New investors have brought life to multiple start-up companies and entertainment projects.
When a music company is forced to close its doors, it often leaves behind a very bitter lesson. Rising music tech companies Ricall and Blin.gy were no exception.
Ricall offered music pre-licensed for use in advertising, film, and TV. Founded in 1998, the company had sought to offer a marketplace in which music publishers and artists could set prices for content. Ricall had scored major partnerships, working closely with UK and international brands including Fiat 500 and The Body Shop.
Blin.gy offered green screen technology for mobile users, allowing them to appear in viral and music videos on their devices. The company had initially found success, even partnering with Ellen DeGeneres. Yet, thanks to the company’s poor management and less-than-stellar video quality, investors pulled out.
Both companies shut down earlier this week on the same day.
Yet, don’t expect these cautionary tales to put a dent in new investments in the music industry. This week, the industry received nearly $2.8 billion in funding.
One burning question remains, however. Will each company and project avoid Ricall and Blin.gy’s disastrous fate?
Can you fly like a HAAWK?
HAAWK monitors, monetizes, and enforces copyrights on user-generated content (UCG), including audio and video.
Former AdRev (AudioMicro, Inc.) founders Ryan Born and Ben Barger launched the start-up company. Both will serve as CEO and COO of HAAWK, respectively. The company recently added Base79 founding member Ben Lister as CRO.
This week, HAAWK closed its first round of financing. Rincon Venture Partners led the successful $2.5 million venture capital round. Investors included Wavemaker Partners, Frontier Venture Capital, and Apex Ventures, among others.
In addition, the company acquired certain distribution assets of music metadata start-up Dart Music, which filed for bankruptcy. HAAWK will use Dart Music’s assets as part of their distribution and technology service.
The company’s service delivers assets to — and administers royalties generated by — music and media retailers. This includes YouTube Content ID, iTunes / Apple Music, Spotify, Amazon Prime Music, Pandora, Google Play, TIDAL, Deezer, and SoundCloud.
In a statement, Jim Andelman, a managing director at Rincon Venture Partners, said,
“HAAWK provides products and services that solve complex challenges faced by today’s media rights holders and the company’s strategy for unlocking new value for content owners is one that we both appreciate and support.”
Ryan Born, HAAWK co-founder and CEO, said,
“HAAWK is excited to partner with Jim and the Rincon Venture Partners team as we execute on our mission to bring transparency to the music and media ecosystem, increase earnings for and bring new opportunities to our growing client base.”
Acast looks to take advantage of explosive growth in the US podcast market.
Traditional radio has another major adversary: podcasts. According to a recent Nielsen report, over 60 million American households listen to podcasts. The ethnic audience for podcasts also grew to 36%, especially among Hispanics and African-Americans.
That may explain why Acast has managed to raise a lot of money.
Acast provides a curated platform for podcast listeners. According to their website, the company connects listeners, podcast creators, and advertisers in a fully integrated, one-stop shop. It also has more than 2,000 content creators on its platform.
Yesterday, the platform announced that it raised $19.5 million in a financing round led by a group of Swedish investors. Acast will use the funds to grow its engineering staff. Funds will also go towards accelerating growth in the US market and to develop its audio-on-demand technology suite.
In a statement, Acast co-founder and CEO Mans Ulvestam said,
“Sweden is home to many of the world’s top streaming services, and Acast is no exception. The Scandinavian culture of early adoption coupled with an incredible network of sophisticated investors that see the value in new services and in pushing boundaries made it an easy choice to build and grow our business here. This new financing round from Robur and Norron will allow us to bring our visiion of the future of audio to life.”
The company first launched in 2014. It has now raised over $32 million.
Will new fundraising allow Patreon to give the solution that frustrated content creators need?
In 2013, Jack Conte, a musician on YouTube, became frustrated. Millions of people watched his videos. Yet, he only received hundreds of dollars for his content.
To solve the problem, and with the help of his college roommate, he launched Patreon, a crowdfunding platform.
Four years later, the service has one million monthly active patrons. The company also has fifty thousand monthly active creators. Patreon estimates that content creators will earn $150 million in 2017.
The latest fundraising news may help Jack Conte accomplish his vision with frustrated content creators.
Three days ago, Conte announced that the platform secured $60 million in an additional round of financing. According to a post on Medium, Patreon will use the funding to scale its team and build more products for its members.
In a statement thanking members who have stuck with the company, Conte wrote,
“Thank you for believing in Patreon, for your continued trust in our vision, and for your creativity and grind.”
The Saudi government believes in the power of music and entertainment
To kickstart Saudi Arabia’s entertainment sector, the Public Investment Fund (PIF) will launch a new company. The company will act as an investment arm in Saudi Arabia’s growing entertainment sector.
It’s all part of an ongoing attempt to diversity beyond oil. But when it comes to music, a large amount of the action will happen outside of Saudi Arabia. And in the broader Middle East and North Africa, live music accounts for nearly 90% of broader music industry revenues. All of which means the Saudi fund could benefit companies in neighboring countries like Israel, Dubai, Abu Dhabi and Qatar.
In a press release, the PIF stated,
“The company, which will have an initial capitalization of SAR 10 billion ($2.7 billion), will play an active investment role in various areas of the entertainment sector, and seek to attract strategic partnerships to build the eco-system within the Kingdom. Additionally, the company will expand the scope and variety of entertainment offerings according to the latest international standards. The company’s efforts will enable the development of and provide incentives for the entertainment sector, as well as building local capabilities within the Kingdom. The company is planning to invest in a number of entertainment projects, which include an entertainment complex that will be launched by 2019.”
Avoiding Blin.gy and Ricall’s fates.
At first glance, HAAWK’s fundraising appears successful. Yet, to avoid closure, company executives will have to answer the same question that Blin.gy’s CEO failed to answer.
“For every tool that becomes a platform, most don’t. How will yours?”
Dart Music went bankrupt for a reason. The promising start-up only focused classical music metadata. Most musical genres only focus on a few metadata fields. Classical music compositions have 80 to 100 fields.
The metadata startup also burned through all of the money that it raised. A bankruptcy filing showed that Dart Music had $2.57 million in itemized debt. Its assets fell between $50,001 to $100,000.
In addition, HAAWK faces significant competition amongst monetization platforms.
Globally, podcasts are a part of a $65 billion audio market. Acast aims to stand out in the US podcast market. Yet, past reviews have dubbed its mobile apps light on features.
On the iOS, it currently enjoys a solid 4.9 rating. This number drops to 4.2 on Google Play. Some users have complained about the difficulty navigating on the app.
In his post titled My Mobile AR Start-up Died So Yours Doesn’t Have To, Blin.gy CEO admitted that its features ultimately sunk his app’s retention metrics.
Arguably, Acast isn’t a mobile-only platform. Yet, should it fail to fix the problems plaguing its mobile apps, its CEO may find himself writing a similar blog post.
To make money from cover songs, popular independent musician Ari Herstand wrote that Patreon may be a good choice. The company has also enjoyed explosive growth. ReCode recently dubbed the platform “one of the most interesting media startups of the last few years.”
Yet, the company has received its fair share of criticism.
Three years ago, veteran Seattle journalist Glenn Fleishman dubbed the platform a hotbed of “Nazis, pedophilia pushers, harassers, and more.” The Verge also recently examined the controversy surrounding the readily-available NSFW content on Patreon for those willing to pay-up.
Other users have also called out the platform for only providing money “for a few,” similar to YouTube.
As Patreon raises more money, will it be able to tackle these problems before they become a legal headache for the company?
The Saudi Arabian government didn’t provide a lot of detail into their $2.7 billion project. The investment may do well, considering that Saudi crown prince Mohammad bin Salman heads up the PIF.
Yet, how much money will the PIF invest in music-related projects?
Lots of money — and even more questions ahead.
Image by Jericho (CC by 3.0)