Imeem is a start-up with a great service (free online music!), lots of users (15 million, according to Quantcast), and a compelling story. Unfortunately, it's pretty darn hard to make it in the online music business.

The start-up has struggled this year, because of a poor advertising market and high licensing fees owed to the record companies (these fees have been a perenial problem for online music start-ups and nearly shut down Pandora in 2007). Techcrunch reported in May that Imeem had, "risen from the ashes," by renegotiating with the record companies and raising several million dollars in additional funding. Now it appears that founder Dalton Caldwell may have found a home for the struggling music service--even if he probably won't walk away with a whole lot of money.

MySpace has agreed to acquire Imeem for the "fire-sale" price of $1 million, plus an assumption of debt, according to AllthingsD. Curiously, neither MySpace nor Imeem has confirmed the deal. A MySpace spokesperson called the reports "rumors." I haven't heard back from anyone at Imeem but will update when I do.

If the deal goes through, Imeem would join its erstwhile competitor iLike, which was acquired by MySpace earlier this year for $20 million. It's possible, of course, that the reports of an acquisition are false and that Imeem is still looking for outside funding or hoping to attract another acquirer.