in beta, though they're now leaking stories that they'll be out of beta this summer. It's only been four years.
Comment posted by Amused
June 23, 2008 @ 12:48 am
Denovich does not equal Devinoch.

You people obviously do not pick up in the fact that the person who posted was stating it is ok to submit copyrighted music to the IMVU catalog as long as you state you are only paying for their time.

The DMCA Policy in IMVU will one day be discovered by a major label, and all hell will break loose.

In the meantime, please don't confuse one person with another. Cliff didn't bother to defend illegal music products.


Piracy: Online and on the Street

It's commonly known as piracy, but it's a too benign term that doesn't even begin to adequately describe the toll that music theft takes on the many artists, songwriters, musicians, record label employees and others whose hard work and great talent make music possible.

Music theft can take various forms: individuals who illegally upload or download music online, online companies who build businesses based on theft and encourage users to break the law, or criminals manufacturing mass numbers of counterfeit CDs for sale on street corners, in flea markets or at retail stores. Across the board, this theft has hurt the music community, with thousands of layoffs, songwriters out of work and new artists having a harder time getting signed and breaking into the business.

One credible analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers' earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes. For copies of the report, please visit

In response, the music industry has employed a multi-faceted approach to combat this piracy, combining education, innovation, and enforcement:

- With investigators deployed in cities across the country, the RIAA is working closely with law enforcement to pull pirate products off the street and to demonstrate that the consequences for this illegal activity are real.
- We are continuing our efforts to educate fans about the value of music and the right ways to acquire it and, when necessary, to enforce our rights through the legal system.
- Record companies have licensed hundreds of digital partners that offer a range of legal models to fans: download and subscription services, cable and satellite radio services, Internet radio webcasting, legitimate peer-to-peer services, video-on-demand, podcasts, CD kiosks and digital jukeboxes, mobile products such as ringbacks, ringtunes, wallpapers, audio and video downloads and more.

Our goal with all these anti-piracy efforts is to protect the ability of the recording industry to invest in new bands and new music and, in the digital space, to give legal online services a chance to flourish.
Comment posted by TruthWillOut
June 23, 2008 @ 11:37 am
OK, I mistook the closeness of the names. No doubt whoever used that name chose it for just that reason. But what I said still stands.
Comment posted by TruthWillOut
June 23, 2008 @ 11:50 am
Amused is correct.
The "musical pirates" submitting to the IMVU catalog do not care about the larger picture though. Right now if the illegal music being sold on IMVU were to be removed from their catalog and no longer allowed to be submitted, IMVU would take a huge hit in their credits sales.
And please, none of this nonsense about "they do not make money of the sale of credits"!
Comment posted by Amused
June 23, 2008 @ 12:03 pm
It isn't the first time Mr. Hick's has been falsely identified and accused in this manner.

I find it rather amusing that people are so quick to "ruin" people in this manner without really paying attention.

Back to the topic:

A lot of people are complaining about the illegal music.

The developers *sic* who post illegal music to their catalogs, and especially fall back on their BS excuse of "you are not buying the music, but paying for my time" are the worst of the bunch. And IMHO they are admitting their guilt by doing so because they are trying to cover the act up with false information.

They are thieves. Plain and simple.
And I am in hopes they will be the first targets of the lawsuits.
Just search "pay for time" and look in Modicons category.
They are sitting ducks.
And of course you can look for "music" and find the obvious.
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