Uh-Oh: Music Financing Is Down 38.1% In 2012…

Looks like 2011 may have been a bit ‘frothy’ for music, to use some VC-speak. Which basically describes a funding climate in which a lot of money is flowing, often on ill-researched, speculative bets.  That certainly describes the crash-and-burn Beyond Oblivion, which couldn’t even burn through its $77 million before imploding last Christmas.  That grandiose meltdown helped to put year-to-date financing a massive 38.1 percent below the 2011 mark.

Music financing, YTD 2012:

$83.25 million

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Music financing, same point in 2011:

$134.4 million

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The Difference:

– 38.1%

And, for additional kicks, here’s a graph of all funding levels, starting in 2011.

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12 Responses

  1. Stu

    Isn’t Beyond Oblivion the outlier though – crazy funding (which in any case it didn’t receive all of)

    Strip that out and the YoY change looks healthier!

    • paul

      Yes and no, in my opinion. I think it remains to be seen what investor appetite for risk in music really is in 2012.
      Beyond Oblivion was 2011’s biggest catastrophe in music, sure, but there’s also $100mm for Spotify and other big bets later on in 2011. Spotify’s rumored to be seeking another, similarly-huge round; let’s see if investors are willing.

  2. soniquariummuzika

    Bottom line, the Digital world is not the same as the physical world. When I was pressing Vinyl, we had distribution to record shops world wide. A lot of boxes left and some came back.
    The more Record Stores I was carried in the more money we made. People were not easly into buying records from across the pond, delivery charge, VAT tax and vice versa. Thus, many shop’d locallyl at their Brick and Mortor Shops.

    Now, I carry all my releases on Itunes. In a drop of a milli second, fans down load choons to their phones, computuers and to the cloud. My over head for the label has drop’d more than 90% as far as “production” and Shipping. Now, the money is spent on pure adervtisment.
    Bottom line, the need for 10000x music stores in the digital realm is foolish. There will be many failed ones as we see now.
    Free market competition is always the best idea, even for you liberal/Socialist fools in my industry. This is a sign that the “Carrying” capacity of such sites is….TOP’D OUT. Not saying inovation will not bring a new “way” in the future.
    Right now, ITUNES is the number one retal store digitaly. Even Tune core admits that ITUNES is 80% or more of their sales.
    ITUNES is now 100% of my sales world wide. My sales are growing faster and faster. I produce Electronci Dance Music, a very small % of the over all Music World. If my label is improving its share and increasing revenue….I have no idea why POP music, ROCK, and other Mainstream Music isn’t just sticking with what is proven to work. Until something better comes along.
    Right now, Itunes is IMHO the best platform. Yes, I’m an Apple Guy, studio, full of Apple Gear as well. But they have proven to me why the are the best. Even better than BEATPORT, who markets to DJs. I don’t care about DJs because I send them Promo’s for free. I care about Consumers across the globe and ITUNES attracts them.

  3. dangude

    I am new to VC funding. What is the source of your data for the graphs?

    • paul

      Mostly confirmed announcements and SEC filings. A smaller number are from credible sources, and typically are widely reported.
      That said, there are sometimes a small round or two missed. I was at Midem earlier this year and an entrepreneur told me about a smaller round in Spain, for example. This was a few hundred thousand, but remained mostly private.
      Actually, if you want the entire spreadsheet I can send that also.

      • dangude

        Thankyou Paul for the quick response, I’ll look up the details.

      • Tucker

        Hi Paul,
        Very interesting report! I would actually love to see the spreadsheet if you wouldn’t mind sending it across (fetchdd@gmail.com).

  4. Yves Villeneuve

    If these financing totals continue this year, Spotify/Sean Parker might have the upperhand in licensing negotiations for 2013.

    Remember when Sean Parker said once Spotify would have a stranglehold on the market it would “squeaze their balls”. The customer was not the only target in that statement ie major labels.

    Revenge is a nasty phenomenon, and this time Sean Parker is seeking revenge against the major labels…just my strong opinion.

  5. Stats are Garbage

    Beyond the twisting of statistics by a journalist to write a headline, these figures are so out of context.
    Music funding will continue to rise as heavy handed DMCA related laws continue and cheap streaming services grow. (mostly consolidated at the top). According to CrunchBase (most trusted data store for funding information)….

    Jan 1 – 2014 to Date

    SoundCloud 60M
    BeatsMusic 60M
    TakeLessons 7M
    50+ other music categorized companies with some sort of funding.