Songkick’s $10 Million Problem…

Ian Hogarth says that people who use Songkick go to twice as many shows a year. “That’s twice as many awesome nights out with friends, twice as much money in the pockets of hardworking bands, twice as much footfall for venues and festivals,” the cofounder explained.  Sounds great, but is that worth a $10 million investment round?

Apparently it is to Sequoia Capital, which just dropped that figure on the London-based Songkick.  Which brings the total funding level to roughly $17 million, and now creates tremendous pressure to generate a gigantic multiple.  And, even more pressure to build this concert recommendation system into a serious revenue generator, enterprise-level company, acquisition, or all three.  First-round investors include Y Combinator, SoftTech, Index Ventures, and the Accelerator Group, alongside angels like Alex Zubillaga.

 

songkicklogo

This transforms Songkick overnight, and it’s not all good.  It’s funny: I’m now plugged into Songkick through Spotify, another wildly-overinvested company.  But it doesn’t have to be $200-plus million: Songkick could easily join the class of overvalued, hard-to-sell startups in music right now.  Startups like Next Big Sound and Topspin, for example, both of whom are sizzling on the sexiness scale, but difficult to properly monetize, scale, and sell at the kinds of multiples that investors demand.

And there’s another huge problem with this picture: Live Nation.  And at this stage, it’s hard to say how this plays out: currently, Songkick is shuttling referrals to Ticketmaster, alongside other providers like Eventbrite, for example.  So right now, Ticketmaster is a ‘partner,’ except for this part:

 

“One of our ticketing partners, Ticketmaster is the biggest brand in concerts, but despite having such a huge slice of the concert industry, my back of the napkin estimate puts them at around 15 million monthly unique visitors for concerts,” Hogarth explained. “That’s a pretty small sliver of everyone out there connected to the internet.”

 

Which sort of looks like a standoff waiting to happen. Live Nation Labs is currently wrapping its head around ticketmaster.com (and livenation.com), to transform something transactional into something far more connected to fans.  And potentially something devastatingly competitive and uncooperative.

/paul

12 Responses

  1. BurlapMontague

    Please for the love of God, learn to write in complete sentences if you’re going to shovel out this level of snark and vitriol. This is not a complete sentence: “Startups like Next Big Sound and Topspin, for example, both of whom are sizzling on the sexiness scale, but difficult to properly monetize, scale, and sell at the kinds of multiples that investors demand.

  2. shakespeare

    you’re not reading a college English essay or the Wall St. Journal, you’re reading a music industry opinion blog written, as always, in a conversational tone.

    i think someone was offended by the knock at those companies… maybe an investor who hasn’t gotten a great return?

  3. Say what?

    Ticketmaster stopped paying referral fees a year ago.

    How do you monitize a concert site when the world’s biggest ticket company won’t give you a dime for sending them traffic?

    Good luck Sequoia.

    • Visitor

      I heard from Ian Hogarth yesterday that this is not the case, ticketmaster is still paying for refferals, along with a couple of other ticketagencies.

  4. Vail, CO

    Ticketmaster LN can just shut off all its listings. I just found a way to make $10MM go “poof”.

    • Vail, CO

      Meaning APIs, integration, etc. They control the venue access many times.

  5. j_laa

    Love it’s sexiness. Love the spotify integration. Love it’s founder. But I don’t love receiving notifications about concerts that were announced days ago and in many cases, have already sold out. Figure that part out and work closer with artists to give fans what they really want – advance notification, premium tickets, bundles, money can’t buy access..

    • Tony van Veen

      100% with you… If Songkick was able to offer exclusive presale type action it would really kick…

      As far as Sequoia and the other investors are concerned, I’m afraid they’re reading too much Lefsetz, who loves them… with some valid reasons. I can only think that this is a total invest & flip asap scenario, and Ticketmaster is possibly the only buyer willing to pay the price. All of Sequoia’s chips are on Ticketmaster.

      Then again, I’d bet that for $5 million (and 2 years) TM can build this beeatch from scratch, AND ramp it up for volume, thanks to their huge presence in the concert business. And they WOULD be able to offer presale specials!

  6. blastjacket

    Like the major labels they loathe, these major VCs havel slipped in their investment strategies. Put a fork in Songkick, it’s over. My guess is that the Founders, if they still control the company, will pull as much out of that $10M as they can.

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  8. @rmofsky

    Does anyone else smell an overinflated music/app tech bubble?