Ultimate Chart (a/o May 20th):
Talk to any venture capitalist, and they'll tell you the same thing. It's very difficult to get funding when you're being aggressively sued, simply because the funding then goes to high-priced lawyers, not talented executives, developers, office space, capital expansion, etc. And that's not growth, it's legal survival, especially since the executive team itself is probably highly distracted by all the litigation.
Which might explain why ReDigi has just saddled itself with roughly $760,000 in debt - not equity - spread across domestic and foreign investors. In other words, you have to pay this back - with interest - instead of offering a percentage of the company.
For those just tuning into this one, ReDigi, a used MP3 marketplace, has been fighting an aggressive lawsuit led by EMI, and most likely, losing a lot of cash in the process. According to documents now filed with federal regulators, ReDigi has been seeking debt-related financing since April, with a target of $775,000. Of that, a group of domestic and foreign investors have tossed $762,692 into the ring. This debt is spread across 15 different issuers, suggesting a complex blend of expiration dates and terms.
The question is whether this is a good idea, or simply a sinkhole. Sure, the majors frequently abuse the legal system with overly-aggressive litigation, designed more to exhaust the resources of a startup than to adequately seek redress or resolution. But that doesn't reduce the extreme costs required to fight such an attack. Just recently, Rutgers School of Law professor Michael Carrier estimated major label defense costs at between $150,000 to $200,000 - a month, with nearly all defendants losing even if they're right.
Fallen Entrepreneur: "It's Actually Impossible to Run a Fully Legal Music Service..."
That could explain an unexpected shift in legal representation a few months ago. That's when attorney Ray Beckerman dropped out of the case, while putting a 'retaining lien' on ReDigi. That suggests a pending pile of debt, according to attorneys speaking with Digital Music News, though ReDigi claimed the financial situation remains robust. "The decision to engage new council has nothing to do with finances. ReDigi is financially strong and growing," ReDigi representative Jacyln Inglis told Digital Music News in April.
ReDigi has not yet responded to this story.
wrong term Tuesday, July 17, 2012
Paul, ReDigi are not venture capitalists, they are vulture capitalists. If you want to use the Wall Street lingo, at least use the right expressions.
I am so tempted to post the reason why Ray Beckerman left the case, but I don't want you to receive yet another retarded request from ReDigi, Grooveshark style.
Bryan Tuesday, July 17, 2012
You're an idiot. Please don't post something so unintelligent ever again. This a place for reasonable discussion.
What does this mean? and who Wednesday, July 18, 2012
First, What?
Seond, How do you have first hand knowledge of why Ray Beckerman left the case? Unless you are Ray Beckerman.... a very disgruntled Ray Beckerman.
Bald Headed John Tuesday, July 17, 2012
How sad and unfortunate that a legitimate legal question may not be answered because reDigi can't afford to fight EMI in court.
IMO this will not be the last time someone will base their business model on digital resale and EMI or some other major label will spend more money to bury it
mnew Wednesday, July 18, 2012
Forgetting the legal argument for a minute I still can't understand why you would throw this amount of money at what is a flawed busines model anyway. (Presumably because it isn't here money)
Apple has the download market cornered, even people like Amazon & Google have found it difficult to compete. Regardless of whether Re-Digi would be able to undercut this with it's "2nd hand" mp3s it would seem most consumers will always go with easiest most intergreated option e.g. using iTunes on an Iphone, and as has been proved by Amazon's 99p albums, the size of those retailers mean they can cut prices if needed and use music as a loss leader for other products.
Add in the general slow down in digital growth and the move away from ala carte downloads towards streaming services and it seems a ridiculous argument to spend so much money on.
Yeah, but... Wednesday, July 18, 2012
You have to look beyond the music. We are talking about a very young start up, which people seem to forget because they've gotten so much media attention. If given the opportunity, this technology can apply to eBooks (which ReDigi is apparently getting ready to launch) games and other digital media. I think this is very much worth the fight. People spend a lot of money on digital media so the consumer rights issue is a very important one.
Yeah, but... Wednesday, July 18, 2012
You have to look beyond the music. We are talking about a very young start up, which people seem to forget because they've gotten so much media attention. If given the opportunity, this technology can apply to eBooks (which ReDigi is apparently getting ready to launch) games and other digital media. I think this is very much worth the fight. People spend a lot of money on digital media so the consumer rights issue is a very important one.
ha ha ha ha Wednesday, July 18, 2012
ReDigi is a money laundering setup. If you can't see that, you must be one of those fools who kept "backups on Megaupload".
Isn't that strange that no journalist has managed to create an account on ReDigi, sell "used mp3s" and then publish the proof?
No one wonders?
You silly Americans...
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