Pandora's executives are cashing $15 million a piece; Spotify is burning that much on one label license! But selling for a billion or hoodwinking Wall Street isn't a game that most can play. It just isn't reality in a smaller, distressed music industry.
Which is why after twelve years on the grind, Sonicbids sold the company for $15 million. This is called taking the money off the table. And it's what smart music companies are doing these days, if they're lucky enough to get an offer in the first place.
The Sonicbids buyout, revealed Wednesday, finds Backstage making the purchase, with Guggenheim Partners ponying the cash. Sort of like Sonicbids, Backstage is in the casting business. Sonicbids will help you submit to SXSW or Bonnaroo; Backstage enables your submission to Broadway (or a comedy show, or an acting gig, etc.) Both are making some money by brokering this exchange, and facilitating the aspiration.
And they hope to make more: these are worlds that sometimes overlap, but ultimately rest on a very similar business model. On one side, both help the venue, festival, or brand effectively field thousands of submissions, while also helping the artist submit materials in a uniform, easier-to-manage format. And both charge for aspirational access: according to details shared by the company, Backstage+Sonicbids will have 600,000 registered users, with 60,000 paying for the privilege.
So, what does $15 million mean to you? That depends on where you stand: Goldman Sachs would sneeze at that return, that's not why they're putting cash on Spotify (or anything else, for that matter). But Edison Ventures did put $4.5 million into Sonicbids in 2007; they didn't get their hoped-for return, but they did get out within a reasonable timeframe. And Sonicbids founder (and majority owner) Panos Panay also gets his exit (and a lot more money in his pocket).
So dude, where's my outrageous multiple? The world has changed since 2008, not just for the music industry but the broader world. And there probably wasn't a $25 million deal around the corner for Sonicbids. Or any other deal at all, for that matter.
Others have also survived the long game, planned that way or otherwise: CD Baby, acquired by Discmakers for $22 million, waited ten years before a buyout in 2008. And BigChampagne, acquired by Live Nation for north $25 million (at least according to our sources), waited nearly twelve. Both were incredibly smart to close those deals, and diversify or exit accordingly.
These are multiples that fit the times.
Kevin Rivers Wednesday, January 30, 2013
I'd like to congratulate Panos on a solid exit. 12 years is a long time to retire :)
I look forward to seeing what he will come up with next!
CEO, Xeinge Group
Bolderdasher Friday, February 01, 2013
Panos has stayed on as President of Sonicbids.
JKR Wednesday, January 30, 2013
$15 million? That's what they tell Digital Music News and the New York Times but this is probably not more than $12MM if that. $8MM? Wouldn't even be surprised.
paul Wednesday, January 30, 2013
Yes, valid point @JKR.
Oftentimes, the figure fed to the media is higher than the actual value. But that's in general, I can't say for this deal.
musicservices4less Thursday, January 31, 2013
Paul, anyway to do a similar article on the current sales multiples for independent record labels and/or music catalogs?
paul Thursday, January 31, 2013
Daunting project. Part of the problem is a lot of the smaller deals are kept private, especially the valuation part. So I might suffer from an incomplete data set.
Kim Jean Taylor Wednesday, January 30, 2013
It's good to see hardworking, dedicated people get a ROI. Kimberly and Panos are lovely people. I'm thrilled for their success.
Energie Wednesday, January 30, 2013
Pretty piss poor exit. If you're Edison, you covered your losses that's it.
Lee Parsons Thursday, January 31, 2013
I have never respected Sonic Bids, both when i was an artist and now as a business owner.
As the new generation of music industry it is our job to help artists and break down barriers of entry. Sonic bids invented their own barrier between musician and promoter and got rich doing it.
Your 15 million exit is made up of the sweat of unsigned artists who gave you their last £30 in the hope of playing a show somewhere, that 10 years ago they would have applied for for free.
Whilst that 1% of paying artists got a gig, 99% of them never saw a return and have made you both millionaires.
I always hoped that you would evolve your model into something that truly benefitted artists. Instead, all i can see is an exit to a similar company who are less involved with music and even more focussed on profit.
balbers Thursday, January 31, 2013
While I respect your comment and your viewpoint, allow me to play devil's advocate-
Let us not forget the adage (which may or may not be hyperbole) that 99% of the bands out there make horrible, awful music.
Just because somebody is in a band and is paying some business to promote it or carry its mp3s or to try and book it on Saturday Night Live doesn't mean that their music automatically transforms from shit to gold.
Maybe Sonic Bids was actually doing their jobs all along, and it was the people to whom they were pitching artists who told them 'thanks, but please peddle your talentless garage band to somebody else.'
davidsthubins Friday, February 01, 2013
To further play devil's advocate. Let's say 99% of people can't afford a home of their own. What we do is extend credit to people who would otherwise not have access to the credit market. And it's called subprime lending.
I don't disagree about quality of music, but don't take musician's money first. Just as banks should not lend money to those they know are unlikely to be able to pay it back.
butch Friday, February 01, 2013
Artists should be given opportunities for free and the company should get a cut if they make any money. It's a rip-off to charge up front when so many won't be able to get in.
Visitor Friday, February 01, 2013
SonicBids is yet another long-tail scam a la Tunecore that simply bilks artists.
Tax the Artists Friday, February 01, 2013
You folks are awfully charitable tonight.
Sonicbids is/was a tax on the gullible. I learned the hard way, by paying for, and actually WINNING some of those contests/festival spots and then having the festivals/clubs not honor the slot.
When I saw them charging $5 to submit a demo to the Bitter End, on Bleecker Street in New York City, I knew they were garbage. They build (paraphrasing another commenter) artificial toll booths and then charging artists to pass through.
Lowest rung of the business. The buyer should have paid for Sonicbids in Reverbnation dollars, or whatever stupid currency those idiots work with.
Lee Parsons Friday, February 01, 2013
Surely then Sonic Bids should have set up a filter so that if music is truly bad they don't send it out to venues?
Problem is, if they had done that, 99% of the music they sent out wouldn't have paid them and they wouldn't be sitting on millions now.
So they relentlessly market at the "useless" bands to make a fast buck.
It's a greedy system and Backstage, who aren't even a music company, look even worse.
I feel sorry for any artists who have bought into that system
Bolderdasher Friday, February 01, 2013
As a "CEO" I would have expected you to do at least the smallest bit of research or be informed on the business that you are commenting on. Sonicbids does not actively pitch music. Sonicbids is just a platform where artists and opportunities meet. The artists are the ones that peddle their own wares to the promoters and while a ton of artists don't make music worth a damn none of them would admit it or even be aware of it. This is why a lot of bad artists don't get selected on Sonicbids. Sonicbids does not curate for opportunities, they create opportunities.
2Cents Friday, February 01, 2013
Sonicbids do not 'create oppurtunities' they put up massive walls for all artists and charge artists for something we used to do ourselves. 'A platform where artists and oppurtunities meet'? Who says things like that apart from employees?
Can we all agree that 'Pay To Play' is morally wrong? Ok.
Hows about 'Pay To Apply'? That is what Sonicbids do.
Sonicbids have never had respect within the artist community because they are money-grabbing sleazebags and Panos Panay just made a few million from struggling artists.
visitor Friday, February 01, 2013
well, to end this discussion, unless panos wants to add his 5 cents:
you can block the sun with one hand but you CANNOT block your hand with the sun.
soncbids creates walls? then why is it so popular with the promoters?
remember, the americans invented monopoly but THE ENGLISH invented CAPITALISM.
so you help who you can by putting a service online and see if the market digs it. this is what sonicbids did and they are very popular!
Butch Friday, February 01, 2013
From ripping people off, just like the banks that ripped people off that wouldn't qualify for loans usually but got gaurantees from the government to make the loans. Either business is shady and wrong for the end user. However, it's always a buy beware economy.
User Friday, February 01, 2013
Hey Butch aren't you do back at your Occupy rally?
paul Friday, February 01, 2013
Pretty interesting debate. I'm making it into a new article, here.
truthhurts Friday, February 01, 2013
Anyone who uses Sonicbids is a sucker!
F Sonicbids Friday, February 01, 2013
Repeating the voice of reason:
"Anyone who uses Sonicbids is a sucker!"
not a hater Monday, February 04, 2013
Arctic monkeys, florance + the machine, the lumineers, Goyte etc these are bands who are claimed to have been Sonicbids members. They are representative of the industry. There are 100,000's of bands who will have tried and inevitably failed to become famous, and most wont admit that it wasnt their time or the sound wasnt right, or they didnt take it seriously enough or practice enough. They will blame sonicbids or their manager or whoever else they can: FACT. tell that to the band who started on sonicbids and now has top 20 hits, who is performing for 20,000 fans, they will praise the service. STOP HATING markets make a business without demand there would be no sonicbids and the fact of the matter is only 1/10 of 1% make it to be famous.