Following the news report on Digital Music News that Music Dealers was shutting down, Australian media outlets are reporting that troubled music streaming startup Guvera is shutting down their operations in the Australian market to focus on emerging markets. A statement that went live on their website today says:
“Born and launched into Australia in 2008, we have had the best time bringing all the latest tunes to the ears of our listeners here. Unfortunately, and with a heavy heart, the time has come to pull back from our operations in the country.”
The recent news to shutdown Australian operations comes after CEO and co-founder Darren Herft had just left the company to focus on overseas operations after the Australian Stock Exchange (ASX) blocked Guvera’s $1.3 billion IPO in June for “confidential” reasons, forcing Guvera to “review its legal options and obligations.” Guvera has since replaced Herft with co-founder Claes Loeberg.
Guvera had apparently planned to float up to 80 million shares at $1.00 a share, using the money that would be raised to pay back debts and creditors, a move that was heavily criticized by Australian tech companies. At hearing the news of Guvera’s IPO listing, tech investor Mike Cannon-Brookes tweeted:
“Was pitched. Read Guvera prospectus. Terrified. $180m raised, <1m MAU? No revs? Little growth? Dodgy loans? ASX shouldn’t allow this stuff.”
Guvera’s ASX prospectus had revealed that the company only had a revenue of $1.2 million in 2015, with huge net losses of $80 million, leading co-founder of Seek and Square Peg Ventures Paul Basset to describe the listing as an “absolute disgrace.”
Guvera posted on their website that they will allow users to re-register in other markets where they’ll set up shop:
“So while we won’t be streaming in Australia any more, we will be continuing this journey in other parts of the world. If your travels take you abroad, you’ll be able re-register to use Guvera in India, Indonesia, Saudi Arabia and United Arab Emirates.
Guvera couldn’t have got to where we are today without all of you, so we thank you sincerely for the love and support that you’ve shown us over the past eight years.”
In the streaming space there’s a lot of profitless prosperity going on, a term once applied to Casablanca Records when label boss Neil Bogart was shipping gold and returning platinum in order to secure what looked like a hit… (refer to “Hit Men” chapter about Casablanca… and the Cher record..)
Sad to learn about Guvera chutting down their music streaming businesses in
Australia, USA and other territories.
The company, which has operations in Australia and the US, posted an $81 million loss in FY15. Its recent prospectus revealed a first-half loss of $55.7 million in FY16.
Also in the news..
source: http://www.afr.com/technology/guvera-shuts-down-aussie-streaming-operations-20160729-gqgi97
Guvera has about 3000 shareholders and has raised $185 million to date, predominantly through AMMA Private Equity’s network of accounting firms, some of which sources told The Australian Financial Review had received kickbacks when clients invested in the company.
The private placement memorandum also revealed that Guvera was continuing to evaluate opportunities in other emerging markets such as the Philippines, Vietnam and China.
It also said that Guvera had placed the company’s subsidiaries in Peru, Mexico, the United States, Finland and Singapore in administration or liquidation.
The business has also managed to reduce its cash burn to $1.7 million per month, down from $5-6 million, and that creditor plans had been negotiated to repay debts owed to music labels, hosting partners and other suppliers.
At the first creditors meeting of the subsidiaries under administration, former Guvera employees told The Australian Financial Review the company had not paid employer superannuation contributions for as long as two years.
About 80 staff members were said to be owed about $467,000, at the time, but this did not take into account all the superannuation and redundancy entitlements staff were owed. In total the subsidiaries had amounted debts of about $15 million.
“The entire time I worked there I received payslips that recorded my super was being deducted. But it turns out none of it was ever actually paid into my super fund,” said one former employee who asked not to be named at the meeting.
“Some of the other guys are now finding out that their super hasn’t been paid for more than two years.”
Same will happen to Spotify in early 2017!
Unless Daniel Ek will wise up and will use his brilliant salesmanship skills to convince Larry Page at Google to Stop music RAPE!
Then, next day, all streamers, including his Spotify, over 100,000 Radio stations and about 3 million public places can become primitive discovery based music stores.
the latest update…
Two subsidiaries of the beleaguered music streaming service Guvera have been returned to Guvera management after creditor meetings yesterday.
“At today’s creditor meetings for Guvera Australia Pty Ltd and Guv Services Pty Ltd, the creditors accepted a deed of company arrangement (DOCA) for each company”, joint voluntary administrator Ezio Senatore said in a statement.
“These DOCAs will provide greater certainty of a return to priority creditors, such as employees, than liquidation of the companies would have done.”
The terms of the arrangement were not disclosed and Guvera did not respond for comment before deadline.
Documents filed with the corporate regulator show Guvera Australia owed about $2m and Guv Services owed more than $10.5m, when the two companies were put into administration in June.
The Tax Office was the single biggest creditor, owed more than $10m by Guv Services, which employed the group’s workers.
Music copyright collection societies APRA and AMCOS, which are run as a single organisation, were together owed more than $900,000 by Guvera Australia, which controlled the licenses needed to run the streaming service.
Phone app developer NextFaze was hard hit, owed more than $462,000, while Melbourne media agency Media Partners was owed $235,000.
Two organisations Guvera sponsored as part of its PR blitz, Tennis Australia and the Melbourne Cup venue Victoria Racing Club, were left owed $285,000 and $297,000 respectively.
Other creditors included Guvera’s former PR firm Edelman, owed almost $34,000.
Last month administrator Neil Cussen of Deloitte told The Australian about 60 employees of Guv Services had been let go but about 20 have been re-employed elsewhere within Guvera.
The firm recently pulled out of the Australian market after a failed attempt to list on the ASX, in a float that would have valued the company at more than $1bn.
Australian users who now try to access the service are instead redirected to a ‘Goodbye’ message.
“Unfortunately, and with a heavy heart, the time has come to pull back from our operations here,” the company says on its website.
“We have decided that in order to achieve sustainable and long-term goals, we will focus our efforts in key emerging countries where we feel we can return the greatest value to our stakeholders.
“As a result, Guvera will no longer stream music in Australia. If your travels take you abroad, you’ll be able re-register to use Guvera in India, Indonesia, Saudi Arabia and United Arab Emirates.”
The company — which recently lost CEO Darren Herft to co-founder Claes Loberg, who has taken the job on a temporary basis — has also recently pulled out of several other markets, including the US and Russia.
A memo to investors said shutting the Australian market was linked to changes in its product and a “strategic re-evaluation of the business”.
Guvera’s free business model sees advertisers pay for access to users, offering branded advertising channels with a library of about 60 million songs.
From the source
http://www.theaustralian.com.au/business/technology/two-subsidiaries-returned-to-guvera-management/news-story/cce951e3dbe35d8f45d52b507c8b1a16
It is amazing that there are still businessmen who actually believe that they can make a profit off of music streaming services. Who will pay hundreds of dollars per year just to listen to music that is already available for free on other legal websites?