$87 Million, Gone? Beyond Oblivion Calling It Quits

In 2011, one of the largest investor rounds in music went to Beyond Oblivion, to the tune of $77 million.

Now, that money – as well as an initial, $10 million infusion – has gone ‘poof’.

A pair of sources initially started pointing Digital Music News to widespread layoffs and ‘wind-down’ procedures, and company CEO Adam Kidron has now confirmed a near-term shutdown.  Both Engadget and the Financial Times have also confirmed the development.

Another source pointed Digital Music News to some grim holiday correspondence, though we’re yet to see internal emails.  “Beyond Oblivion employees are talking, saying everyone got laid off, they ran out of money,” the source flatly shared this week.

 

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 Also check out: “The Tally’s In! Music Startups Received $458.8 Million In 2011…

 

There’s a reason why this was such a capital-intensive venture: licensing.  Just like the heavily-financed Spotify, major label and publisher deals tend to be exorbitantly expensive, with little cash (if any) trickling down to artists.  In this case, one of the investors paying the tab was News Corp., whose list of ‘misses’ also includes MySpace.

Separately, another source close to the investment terms reiterated that the much-celebrated $77 million investment was actually not a lump sum, but rather a broader amount predicated upon certain benchmarks.  “The reported $77 million second round was based on hitting numerous milestones which never occurred,” the source told us.  “No way they were given, and burned through, $87 million.”

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In a quick back-and-forth earlier this year, a Beyond Oblivion executive denied that this benchmark structure existed.  Either way, the presence of such a large figure – upfront or otherwise – may have created a myriad of unique problems.  One person close to the company noted that it was difficult to negotiate reasonable licensing and even infrastructure rates, given the perceived presence of so much cash.  And major labels are rarely shy about charging outrageous ransoms that ultimately bury the well-financed startup in question.

More as it develops. /paul.

19 Responses

  1. raza

    absurd….some entrepreneurs should be jailed for this…gonna make it so much harder for honest ones to get funding in an already-tight environment…

  2. Michael A Lyric

    Large record deals are often structured like this. The artists never gets all the cash upfront. So I doubt all the money is gone in the way implied.

  3. distro...

    I do the content for a digital distributor and we actually are working on integrating our system to deliver to Beyond Oblivion. We just heard from them yesterday regarding them needing content in DDEX and nothing was mentioned about this…. if we hear anything we’ll advise…. weird!

    • Artist/Digital Label Owner

      Does not suprise me. I spent 14 years in the Hedgefund business while starting up my digital label in 2000. I was in Chicago, a more ethical group of traders and Private Equity Groups. Never the less, the “WALL STREET” industry is full of scumbags, crooks and fools who invest in dreams. The money is gone and their investors our out of that coin, period.

      I still trade the global markets with my own money and run my digital label ( Electronic Music). I have had people apporach me and asked if they could be “Angles” and invest. I always tell them no. Othere peoples money brings on a huge repsonablitity. I am one of the few “artist/producers” who own his own label Free and Clear. I keep all profits from my tours, my digital music sales and all my profits from “Film, Game and Tv scores” I produce. I split profits with other artist who are “Independent Contractors” and signed non-exclusive contracts to be artist on the label.

      The name of the game is to “Do it yourself”. I’m in now hurry to try and compete with the “Majors” our there. I have no interest in selling out my sould to produce chessy pop music or play to the masses who are mainly “Sheep” in the US.

      • mdti

        I beleive that is the future…. means of production and distribution makes it easier to diy, and major label are less and less necessary (necessary is different than useful). The time left for major record companies depends how they can make themselve useful (I doubt they will ever be again, they do not seem to be interested to be “useful” and still try to make themselves necessary, but they are not) and they will live on their back catalogs.

        Tour organizers, promotion companies, etc, are what is still “necessary” or useful at present time.

        • another independnet label owne

          I disagree and believe it is a hybrid of the two that are the wave of the future. DIY is great, but you’re always going to be limited in some capacity. I’m not a big fan of many of the decisions major labels make, but as someone who has developed artists and then upstreamed them to successful major label partnerships, it cannot be ignored that major labels offer a level of promotional expertise and expereince that most indies are not capable of. Whether pop or electronic music, reaching a larger audience is still the ultimate goal and major labels still succeed at doing this faster and bigger then anyone else due to their infrastructure, relationships, and experience. For certain artists these things are not only useful, but also necessary. For others a hybrid of the DIY/indie development and major backing down the road is another option (when and if needed). This will continue to change with time, but is in no way extiinct and their “major” promo skills are still very relevant and in most cases necessary to reach that larger audience.

          • mdti

            You could be right, but the way I se it that

            – promo skills exist outside of major labels (sometimes it is ex employees who set up their own business). But it is true that a diy has harder time getting programmed on radio/tv who prefer to broadcast musicians who have already developped their act (ie, already released several singles, doing gigs etc). (but to take myself as an example, one clip was broadcasted a few times a week during 3/4 month.. on french cable tv.

            – touring is not produced by major labels but by tour organizers (at least in some countries in the EU), and label do not always get anything from it (except co-financing and selling merch at gigs).

            Promo, good studio, mastering, etc it is a question of money and contacts in the biz. When you can find the skills out of the major companies, it depends on wether one has deep pockets to pay for all the services, or if he has to be funded.

            The way I see it is that, as long as they are laying off skills, those skills are on the market on some of them might take the opportunity to set up their own business (especially when non-competition provisions in contracts are more and more difficult to enforce as they are more and more seen as illegal, at least in FR (must be limited in time, location and must be compensated to make up for the loss of opportunity induced by the non-compeition clause).

            Majors have the lobby and are able to direct elected representatives with their legal needs, but i beleive this cannot last forever.

            But you are right that it is still currently costly to develop an artist, and that it is better to find skilled help in doing so.

          • cstephen84

            “another independent label owner”, thank you for sharing a true view of the role of the major labels in the “real world”. Reaching the biggest audience from the outset takes a lot of money. It varies from genre to genre but in country the figure that majors and top tier independents spend in launching the new artist is verified to be $500,000 to $1,000,000 plus. Not too many indie artists that I know have the funds to do that.

            On another note – would you be interested in doing a guest blog at on the subject of indie versus major labels. If so you may contact me by commenting on one of the posts at the blog – leave your email address there and I won’t publishg the comment unless you want me to.

  4. Leo

    Oh dear. $87 million. So many wonderful music productions could have been delivered to the public with all that money. Not to mention keeping up jobs. Keeping great studios open. Boosting gear sales. And so on.

    Fuck startups, fuck web 2.0, fuck all this “cloud” nonsense. Hype and smokescreen for money laundering.

    Beyond Oblivion secures $77m extra funding

    http://www.guardian.co.uk/media/2011/mar/08/beyond-oblivion-news-corp

    • Facepalm

      @Leo. Bet you couldn’t run a startup business, in any field, paying “between 70% and 90%” (the figures from the article that you link) of revenue for rights, with all the costs coming out of the small percentage remaining. So keep your abuse for those responsible.

  5. mdti

    beyond comprehension…

    i’m setting a start-up with name “last forever”

    bids are open 😉

  6. @whatevskirex

    Heavily financed deals like BO & Spotify rely on trickle down & are terrible for indie artists. Good to see implosion.

  7. c

    I thought they had a good idea. The problem was that with their business model, the licensing was too complex, or, at least, that’s what it looks like given the information currently available. This isn’t money laundering, it’s a failed (apparently) business venture.

  8. mike333

    I my god, I can’t believe that some people have $87 Million… I work very hard and my salary is very small… It is unfair I think that some people have to work very hard while others don’t have to. Well, some people are worth these money but others… But it is only a my own opinion. Thanks

    Mike from buy zoloft